Egypt’s Financial Regulatory Authority (FRA) has amended the law regulating microfinance activities to include small- and medium-sized enterprises (SMEs), according to FRA Chairperson Mohamed Omran.
Omran said that through the Law No. 201 of 2020, the authority developed an integrated regulation that allows non-traditional financing for SMEs.
He also welcomed the amendment of Law No 141 of 2014, regulating microfinance activity. This would subject the SME financing to an integrated regulation, and include it under a control umbrella aimed at achieving stability and transparency among dealers in this activity.
Omran added that the amendments are expected to increase the ability of the target SME groups, and will help them gain access to various means of financing. This would take place by using the best international practices in organising the work of funding providers, reducing the risks they are exposed to, and encouraging them to expand this activity.
It would also protect the rights of those receiving funding by placing the institutions that provide them under a tight supervisory system.
He added that the law included organising the activity of financing micro, small, and medium enterprises (MSMEs) in a manner that guarantees the interests of the parties concerned.
It would also organise the overseeing of companies, associations and civil institutions that provide funding, to ensure efficiency, transparency and manage the risks that they may be exposed to.
He said that Egypt has witnessed a rapid growth in microfinance activity over the past six years, with the number of companies, associations and civil institutions practicing these activities reaching about 980 entities.
There are also now 2,343 branches involved in this activity spread across Egypt, with microfinance activities boasting remarkable results. The sector has seen the funding granted to micro-projects rise from about EGP 2bn at the time of the law’s promulgation at the end of 2014, to EGP 17.5bn at the end of August 2020.
Omran said that the total number of projects which have benefited from microfinance currently stands at about 3.11 million projects. These have contributed significantly to financial inclusion, and the inclusion of new groups that had not previously dealt with financial institutions.