The EGP 100,000 limit set for microfinance loans is subject to a future increase that should not exceed 5%, chairman of the Egyptian Financial Supervisory Authority Sherif Samy told the Daily News Egypt.
“The increase should not exceed 5% per annum and should be approved by the Egyptian prime minister,” Samy added.
President Abdel Fattah Al-Sisi issued a decree approving the microfinance law, which was prepared by EFSA on Thursday. The law, which is the first of its kind in Egypt, will allow companies and non-government organisations (NGOs) to finance projects that are normally ineligible for bank loans.
Samy claimed that this is the most important economic legislation issued since January 2011.
The EFSA chairman pointed out that in “practical life”, finances required for micro-businesses don’t exceed half of the figure set in the law.
Loan companies will seek licences from the EFSA. Following the authority’s approval, the loan company will sit down with the entities seeking micro-financing, and together they will sign a contract agreeing on the financing and repayment terms.
Samy indicated that less documentation and bureaucracy is required for obtaining microfinance than when applying for a normal loan. He added, however, that the “EFSA can’t force a company to finance a project that it has rejected”.