The Financial Regulatory Authority (FRA) has revealed that the volume of microfinance in the Egyptian market reached about EGP 22.53bn in the second quarter (Q2) of 2021, compared to EGP 17.22bn in Q2 of 2020.
According to the authority, microfinance means any financing for economic, productive, service, or commercial purposes in the fields and at the value determined by FRA’s board of directors.
Microfinance is a major means of encouraging the participation of low-income groups in economic activity. Access to various financing means for individuals and owners of micro-enterprises contributes to reducing unemployment, contributing to improving the incomes of the poorest families, and having a positive impact on increasing the volume of investment and employment in the national economy.
Microfinance is characterized, according to the experiences prevailing in various countries of the world, depends on personal and direct contact between the financing entity and customers, and on the provision of amounts or services of limited value, which requires the presence of organized entities for personal communication with individuals, entities, and micro-enterprises.
It is noteworthy that on 13 November 2014, the Presidential Decree of Law 141 of 2014 regulating microfinance activity was published in the Official Gazette.
Microfinance in Egypt focuses on agricultural fields and related activities, including agricultural production or manufacturing, animal and bird breeding, fish farms, fishing, and other activities. It also includes the productive, industrial, and handicraft fields, and includes all areas of production and manufacturing in the field of textiles, knitting, furniture, food products, leather, paper, wood, metal, plastic, glass, office tools, devices, machines and equipment, handicrafts of all kinds, waste recycling, and other activities or projects in the productive and industrial fields and craftsmanship.
It also includes service areas, including contracting, finishing, transportation, packaging, storage, maintenance, repair, restaurants, nutrition, sports clothing, games, entertainment, computer services, information and communication systems, health and medical services, educational and training services, tourism and travel services, photography, artwork, advertising, photography, printing, binding, professional services, cleaning services, ironing clothes, and other activities or projects in the service fields.
It also includes the commercial fields, and includes all activities or projects in the fields of wholesale and retail trade, procurement, brokerage and distribution.
In the same context, the FRA revealed that the Tasaheel Microfinance Company occupied the first place among companies and providers of this financing, with EGP 4.578bn, accounting for 21.82% of the market.
Tanmeyah came in second place with a financing amount of EGP 3.208bn and a share of 15.29% of the activity, followed by the Alexandria Business Association with a market share of 10.52% and EGP 2.207bn finance.
Reefy came in fourth place with financing of EGP 1.155bn and a market share of 5.50%, followed by El Mobadara with total finance of EGP 997.607m and a market share of 4.75%.
Aman for Microfinance came in sixth place with EGP 925.7m finance and a market share of 4.41%, followed by the Dakahlya Businessmen Association For Community Development (DBACD) with total finance of EGP 865.173m and a market share of 4.12%.
In eighth place came Tamweely Microfinance with funds of EGP 858.975m and a market share of 4.09%, followed by the Lead Foundation with funds of EGP 733.495m and a market share of 3.50%. Al Tadamun Microfinance Foundation came in tenth place with EGP 612.663m worth funding and a market share of 2.92%.
According to the authority, the number of beneficiaries of the nano-finance activity, which is provided through microfinance companies, registered about 5524 beneficiaries, with a financing value of EGP 1.049m in Q1 of 2021.
The nano-finance product reaches a maximum EGP 3,000 per person, with a repayment period not exceeding 90 days, for the purpose of covering the needs of groups most in need of financial services.
According to the authority, the commercial activity accounted for 42.71% of the balances of nano loans, then the productive activity by 32.55%, then the commercial activity by 24.3%, and then the agricultural activity by 0.53%.
In the same context, the authority revealed that the number of clients benefiting from microfinance activity, who disbursed financing through electronic payment systems, amounted to about 63,096 clients, with a financing value of EGP 683.5m in Q1 of 2021.
On the other hand, the number of customers who paid financing through electronic payment systems reached 613,500 customers, with a value of EGP 930.371m.
In the same context, FRA indicated that microfinance companies and associations pumped about EGP 2.753bn to about 192,500 customers, within the “Decent Life” initiative, in Q1 of 2021. The authority’s report revealed that the companies provided the largest proportion of the funds, amounting to EGP 2.029bn to about 123,300 beneficiaries, with a market share of 73.3%.
In the second place was the “Class A” civil society organisations, with EGP 635.7m in financing for about 61,400 customers, and a market share of 23.1%, followed by the “Class B” civil society organisations with funds of EGP 83.240m for 7,870 clients, then “Class C” organisations with EGP 5.1m funding for 395 clients.