Debt Incarceration A multi country research study prepared by Mayer Brown International LLP

CoverDebt incarceration is an issue that GALA is particularly concerned about. The act of incarcerating a debtor for failing to repay loans or credit is incompatible with international agreements such as the International Covenant on Civil and Political Rights (ICCPR). Despite this, in Tanzania, a debtor may be imprisoned for up to 6 months for an unpaid amount of USD0.05. While in China, debtors can face life imprisonment in “very severe circumstances”. Indebtedness is a major global issue affecting millions. In South Africa, a survey in 2013 estimated around five million South Africans were battling with over-indebtedness. Debt incarceration is harming the poor and ‘financial inclusion’ in developing countries. There are fears that debt incarceration of the poor is worsening due to the increased commercialisation of microfinance combined with its ‘zero tolerance’ for loan delinquency. Furthermore, financial services to the disadvantaged are poorly regulated in many countries and GALA believes that third party stakeholders like investors and donors of codes of conduct need to be made aware of the serious implications.

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Report for GALA on COWE 22 July 2015

CoverIn 2006/2007, COWE (a local company that transacted financial business without a license in breach of Ugandan law) marketed itself to the local communities in various districts in south-western Uganda as a charity helping to alleviate poverty in Uganda. Through a network of employees, COWE incentivised local people to invest funds with the organisation which it purported to use to support projects and work in the community to help orphans and the elderly, whilst at the same time promising those who invested a substantial return purportedly generated from membership fees, local tea projects, donations from Europe and the USA. Many individuals received back double the amount they had initially invested in a short period of time, which incentivised them to invest further monies and to spread the word. We have seen no evidence which suggests that international donations were in fact made and that local projects were effectively pursued and, when COWE started closing down its offices in early 2007, it became clear that COWE in fact operated as a typical pyramid scheme and that the investments made by the victims of the Scheme were lost.

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