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Wednesday, 14 October 2020

Microfinance Act amendments that bring SMEs under legislation signed into law

LEGISLATION WATCH- SME lenders are now subject to the Microfinance Act now that President Abdel Fattah El Sisi ratified amendments to the law yesterday. The amendments raise the maximum value of a micro-loan to a single company or project to EGP 200k from EGP 100k, according to a summary of the final draft by El Dostour. They should take effect once amended executive regulations for the law are published.

Other elements: The changes, which received a final nod from the House of Representatives last month, mean all stipulations in the 2014 microfinance law (pdf) aimed at regulating microfinance activity — including articles pertaining to lenders’ technical and risk management capabilities — now apply to SME lenders. They introduce a EGP 20 mn capital requirement for SME lenders, and keep the requirement for microfinance counterparts at EGP 5 mn, as well as allow SME finance providers to be members of a rebranded Egyptian Microfinance Federation.

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