EDITORIAL: The government’s crackdown on illegal internet loan apps, however late, is a step in the right direction, no doubt. Yet whatever digital safeguards it will put in place will not nearly be enough to tackle predatory loan sharks, it will just reduce their online presence till they find ways around legal loopholes.
That’s because the financial desperation that pushes people into their clutches continues to exist, as it has always existed, which is why poor, helpless people have been paying pounds of flesh in interest in these parts since forever.
The unfortunate man in Rawalpindi, whose suicide finally jolted the state out of its ignorance about the online footprint of these sharks, would have known of people, some perhaps personally, whose needs pushed them into a vicious circle of loan shark debt that ultimately tightened like a noose around their necks.
The very fact that the need for a sum like Rs 13,000 — to cover rent and children’s school fees — forced him on the road to taking his own life explains these victims’ helplessness.
Most of them are from the miserable unbanked lot that rots at the very bottom of the food chain. They have no access to formal or even sanitised borrowing channels, and the need to put food on the table, pay the bills and also dream of keeping the kids in school, in times of record inflation and unemployment, makes this killing season, quite literally, for informal lenders that have grown fat by preying on just such targets. This puts the state in a real bind.
Sure, it can shut down websites that boost this business, but the needy will still find a door to knock on to make it to the next week, or month. It won’t do much good to just tell people to stay away from such hawks, because desperation often knows no sense when it matters most.
And it can’t just dole out stipends even if it had the cash to do so. Sadly, there are only very long-term solutions for such problems. These issues are a natural outcome of many decades of unchecked population growth, which shrank education and employment opportunities for an increasing majority of the population and kept pushing the poverty rate up all the while.
That has put too much pressure on state resources for too long, and now there are far, far more people than there are pieces of the national pie. Turning this tide, so to speak, will also take a very long time.
The government should extend the cleanup from the online to the real world, of course, but it must also give very serious thought to social issues, like population and education, that have grown into serious economic crises. It should also work on blueprints for formalising the huge unbanked sector by establishing official credit structures at the grassroot. When unavoidable and inevitable borrowing and lending is going to run micro economic structures up and down the country, it’s best to bring it under the official radar and ensure a sensible debt and interest regime.
The worst and most irresponsible thing the government can do, though, is brush this issue right back under the carpet once it fades from the headlines. There’s a good chance of this endless trend repeating itself again because everybody is gripped with the upcoming election.
And that’s when politicians can be just as ruthless in exploiting the people as the loan sharks they’re promising to shut down right now. Because history has taught us time and again that they go to any length to secure their power and privileges, conveniently throwing the common man under the bus when that’s what it takes.
Copyright Business Recorder, 2023