Philippines: Exploitation of the Working Classes through Abusive Microcredit
18 June by Eric Toussaint
After visiting an agriculture cooperative in the province of Lanao del Norte on 9 June 2025. Photo CADTM.
Across the globe, a considerable portion of the working classes is compelled to borrow at exorbitant rates to cover basic expenses related to daily life and work. This phenomenon has worsened in recent years as neoliberal policies have led to a decline in incomes for the most impoverished and exploited sectors of the working classes. This situation affects hundreds of millions of people—potentially several billion inhabitants of the planet. While incomes are stagnating or decreasing for farmers, fishermen, street vendors, small traders, industrial workers, teachers, health workers, and others, the costs associated with working the land, commuting to work, running a small business, and providing education for children continue to rise. Similarly, expenses for healthcare, food, and housing have increased.
During multiple trips for CADTM over the past few years, I have witnessed this distressing trend repeatedly and have reported on it alongside other CADTM members in several articles regarding microcredit in Sri Lanka and Kenya.
Member organisations of the CADTM international network have addressed similar issues regarding Morocco, India, Bangladesh, Pakistan, and other countries.
CADTM has recently published an academic study examining the rise in debt among the working classes. The study, titled ‘The Urgent Need to Better Measure Household Debt’, was authored by Isabelle Guérin, Timothée Narring, Sébastien Michiels, and Arnaud Natal, and it was published on 10 January 2025.
During a trip to the Philippines in June 2025, my colleagues and I, as part of a CADTM international delegation, were deeply affected by the distress faced by many farmers and villagers who depend on fishing for their livelihoods in the capital, Manila, as well as on the island of Mindanao. All the people we met expressed that there is a pervasive issue of indebtedness among the working classes.
Here are a few examples:
Joyce, a woman in her forties who earns her living through fishing in the province of Lanao del Norte, had to borrow 20,000 Philippine pesos (approximately 310 euros or just under 360 US dollars at the exchange rate of 15 June 2025). Without this financial support, she would be unable to organise the sale of her catch in the nearest town or provide for her children. She is required to repay part of the borrowed sum, along with interest, every month, with an interest rate exceeding 50% per year. She is struggling to cope and can no longer sleep.
Javier, a fisherman also in his forties, borrowed 50,000 Philippine pesos (around 775 euros or just under 900 US dollars at the exchange rate of 15 June 2025) from a microcredit firm named ASA. From the first month, he is obliged to repay some of the capital. Over the course of a year, he must repay a total of 78,000 pesos. After six months, he will have repaid more than half of the amount he received, indicating that he is effectively paying over 50% of the real interest. Yet, ASA markets itself as an organisation aimed at improving the well-being of the poor, claiming not to pursue profit. ASA asserts that it has 2 million customers, whom it regards as micro-entrepreneurs.
In the same province of Lanao del Norte, Angela, a farmer, borrowed 30,000 Philippine pesos to raise the 62,000 pesos required to cultivate one hectare of land for rice production. This cost encompasses all inputs: seeds, pesticides, herbicides, and fertilisers, as well as irrigation costs, land rentals, property taxes, and more. Rather than making monthly repayments, she repays the borrowed sum of 30,000 pesos after the harvest, adding a certain number of bags of rice to the repayment. When we calculate the market value of the bags of rice she provides to the lender, it becomes evident that she is effectively repaying the equivalent of 30,000 pesos in kind. Consequently, the lender receives the 30,000 pesos lent, plus the equivalent of 30,000 pesos in kind as repayment. This results in an interest rate of 100%. It is an untenable situation.
Fortunately, in Angela’s case, she now has the opportunity to secure a loan from the cooperative association she recently joined, which we previously discussed. This association offers loans at a remarkably low interest rate of 2%. Furthermore, if the harvest turns out to be poor or if she encounters significant difficulties, there are provisions for partial cancellation or rescheduling of the debt repayment. However, the challenge remains that there are not enough associations like the one Angela has joined.
The three examples I have just mentioned, while extreme, reflect interest rates that are alarmingly common, ranging from 50% to 100%. Furthermore, any rate exceeding 10% renders repayment nearly impossible for individuals whose incomes barely cover their basic needs. Rates within the range of 50% to 100% create an untenable situation for debtors.
It is important to note that the interest rate is frequently not
disclosed in the payment booklet. The region is home to indigenous
communities, as well as others who follow the Islamic faith, including
the Moros. In an attempt to mislead members of Muslim communities,
lenders assert that they do not charge interest on the loaned amount.
However, they deceitfully impose a substantial additional charge (up to
80% of the amount borrowed) under the guise of administrative or other
fees that the borrower is obliged to repay. This arrangement exemplifies
not only extreme exploitation but also a foundation of deception, lies,
and falsehood.
Conclusion: It is essential to forge, wherever possible, a broad social
movement that demands the authorities put an end to usurious loans,
frequently disguised as microfinance, which falsely purport to assist
micro-entrepreneurs—this is a genuine scam. We must advocate for the
cancellation of abusive debts imposed on the working classes. We must
ensure they receive adequate income. Additionally, we should establish a
non-profit public credit system. Furthermore, we must guarantee free
access to education and healthcare.
The author expresses gratitude to Sushovan Dhar for his review of this article
is
a historian and political scientist who completed his Ph.D. at the
universities of Paris VIII and Liège, is the spokesperson of the CADTM
International, and sits on the Scientific Council of ATTAC France.
He is the author of World Bank: A Critical History, London, Pluto, 2023, Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography: https://en.wikipedia.org/wiki/%C3%89ric_Toussaint
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.
To learn more about misuses of microcredit in Sri Lanka:
‘Damning testimonies of microcredit abuse,’ by Eric Toussaint and Nathan Legrand, published on 25 April 2018
‘In Sri Lanka, Resistance to Private Indebtedness is a Strategic Issue,’ by Nathan Legrand and CADTM South Asia, published on 3 March 2020
‘IMF: Inhuman at the micro and macro levels’ by Eric Toussaint, published on 27 February 2020
To find out more about abusive microcredit practices in Kenya:
‘Alert on the sophistication of illegitimate debt techniques via mobile telephony’ by Eric Toussaint, published on 8 November 2019
‘Let us unite against micro-credits and illegitimate debt’ CADTM East Africa meeting, Nairobi, Kenya by Sushovan Dhar, published on 4 March 2020
Source: Philippines: Exploitation of the Working Classes through Abusive Microcredit
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