CAIRO – 29 February 2024: The Egyptian Union for Funding Medium, Small, and Micro Enterprises organized Tuesday a forum to display figures on microfinance in the country as well as the results of a study carried out by the National Center for Social Criminological Center.
The study consisted of 95 questions and included 3,500 respondents. Its time frame was between November 2020 and January 2021, and between August 2022 and October 2022. The screening questions showed that 71.2 percent of microfinance recipients are women.
The outstanding fact is that 96.8 percent of enterprises achieved profits. Of those, 69.2 percent were reinvested in growing the business, while 57 percent were used to buy inputs. On the other hand, 3.2 percent of customers stumbled while 59.8 percent made savings. Further, 70.7 percent provided better healthcare to their families, while 34.8 percent renovated their homes.
Some beneficiaries would ask for more credit during certain seasons where demand rises, such as religious holidays and the beginning of the academic year. As for the categories that achieve more profits, they are males, rural individuals, Upper Egyptians, and university graduates.
Egypt Today spoke to the head of one of the microfinance associations operating in Upper Egypt. He said that the value of loans ranged between LE10,000 and LE240,000, and that the minimum and maximum payback durations are six months and 36 months, respectively.
As for the interest rate, it reaches up to 33 percent as the association has to collect the current rate set by the Central Bank of Egypt (CBE) – which is 22.25 percent – in addition to administrative fees paid to governmental entities, as well as cover the operation costs. The projects funded are typically agricultural processing, workshops, handicrafts, and convenience shops.
The union's chairwoman Mona Zulfacar stated that the size of microfinance had amounted to LE78.3 billion disbursed to 4.7 million customers by June 2023.
On the same level, Head of the Central Sector for Microfinance at the Micro, Small, Medium Enterprise Development Agency (MSMEDA) Nevine Badr El Din pointed out that the targeted figure of customers is 12.5 million. She added that funding entities are keen on measuring the impact to better tailor their products.
Chairman of the Financial Regulatory Authority (FRA) Mohamed Farid Saleh noted that technology and insurance must also be provided and not just credit, in addition to teaching customer how to develop markets. He clarified that accumulated gradual savings were key to achieve growth and development, and that the life of beneficiaries could change on both the short and medium terms.
The official stressed that supervision was essential to ensure that microfinance entities were not exploiting the financial needs of beneficiaries. With regard to the steps taken by the authority to boost the sector, it published on its website a manual on how to measure market needs and customer behavior.
Saleh equally urged microfinance associations to do responsible pricing, and ensure the existence of a real business before approving the loan by asking for more documents.
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