Credit trap: debt and dispossession in Central Asia

Since 2006, illegal debt collection agencies have flourished in Kazakhstan, where besides only 193 officially registered agencies, at least a thousand operate illegally. In 2019, the country’s banks sold problematic loans worth 611.6 billion tenge ($ 1.4 billion) to collection agencies. Publication on Kazakh social networks video and voice recordings denounce the abuses of these agencies, including physical assaults.

A 2019 video shows a young male collector from Almaty’s unregistered collection group threatening a young debtor, calling her a “dirt-eating trash” and “mistake” that shouldn’t have been born. When the young woman filed a complaint, he and two accomplices assaulted a senior partner at the law firm who helped her, breaking her nose and ribs. In the same year, Kazakh courts examined 353 complaints against debt collectors. The maximum penalty for debt collectors who break the law is 180 hours of correctional work. As a result, private collectors continue to act with impunity, using threats and physical force to extract debt.

Recently, private debt collection companies have been able to open private law enforcement agencies to increase their enforcement powers. Debt collectors can now access state and commercial debtor databases and can use extended legal powers, such as seizing property, auctioning, accessing bank accounts and imposing credit restrictions. trip.

Access to debtor records is responsible for the development of sophisticated fraudulent tactics to “collect” debt. For example, in a recent case, a debtor and mother of five was on a waiting list for state-subsidized housing. One day, she received a phone call informing her that her application had been approved, but the documents were on hold due to her pending loan. She was asked to borrow money to repay the bank loan in order to complete the process. After paying off the debt, she learned that she had been scammed by debt collectors.

Economic inequalities in Central Asia are among the highest in the world. Debt shifted income from the poor to the rich, in what Michael Hudson wisely calls a regressive form of income distribution. Between 1995 and 2012, microcredit was responsible for transfer up to $ 125 billion from poor communities in the Global South to financial centers in the Global North, a regressive distribution of global wealth partly achieved at the expense of poor rural women.

In Central Asia, women tried to resist debt bondage, but their resistance did not bring significant changes to predatory lending practices in the region, as governments cracked down on protests, while indebted women took to task. often been demonized and stigmatized by the media as unscrupulous and irresponsible. borrowers lack financial discipline and knowledge.

The power imbalance between lenders and borrowers is enormous, and indebted women alone cannot shoulder the global power of financial institutions. The passivity of people towards the regulation of finance reflects the degree to which the neoliberal moral order has come to be accepted as just and natural. The task of global anti-debt movements such as the Tax Justice Network and the Jubilee Debt Campaign is therefore to challenge the power of finance and call for progressive alternatives.

This global coalition must overcome the economic and moral grip of finance on society, so that finance serves the well-being of the people rather than the economic interests of the lenders.

About Janet Young

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