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EFSA: An Unprecedented Boost in Microfinance Activity

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• EFSA issues the first annual report on microfinance activity in Egypt
• Sherif Samy: 12% increase in microfinance in the second half of 2016
• Women represent 70% of microfinance beneficiaries in Egypt
• Sherif Samy: 1.8 million citizens benefit from microfinance through 755 associations and companies
• By the end of 2016, microfinance balances in Egypt was 4.5 billion EGP 

Sherif Samy – EFSA’s Chairman revealed that 2016 witnessed a significant growth in microfinance activity. The value of the existing microfinance balances at the NGOs and companies amounted to 4.5 billion EGP. He added that the number of beneficiaries reached 1.8 million. He pointed out that financing portfolio increased by about 12% in the second half of 2016.

 In addition, he noted that microfinance annual report 2016 was published by the Authority and it dealt with the first full year of activity. The annual report showed that the number of licenses reached 755 serving clients through 1425 headquarters and branch in various governorates of the Republic. The report pointed out that the share of associations and NGOs from the microfinance market reached 77% in terms of stocks compared to 23% for companies. On the other hand, beneficiaries from NGOs and associations represented  84% and 16% benefited from companies.

Sherif Samy noted that microfinance activity which is one of the pillars that help in achieving financial inclusion in Egypt has achieved positive results in terms of women’s access to financial services. The annual report of the Authority showed that females represent 70% of microfinance beneficiaries and the financing balances for the females were 51% from the total market.

EFSA’s Chairman explained that microfinance is characterized by the existence of crowdfunding along with the individual lending. The total number of beneficiaries of crowdfunding reached 982 thousand citizens representing 46% of the total clients of NGOs and associations, compared to 847 thousand citizens representing 53% of individual lending.

Sherif Samy pointed out that after analyzing the purpose of financing granted, the commercial activity came in the first place by the end of 2016 in terms of portfolio’s value representing 60% and  the number of beneficiaries was 67%,  followed by service activity in the  second place with a portfolio of 19% and the number of beneficiaries was14%.  While comes in the third , the agricultural activity with  a portfolio representing 13% and 11% of the beneficiaries and finally the productive and crafts activity by 8% of the funds portfolio and 8% of the beneficiaries.

He stressed that law no. 141 of 2014 regulating microfinance which is issued by the end of 2014 is one of the most important economic legislations in Egypt during the last five years. He   added that the said Law aims at creating job opportunities and reducing poverty through regulating and activating means of financing for ordinary citizens who seek to establish new projects.  He noted that microfinance is limited to economic, productive, service, commercial or agricultural purposes – apart from consuming purposes and it shall not exceed 100,000 pounds.

  Also, Sherif Samy pointed out that achieving financial inclusion depends to a large extent on the availability of means of payment offered by Information and communication technology. Therefore, EFSA was keen to regulate the issuance of standard insurance policies through the Internet. In this regard, he welcomed the rules governing the provision of mobile payment services which is issued by the Central Bank. He added that it is a positive transfer that allows the expansion of the use of payment services to support the benefit of more individuals and small enterprises of financial services. He pointed out that it included the provision that the associations and civil institutions licensed to practice microfinance shall receive the value of the loan or payment installments from the clients   periodically.

EFSA’s Chairman praised the efforts of the Egyptian Union of Microfinance headed by Mona Zulfikar. The Union was stated in the Law which was issued by EFSA   in order to develop the activity, consolidate the concepts and rules of its practice and make recommendations on legislations regulating the practice of microfinance or related to the work of the Union’s members, namely the companies, NGOs, banks licensed to practice microfinance in addition to  the Social Fund for Development and credit guarantee companies.
 

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Regulator Information

Abbreviation: FRA
Jurisdiction: Egypt

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