Mona El-Baradei, executive manager of the Egyptian Banking Institute, confirmed that the Central Bank of Egypt’s (CBE) initiative—launched in 2014 to finance the low- to middle-income housing—represents a great starting point for the mortgage market in Egypt, which has been suffering for many years from shortages and a high interest rate of financing.
El-Baradei told Daily News Egypt that this initiative supports citizens of limited and medium income. It also provides new funding opportunities and allocation of deposits in banks more effectively, as the rate of loans to deposits in banks does not exceed 40%. This is besides its effective role in achieving financial inclusion and broadening the bank’s customer’s base, as well as its national role in supporting the Egyptian economy.
A few days ago, the Egyptian Banking Institute held a conference on the role of the banking sector and mortgage companies in supporting the initiative.
Banks operating in the Egyptian market established specialised departments for managing and marketing real estate projects as well as developing the services provided in this area, in response to the CBE’s initiative and recent developments in the economic sector. These departments began to achieve positive results and significant increases in the total mortgages granted to customers after the activation of the initiative, according to E-Baradei.
El-Baradei stressed the importance of how all concerned parties should continue their efforts to expand the scope of mortgage finance, to work on the inclusion of the entire real estate sector into the formal economy, and to correct all the imbalances in it. This is besides conducting radical reforms to the system of real estate registration and property taxes.
She also added that the mortgage finance must cover all segments of society in all parts of Egypt, with participation of all banks working in the Egyptian banking sector.
The real estate sector is one of the most dynamic sectors in the Egyptian economy, where the industry is characterised by great potential due to a combination of factors, including the accumulation of experiences. This industry is one of the oldest industries in the state due to the abundance of human and financial resources and the rising demand on real estate, according to El-Baradei.
She added that this sector also contributes to intensifying the economic activity of a large number of industries, along with its contribution to solving social and humanitarian problems through providing adequate housing for various community segments according to their level of income.
She noted that the construction sector in Egypt has achieved a growth of 10.8% during the fiscal year (FY) 2015/2016, as the sector employed 12.4% of the total number of employees at the end of FY 2014/2015, noting that these growth rates are due to the continued increase in the domestic and foreign demand for real estate, as well as the steady increase in the building and construction of new roads.
The housing crisis in Egypt is still in need of more efforts to achieve realistic solutions, and to direct a bulk of real estate investment to the appropriate projects for low- and medium-income segments. This is besides the continuation to follow up and resolve unauthorised real estate problems, El-Baradei said.