Microlending still grew in Egypt in 2020 — just at a slower rate than it did in the previous two years. Figures (pdf) released by the Financial Regulatory Authority yesterday showed that lending grew 17% y-o-y to EGP 19.3 bn last year, a noticeably slower rate of growth than that of 2019, when microloans surged 43.5% y-o-y (pdf) and 2018, when it grew 62% y-o-y (pdf).

In detail: Around 3.2 mn people took out microloans in 2020, compared to 3.1 mn and 2.8 mn in 2019 and 2018 respectively, with women accounting for 60% of the total and Upper Egypt governorates accounting for 54%.

Why the slump? Some players stopped extending new loans and only focused on collections in 2Q2020 and 3Q2020 to mitigate risks and bad loans during the pandemic, Associate Vice President of Financials at Beltone Financial Abanob Magdy told Enterprise. Once the initial market meltdown had tapered off, lending began to pick up again in 4Q2020, Magdy said.

Growth is expected to accelerate this year: Beltone expects the value of microloans to expand by 23% in 2021 as covid-fueled fears abate and businesses begin to operate normally. The entry of new players into the market will continue to support lending growth but will also put pressure on income margins, Magdy said.