Can the banking sector achieve financial inclusion alone?

Hossam Mounir
14 Min Read

 The Central Bank of Egypt (CBE) will be organising the largest international conference on financial inclusion, between 13 and 15 September. The conference will be attended by more than 800 participants from more than 94 countries, represented by 119 ministries of finance and central banks. The conference is held under the auspices of the Presidency of the Republic.

Financial inclusion refers to the availability and use of all financial services to various groups of society in its institutions and individuals, especially the poor and marginalised, through the official channels of the financial sector, and to encourage these groups to manage their funds and savings properly as to avoid resorting to some channels and informal means that are not subject to a minimum of control and supervision.

The question posed by Daily News Egypt is, can the banking sector alone achieve financial inclusion in Egypt? Or does achieving this aim require other things?

Is the infrastructure of the banks, including the branches and ATMs and technological tools enable banks to achieve this goal?

A number of bankers who answered these questions stressed that the banking infrastructure is ready, but achieving this goal requires government and legislative support.


According to the CBE, there are only about 3,977 branches of all banks operating in the local market, employing 111,407 employees.

Moreover, there are 9,832 ATMs as estimated by the end of December 2016, used by 3.86 million credit cards and 12.08 million debit cards, as well as 8.648 million prepaid cards.

Deputy CBE Governor Mai Abol Naga said last week that the conference the CBE is set to hold for three days will be held in the first time in Egypt in cooperation with the Alliance for Financial Inclusion.

The chairperson of the Agriculture Bank of Egypt, Elsayed Elkosayer
(DNE Photo)

She explained that the conference will witness the presentation of the initiatives and efforts exerted by the member countries of the Arab region in the area of financial inclusion, stressing that it has become the focus of many governments and financial and regulatory bodies, as it has a positive impact on the economies of countries.

The chairperson of the Agriculture Bank of Egypt, Elsayed Elkosayer, said that there are only 11 to 12 million citizens who deal with banks in Egypt, out of about 54 million citizens who can deal with them. Consequently, a large number of citizens are still outside banking system. He added that banks and other financial institutions must strive to include them.

“Although the Central Bank of Egypt (CBE) is making a lot of efforts to achieve financial inclusion, through the initiatives launched from time to time, we hope that there will be quick passage for laws that integrate the informal economy to the formal economy and provide incentives for that,” he stressed.

Elkosayer also said that the banking sector, including the Agriculute Bank of Egypt, has the ability to achieve financial inclusion in Egypt. He stressed that achieving financial inclusion is not a job for banks alone, but other institutions can help in this regard, such as Egypt Post, NGOs specialised in microfinance, the Social Fund for Development, and specialised companies in electronic payment such as Fawry.

He added that dealing with banks is no longer limited to dealing through branches or even ATMs and points of sale (POS) but has now expanded to include dealing through mobile phones, which is in the hands of all citizens. This means it can be achieved easily, provided that citizens believe in the importance of this.

“This is not related to the readiness of the banking sector or other institutions to achieve financial inclusion, as it is related to the degree of conviction of the citizens themselves in the importance of conducting transactions through banks. This requires changing the culture of the people to make them understand that the banking sector is the safest place for savings and financial transactions,” he noted.

On the role of the bank in achieving financial inclusion, Elkosayer said that the Agricultural Bank of Egypt is the most capable of achieving financial inclusion in Egypt, where 50% of the Egyptian people have access to its services.

He pointed out that the bank has a branch network of 1,210 branches spread throughout the republic, equivalent to about 27% of the total number of units of the Egyptian banking system as a whole; thus, the bank has spread and access to places in the villages and areas with lower incomes that no other bank can access.

The number of the bank’s customers amounts to about 2 million customers, mostly farmers and micro-entrepreneurs. The number of farmers in Egypt is about 6 million, in addition to temporary agricultural labor estimated at 4 million, which means that 10 million people work in the agriculture sector. Each of the 10 million people supports between 4 and 5 individuals, which means the bank can extend its services to about 40 or 50% of the population of Egypt.

According to the chairperson of the United Bank, Ashraf Elkady, there is data from the World Bank to indicate that Egypt has the capacity to include 44 million citizens in the financial system and that it is qualified through a technological environment and strong infrastructure systems and laws to achieve financial inclusion.

He noted that the most important challenge facing opportunities to maximise the size of economic growth of Egypt is the lack of the spread of financial culture and awareness, especially among the younger generation, particularly women. This, he said, reduces the increase in the volume of investment and increases the size of consumption. It also increases the size of financial risks and hinders investment opportunities in health and educationm he added.

“The first application of financial inclusion is that every citizen in Egypt has a bank account, whether he has a known income or has no income at all. This is done by banks, post offices, mobile networks, civil society organisations, cooperative societies, or insurance companies,” he explained.

Elkady pointed out that there are serious steps taken by the Egyptian government and the CBE towards building the national database to expand the financial inclusion base through a number of initiatives, such as implementing a Takaful and Karama project to include the beneficiaries of this support programme, and the Small and Medium Enterprises Initiative, the Green Window Project, and the Financial Inclusion Initiative, which was led by the CBE in the second quarter (Q2) of this year.

He added that the announcement of the president of Egypt to establish the National Council for Payments came as another step in the implementation of mechanisms of financial inclusion. The council aims to reduce the use of banknotes outside the banking sector and integrate the largest number of citizens into the banking system.

Prominent banking expert and board member of the Suez Canal Bank and the Arab Sudanese Bank, Mohamed Abdul Aal

Mohamed Abdel Aal, a board member of the Suez Canal Bank said that, although the CBE is responsible for achieving the goal of financial inclusion, it alone will not be able to. He stressed that there must be a national strategy to achieve this goal, without which all efforts will be hard to press.

He added that the most important challenge that can stand before the CBE in achieving financial inclusion is how to coordinate and balance the initiative’s requirements as a strategic goal of the state and the three very important and related elements of financial stability, integrity, and protection to consumers or customers of banks.

He pointed out that there is a great correlation between financial inclusion and financial stability, and each affects the other. “Achieving financial inclusion, which requires the introduction of all categories of society in the financial sector, may contradict the requirements of financial integrity in some cases, as some of these groups refuse to enter the sector so as not to be subject to taxes or be subject to law,” he explained.

He added that achieving financial inclusion by opening an account for every citizen in banks may also conflict with the determinants of compliance and controls set by the CBE with regard to the rules of “know your customer” and those of money laundering and terrorism financing.


“Access to the best situation in which these three elements are balanced financial stability, financial integrity, and financial protection with the achievement of financial inclusion is the task of the CBE during this period,” according to Abdel Aal.

He stressed the difficulty of achieving financial stability and its continuation without achieving financial inclusion, pointing out that it is inconceivable that more than 60% of the volume of economic activity in Egypt is done outside the official framework and away from official banking transactions.

According to Abdel Aal, financial inclusion also helps to improve financial conditions and raise citizens’ standard of living, as it works more to support the family sector. This, in addition to the introduction of small professions in the financial system and the introduction of these segments to the financial community and banking, in turn helps achieve financial stability.

Abdel Aal called on the CBE to have some flexibility in the standards and controls related to opening accounts in banks so that it can implement the obligation requirements imposed on them, and at the same time does not adversely affect access to financial services for low-income earners.

He stressed that consumer protection and education is one of the most important priorities that must be taken into account to achieve financial inclusion in Egypt, which requires the establishment of strict rules and controls to achieve it.

“The transition to digital payments and remittances at the national level and the end of the transaction in cash should be developed, encouraged and implemented in order to ensure rapid and secure payments, efficiently, transparently and at low cost, all of which are important elements in providing a good environment for financial inclusion,” he said.

He added the government should also enact legislation that would help to achieve financial inclusion and push the informal sector to switch from cash-based transactions to digital transactions.

According to Abdel Aal, it is also necessary for every citizen who is qualified to deal with banks to have a bank account, which has special encouraging advantages, whether by opening such accounts without expenses and without a minimum and not to abide by the profession or job or whether the citizen is literate or not, or through offering loans and other matters of interest to citizens with special facilities.

“The CBE and the regulatory bodies and the government in general should work to achieve the balance required and important between financial inclusion and financial stability and financial integrity and financial protection and take all necessary measures to achieve this,” he stressed.

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