• Dr. Omran: Activating electronic payment system in microfinance activity supports financial inclusion
• Dr. Omran: Proceeding in financial inclusion through using the mobile phone in granting financing and collecting the premiums of microfinance activity is a positive step
At the invitation of the Financial Regulatory Authority, Dr. Mohammed Omran- FRA’s Chairman held a meeting with the heads and members of the boards of directors of companies, NGOs and private institutions licensed to practice microfinance activities to inform them of the Authority’s initiative to launch a compulsory life insurance for clients benefiting from microfinance loans in a step to expand the social security net. In addition, both sides discussed the mechanism set for implementing the initiative against death risk in a sector represented by 2.4 million Egyptians with financing balances amounted to 8.4 billion pounds by the end of the first quarter of 2018.
Moreover, FRA’s Chairman pointed out that the meetings held with the representatives of the microfinance industry open a community dialogue to reach the ideal mechanism that oblige MFIs to provide a package of integrated non-banking financial services – life insurance and microfinance – in a single step, that is through setting regulatory controls and decisions that ensure the proper implementation of the initiative.
The attendees discussed the possibility of arranging a collective coverage for microfinance clients against death risk where they pay a simple fixed insurance premium of up to four pounds per month. Also, they discussed how to benefit from the experiences of some microfinance companies and business associations offering life insurance coverage to their clients. On the other hand, the attendees discussed how to take advantage from FRA’s decision no. 902 of 2016 which allows the E- issuance and distribution of micro-insurance policies against life risk through the network of information systems and through any of the entities licensed to engage in microfinance activity including companies or NGOs or institutions of category A, B.
Mrs. Mona Zulfikar- Chairperson of the Egyptian Federation of Microfinance welcomed the initiative and requested the Authority to extend its initiative to include a collective policy against death and disability risks in addition to the risk of accidental death with a simple insurance premium.
The participants also agreed on the importance of compulsory insurance for microfinance clients and supporting the initiative in the light of the growing market and its development which necessitates taking into account the small client and adding the advantage of comprehensive life insurance and in total and partial deficits which contributes to the development of the principle of social responsibility in the microfinance market. In this respect, FRA shall set the rules and standards for micro-insurance in accordance with the nature of microfinance activity.
In a related context, the Board of Trustees of Microfinance Unit headed by Dr. Mohammed Omran held its first meeting – yesterday morning – after its new formation. The new Board of Trustees included Dr. Mohamed Omran, Consultant / Reda Abdel Moaty and Mr. Abdelhamid Ibrahim ( FRA representatives) , Mrs. Mai Abu El-Naga, representative of the Central Bank of Egypt, Mr. Mohamed Said Mohamed Mostafa, representative of the Ministry of Social Solidarity, Mrs . Niven Ali Bader Eldeen , representative of the Mirco, Small, and Medium Enterprises Development Agency (MSMEsDevelopment Agency), Mr. Karim Fanous, MP Hala Fawzi Abu Alsaad, representatives of NGOs operating in the activity and Mrs. Naglaa Bahr, expert. The new Board discussed several topics related to regulating microfinance, the most important of which is granting license to NGOs using Electronic payment systems upon providing financing and collection activities through e-payment service providers, as well as benefiting from mobile payment systems in financing and collection activities.
Moreover, Dr. Omran asserted that the procedures to be followed by the Microfinance Unit regarding violations committed by the NGOs shall be taken gradually and according to the kind of violations.