مؤسسة حياه للتنمية والدمج المجتمعي Development and community integration
Dr. Islam Abu El-Majd is a researcher in political economy field wrote about: The Problems of debtors in Egypt.
Numbers and statistics which governmental officials Circulated about debt problems, [1] rose worries about continuing debts problem and its negatives effects on family stability, individual effectiveness and Government spending policies, it leds to social and economic instability of Egyptian society, And this May called “Social Disease”, which prevent to achieve the aims of sustainable development of Egyptian economy.
The definition of debtors (Men and Women) is: “People who are in debt (incur debt) and couldn’t pay it”. It’s a social economical phenomenon which spreads in the Egyptian society as a result of the large number of people under the poverty line; recently a statistic has spread which supposed that numbers of debtors (Men and Women) in the Egyptian prisons are between 20% – 25% of the total of prisoners is about 20: 25 thousands of Prisoners (Men and women). [2] But other statistic mentioned that the numbers of debtors are more than 30 thousands of prisoners (Men and women) and the numbers of debtors (Men and Women) who get a judgment and still out the prison are doubling because there are hundreds thousands of the final judgments which still under execution.
A study has applied on a sample includes 120 female debtors mentioned that the average of the amount of female debtor because of debts of electrical appliances and furniture don’t exceed seven thousands pounds, on the other side there are women took judgements for 90 pounds as a debt.[3]
The most important of regulation reasons which make this problem worse are the confusion of personal credit market in Egypt and its spread by unregulated way through illegal Market, Bank segmentation is the official market of personal credit still not spread adequately in Egypt, which Its rate doesn’t exceed 10% of the total of credit portfolios of operating banks in Egypt, [4] Because Egyptian citizen either he feel fear of dealing with banks or he doesn’t qualified enough to take a loan according to the in force standards of operating banks in Egypt. [5]
In the illegal market of personal credit, this problem became worse because the traders use what called “Trust Receipts” to registration of debt and that’s change commercial deals from a civil case doesn’t led to sending to prison to a criminal case leds to prison for many years.
The Professionals traders who work in illegal markets know this truth, they lend people and already know they may can’t pay his/her debt but they (traders) assume that the debtors will do their best to don’t commit to prison, and they focus on the debtor or his underwriter should be a woman to be a way to payment under pressure of criminal judgements And that consider a discrimination against woman.
There is a very dangerous phenomenon has appeared in illegal market of personal debt, is a secondary illegal market which known as a market of “loans securitization” which means sell or discount the debts to people who aren’t the real loaners, especially to people who could afford debts collection, as people who works in legal profession or the ex- employees in security forces, who establish legal companies for collect the bad debts.
This phenomenon increases the negative sides of the debtors problems, which the debtors get into trouble of paying the debt -which is a civil case- and pay profit margin of loans securitization which is often a huge sum, and that under the pressure of criminal judgements especially which faced against woman.
As a result of the lack of statistics and certified studies depending on scientific methods about this problem, the public view reflects that it cannot compare between profit and economical income of illegal personal debt market which lessen by the social and economical cost because of aggravation of the debtors’ phenomenon, which a serious social economic study could prove it.
Maybe the most important solve of this problem in the short run is working to increase the awareness of legal power and its elements (office of judge – Public prosecutor -lawyers), according to this problem and its legal sides, and to guarantee dealing with this lawsuits through its right legal description as civil cases not as criminal cases because there isn’t a criminal model to describe it as a criminal case.
And work to prepare a black list to who works in the main and secondary illegal personal credit market, prepare public Committees to supervise the market by legal ways as the laws, consumer protection laws, Model of False accusation crime and abuse of using the law.
Trying to find solves in the short and long run through work to combine the illegal personal credit market with the legal market by support “fair borrowing” project, which the loaner bears the responsibility of personal credit market to verify the ability of paying the debt and announce the details of debt, and add it to credit report group of legal personal credit market, impose economical sanctions for lawbreakers by applying the law of “civil insolvency”.
And that work to achieve Egypt obligations of social and legal rights, to Fulfil Egypt’s approval of the national agreement of cultural, social and economical rights, and to support the important side of social and economical stability to achieve the sustainable development of Egyptian society.
[1] News: A Parliamentary site: Ministry of Social Solidarity: Women represent 225% of the total number of the debtors in Egypt – More
[2] Pervious source.
[3] A field study about the reality of debts of group of women in Cairo – “To good prevail ” initiative.
[4] Although there are many problems which appear during applying the retail banking systems in Egypt, As a result of bad irregularities of the banking segmentation rules and the Creditworthiness rules of individual customers by operating banks in Egypt, But it seems that it could apply in legal market easier than in illegal market.