Chairperson of the Egyptian Agricultural Bank (EAB) Elsayed Elkosayer expected that the development of the bank’s technological infrastructure will cost more than EGP 1bn.
He told Daily News Egypt that the development process may extend to three years. It will provide the best modern banking and electronic services to its farmer customers, especially payroll, e-payments, remittances, ATMs, and point of sale (POS).
The EAB operates through 1,210 branches and banking units nationwide, including 20 Islamic branches, which are planned to increase to 30 branches.
The development process of the bank differs from its restructuring plan, which may cost much more and for which the bank is working to secure financing from international institutions, including the World Bank.
In this context, Elkosayer disclosed that the bank is currently discussing with Minister of Investment and International Cooperation Sahar Nasr the reactivation of its agreement with the World Bank to obtain $500m for restructuring.
The World Bank has agreed to finance the EAB on the condition that it will be affiliated with the Central Bank of Egypt (CBE), and that it issues its new law.
Elkosayer said that the bank’s new law has been passed since November 2016, and it is also now affiliated with the CBE, so the negotiations with the World Bank will be easier.
He pointed out that the CBE has granted the EAB an EGP 2.5bn deposit for a 10-year term without interest, as part of the CBE’s plan to support the bank to complete its restructuring plan.
Elkosayer noted that this sum is just a part of the CBE’s financing plan until the bank determines its needs, stressing that the CBE vowed its full support to the bank.
“The EAB seeks to obtain the appropriate funding, whether from the World Bank or the CBE, in addition to its dues from the Ministry of Finance, amounting to more than EGP 2.5bn, to develop its situation, limit its losses, and generate revenue, which can be used to spend on the development process,” according to Elkosayer.
He said that he discussed with Prime Minister Sherif Ismail to obtain treasury bonds issued by the Ministry of Finance in exchange for the bank’s dues, in case it could not pay in cash.
He stressed that the executive management of the bank is working on completing the restructuring plan, which began with the approval of the bank’s new law, and then the merger between the Upper Egypt and Delta sectors.
He added that this plan comes in parallel with the bank’s plan to increase its capital base, while training employees on the new services that will be provided.
The bank’s restructuring plan includes developing the organisational structure of the bank, separating the support and business sectors, as well as recruiting experienced employees to help the bank perform its role properly.
Elkosayer expected to complete the development of the basic system of the bank and the merger of bank’s main sectors within two months.
Previously, there were three main branches: the Principal Bank for Development and Agricultural Credit (PBDAC) in Upper Egypt; PBDAC in Delta; and the Cairo headquarters, which supervises the two other banks.
In the same context, Elkosayer said that the bank is currently cooperating with the Egyptian Banking Institute (EBI) and the CBE to train a large number of its employees to work in the sector of small and medium-sized enterprises (SMEs). He noted that the bank plans to establish a number of SME units in various governorates in the coming period.
He pointed out that 1,400 employees have already been tested, 853 of whom have succeeded and been evaluated by the institute, which will start training 400 of them for three months.
He added that the human resources department of the bank is also training another group of employees who will help qualify other groups, until the bank finishes training and qualifying all employees inside and outside the bank.
“The bank’s loan portfolio amounts to about EGP 23.5bn, of which about 80% are small and micro loans,” stated Elkosayer.
He pointed out that bad debts represent about 18% of the total loans, and the bank aims to reduce this ratio to 15% by the end of this year, and 10% within two years.
Elkosayer stressed that the bank deals with each bad debt separately and not through collective initiatives, pointing out that the debts of less than EGP 10,000 represent about 60% of the total bad loans.
He expected that his bank’s indicators will improve and achieve good results in the coming period, noting that the bank will witness a comprehensive change in its various business indicators by the end of June 2017.
He pointed out that the Agricultural Bank is engaged in national activities and does not only work to achieve profitability. He revealed that the bank has provided funds of about EGP 5.5bn to 800,000 customers working in the field of plant production and strategic crops, with a subsidised return of only 5% per year.
“The EAB aims to finance the farmers in the 1.5m-feddan project. The bank also aims to allocate EGP 100m to the veal meat project, expected to reach EGP 300m in the future. It also participates with the Ministry of Agriculture to revive the contracting farms project,” Elkosayer said.
He pointed out that the Ministry of Agriculture has allocated 10% of the total subsidised fertilisers to the bank, so that it distributes them through its units in all villages.
He pointed out that the bank is also considering the launch of “Bent Misr” programme to finance breadwinner women, which is expected to start soon.
Elkosayer concluded that the EAB is currently negotiating with the Ministry of Finance to activate the payroll system for government employees in the bank.