Last fall, HNMCP was engaged by the International Development Law Organization (IDLO) to look into consumer protection issues, and in particular, dispute resolution, in the Egyptian microfinance market. The microfinance market is the market for small or “micro” loans with values ranging from a few to a few hundred U.S. dollars and having repayment terms ranging from one day to six months. The clients for microfinance services are typically poorer people who run small businesses or groups of people who work together to create and sell consumer products. Currently only a small percentage of the potential market for microcredit in Egypt is currently tapped, although the number is anticipated to grow, with some sources speculating that microfinance will be an essential part of Egypt’s future economic development.
The students’ project encompassed the entire academic year. In the fall semester, the students conducted desk research and prepared for a field trip to Egypt taken in January. In the spring semester, the students collated the data they gathered in Egypt and wrote their report. While in Egypt, the students met with officials from a range of government and non-governmental organizations, alternative dispute resolution centers, and lending institutions. The students also conducted focus groups with microfinance borrowers and participated in a round-table discussion at the Library of Alexandria with Egyptian judges and students from the legal clinic at the University of Alexandria.
The protection of micro-loan consumers turned out to be a timely issue for a clinical project given the large scale dissatisfaction with economic conditions and treatment by government and other institutions revealed in January’s protests. Although the students fortunately did not encounter any protests firsthand, their research revealed frustration on the part of many borrowers with their treatment by microfinance lenders.
Based on their research, the students came up with a number of recommendations for improving conditions for borrowers through the use of alternative dispute resolution methods such as mediation or arbitration. The recommendations contained a number of smaller, practical proposals as well as more ambitious projects. Jeremy McClane ’02, HNMCP Clinical Instructor and Lecturer on Law commented, “Egypt is in a period of great change, and it ripe to make reforms in the ways that consumers are treated and enhance the potential for economic development. These students have taken an important step in starting to think about ways in which those reforms could be made.”
