MSMEs account for 75% of ABE’s loans portfolio by end October: chairperson

Hossam Mounir
11 Min Read
El-Sayed El-Kosayer, president of the Industrial Development and Workers Bank of Egypt (Photo from Al-Borsa News)

Micro, Small, and Medium Enterprises (MSMEs) accounted for some 75% of the Agricultural Bank of Egypt (ABE) by the end of October 2018, according to the bank’s Chairperson Elsayed Elkosayer.

He explained that the volume of loans granted to these projects reached about EGP 6.5bn, stressing that the bank’s management has given special importance to the expansion of these projects, because of their role in creating job opportunities and to reduce the problem of unemployment, as well as to develop the economy, achieve the objectives of financial inclusion, and integrate into the formal sector.

Elkosayer pointed out that the bank injected funds worth EGP 605m to 1,314 clients of these projects within the initiative of the Central Bank of Egypt (CBE).

Furthermore, he added that ABE has entered into many agreements with the Micro, Small, and Medium Enterprises Development Agency (MSMEDA) to support and finance small projects, especially agricultural projects and livestock development, the most recent of which were in October, worth EGP 50m.

“The bank has adopted a new policy to deal with bad debts based on the each case’s individual study, after which it takes the appropriate decision, starting from debts scheduling to even adjustments commensurate with the circumstances of defaulting customers and their ability to repay,” he added.

the ban’s chairperson explained that the bank’s new policy convinced the faltering customer of the concept of partnership with the bank, and established the ABE’s keenness towards their interests, providing them with all forms of support in order to return to production and profitability which enabled customers to meet their obligations and pay the debts owed to the bank. This contributed to fulfilling a remarkable growth in the settlement of bad debts.

During the period from 28 June to 30 November 2018, the ABE processed debts amounting to EGP 380m for over 5,000 defaulting clients, as part of the initiative launched by the CBE in June. Those customers paid EGP 196m and were exempted from EGP 184m.

“From April 2016 to November 2018, the ABE succeeded in dealing with outstanding debts of over EGP 2bn of 32,00 clients. They paid EGP 1.26bn and exempted them from EGP 750m,” Elkosayer said.

He pointed out that the volume of the portfolio of deposits in the Islamic transactions’ activity until the end of November 2018 reached EGP 966m, up from EGP 907m in 30 November 2017. The Islamic funding employment portfolio scored EGP 831m against EGP 627m.

The ABE contributes towards the capital of some companies in the fields of agricultural development, mechanisation, insurance and banks. It also invests in investment fund securities, housing bonds and government bonds in addition to its contribution towards its investment fund’s securities.

The bank also owns the Egyptian Company for Agricultural and Rural Development, the main arm of the bank in all fields of agricultural development, and three investment funds, one of which is Islamic in partnership with Banque du Caire.

Moreover, Elkosayer added that the book value of the bank’s securities portfolio was about EGP 2.201bn at the end of June 2018 against EGP 2.112bn in June 2017, up by EGP 89m or 4.2%.

Elkosayer also pointed out that the ABE had an important role in marketing the local wheat crop in 2018, thanks to the proper preparations which preceded the supply season , through the readiness of the silos and collection centres.

Regarding the bank’s role in supporting the national project to revive beef, he said that the bank injected EGP 479m to 3,564 clients to raise 35,000 cattle.

In November 2018, the bank signed a cooperation protocol with Misr El-Khair Company for the rehabilitation and financing of livestock production farms at maximum capacity.

In a different context, Elkosayer said that the bank has signed a cooperation agreement with the Rabo International Advisory Services (RIAS) of the Dutch Rabobank and the German SAND fund to implement the bank’s technical and restructuring project in its first phase.

The agreement includes providing technical support to the ABE in the development of human resources, operations, its strategic plan and product portfolio, according to a timetable extending over a year, during which all the objectives pursued by the ABE are achieved according to specific outputs with clear timetables, Elkosayer pointed out.

“The ABE owns 1,210 branches, including 192 branches in cities, and 1,018 in villages, catering to the comprehensive banking services of over 3 million clients. The bank aims to reach 7 million clients in the coming period,” he added.

Elkosayer explained that the bank is currently witnessing an important phase of comprehensive restructuring, with the strong support of the CBE. The process includes developing the IT system; restructuring human resources and capacity building; improving the efficiency of asset management through the development of product packages to meet the needs of all segments of customers; the diversification of distribution channels; the provision of electronic services; handling irregular debts, and providing all that supports the role of the bank in achieving rural and agricultural development.

The most important projects currently underway are the technological infrastructure development, in cooperation with one of the specialised bodies with extensive experience at the international level in the field of information technology development, according to Elkosayer.

The project also aims to establish a data centre, with the implementation of a sophisticated core banking system, in accordance with best practices of information security systems, and anti-money laundering.

The first phase is to be implemented within 12 months and include preparing the specification and prospectus for the data centre, CRM, ERP, and ALM, he explained. The current status assessment report was finalised, as well as the target operating model. The bank also completed the prospectus and will put them up soon to implement the project.

The ABE would not have achieved all this without the support of the CBE, such as an EGP 10bn deposit on several tranches in the last two years, to support the ABE’s capital base, thus improving its capital adequacy standard, stressed Elkosayer.

Over and above, he pointed out that this support from the CBE confirms its willingness to continue along the positive role of the ABE in supporting the state’s economic development efforts and suppor its role as an ideal gateway to achieve financial inclusion by integrating customers into various sectors of the economy.

“The ABE issued, until the end of November 2018, about 174,000 Aman certificates worth EGP 186m, leading the banks issuing it,” he said.

Moreover, he pointed out that 56 clients have won in the first raffle in June 2018, while 40 clients won in another raffle in September 2018.

“The ATM network of the ABE has been linked to the Egyptian Banks Company, which enables other banks’ cards holders use the ABE’s ATM network,” Elkosayer said.

Elkosayer pointed out that a large number of ATMs have been deployed, especially in Upper Egypt and the delta, with plans to continue deploying more machines to cover all of the bank’s branches in the coming three years.

What’s more, he declared that the bank has increased its cooperation with VISA to enable it to fulfil more tasks, such as issuance bank, collection bank, debit cards, prepaid cards, credit cards, deployment of ATM networks both inside and outside the bank’s branches, spreading POS machines, and training 300 bank employees.

At the same time, he noted that the bank completed the project for issuing government cards, in cooperation with VISA and e-Finance. It also coordinated with e-Finance to contract on the first accounting unit during the first quarter of 2019.

Similarly, he added that the bank also transferred its electronic cards, from magnetic cards to smart cards, in cooperation with VISA and NI. The bank offered a tender to supply 25,000 smart chip cards to modernise existing cards and issue more.

The ABE had entered into a contract with Fawry in March 2014 to provide the services of bill payments and collection through 200 POS at the bank’s branches, which later increased to 341 POS in the fiscal year 2017/18. Collections have since reached EGP 2bn.

“The ABE provides the electronic collection services for tax, customs, and other entitlements of government services, in cooperation with e-Finance. The service is available in 213 branches of the bank.”

Finally, Elkosayer said that the bank’s branches received 2.5m farmer smart cars to offer better services to Egyptian farmers within the framework of cooperation with the ministry of agriculture and land reclamation to automate the agricultural tenure card, in view of the cooperation protocol between the ministry of agriculture, the ABE, and e-Finance.

Share This Article
Leave a comment