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Wednesday, 24 May 2017

CBE Microfinance to push out EGP 30 bn in subsidized financing to as many as 10 mn borrowers within four years

The Central Bank of Egypt launched a new microfinance initiative yesterday that aims to funnel EGP 30 bn to around 10 mn beneficiaries over the next four years. The initiative, which was first hinted at back in December and was formed in collaboration with the Egyptian Microfinance Federation (EMF) and the Egyptian Financial Supervisory Authority (EFSA), was announced by CBE Governor Tarek Amer at a presser we attended yesterday. Key features of the initiative include:

  • Eight banks will offer subsidized funding to three microfinance companies and around 752 EFSA-accredited institutions and NGOs working under the umbrella of the EMF. The funding will then be on-lended to individuals or and micro-enterprises seeking specific forms of financing. Recipients may also be able to access direct funding from the Microfinance Projects Development Authority (former Social Fund for Development) and banks.
  • The initiative will be rolled into the CBE’s SME-funding initiative, which requires banks grow their SME businesses to 20% of their portfolios by 2020. Microfinance under the initiative will be counted towards that SME quota funding, according to a CBE press release.

Other highlights from the conference, which was attended by other senior CBE, government, and banking sector officials include:

  • The move appears to be part of a wider financial inclusion strategy which include a new emphasis on mobile payments. The CBE will hold a meeting with President Abdel Fattah El Sisi to discuss a wide-reaching mobile payments policy, said Governor Tarek Amer. There are now 7 mn mobile payments customers in Egypt, he added.
  • The immediate aim is to see micro enterprises grow into small, and then to medium enterprises, said Deputy Governor Gamal Negm.
  • Technology is expected to play a leading role in the initiative, said Hisham Ezz El Arab, chairman of CIB and the Federation of Egyptian Banks. He stressed the necessity for the banking sector to make microfinance a crucial part of the banking sector’s strategy going forward.
  • It aims to reach places that are most in need, namely Upper Egypt. The main sector in need being the agricultural sector in rural areas, said EMF chairman Mona Zulficar. Total microfinance loans in the market reached EGP 6.7 bn as of the end of 2016, benefiting 2 mn customers, said Zulficar. Repayment rates on these loans has been 99.5%. Women made up 70% of microfinance beneficiaries, according to EFSA numbers.
  • Social Solidarity Minister Ghada Wali highlighted how the move sends a message of support from the banking sector to civil society organizations, stressing in publicly accessible terms the importance of building a credit history.
  • The Alliance for Financial Inclusion, of which CBE is a member, will hold its meeting in Egypt this year in September in Sharm El Sheikh, Deputy Governor Lobna Helal said.
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