In a bid to instil the principle of financial inclusion more widely in Egypt, the Central Bank of Egypt (CBE) held the "Arab week for financial inclusion" that aims to bring a larger number of individuals and companies under the umbrella of the banking system from 27 April to 4 May. The CBE had earlier held a meeting in mid-March, in which it was decided to designate 27 April every year as the “Arab Day for Financial Inclusion”, according to the Council of Arab Central Bank Governors. The CBE directed the country's banks to reach out to the governorates, social clubs, universities and underprivileged areas during the week and present banking products that could suit these segments of customers. It directed them to find ways to provide bank accounts for new customers without requiring a minimum limit or fees for opening the accounts. Various banks took part in the initiative, holding different activities throughout the week to raise people's awareness about financial inclusion. Financial inclusion aims to ensure that all individuals or entities in society can find financial products suitable for their needs at reasonable prices and through properly regulated channels, according to the CBE. These financial products include saving accounts, current accounts, insurance, financing, and credit, among other products and services. Egypt's currently banked population is small, with only 10 to 13 per cent of the population having bank accounts, Mokhtar Al-Sherif, an economics expert said. The country has a population of 92 million. Al-Sherif said that the economy in Egypt was largely cash-based and depended on cash transactions, a model that many countries around the world have abandoned. These have turned to electronic transactions instead, which eliminate the human factor that can cause mistakes or open the door to corruption. “A larger banking system would be more efficient and spur economic development. Egypt should work on increasing the percentage of the banked population to 50 per cent,” Al-Sherif told Al-Ahram Weekly. However, he said there were obstacles standing in the way of greater financial inclusion. There were not enough bank branches operating in the country and these would need to be increased in number, he said. A second challenge was the distrust that could exist between people and the banks. Al-Sherif said the reason for this went back to a traditional culture that made people wary of dealing with banks, fearing the possibly high cost of services. Figures released by the CBE indicate that the lack of geographical spread of bank branches and ATMs might hinder financial inclusion. They show that the total number of branches of all banks operating in the local market is 4,000, employing some 111,400 people. There were about 9,832 ATMs in Egypt at the end of December 2016. Al-Sherif said that such obstacles needed to be addressed in order to achieve greater financial inclusion. One way in which this could be done was by lowering the costs of banking services as well as by encouraging people to join the banking system through raising their awareness of it, he said. He said it was important to benefit from the successful experiences of other countries in this regard, especially India which plans to include 50 per cent of its population in the banking system by 2020. “Egypt should expedite the process of financial inclusion, though this will need time because it involves changing culture and behaviour,” Al-Sherif said. He added that the CBE's initiative was a step in the right direction, though it needed to be expanded. “We lack appropriate information about the various financial services we can get,” commented Amal Ismail, a 42-year-old housewife in Cairo. Ismail told the Weekly that she did not know enough about the different forms and benefits of the savings accounts on offer at the banks, and consequently she had been saving outside the banking system. “I feel I have been missing out and think that the banks should reach out more to people and explain their products,” she said. According to CBE figures, banks operating in the Egyptian market had issued 3.86 million credit cards, 12.08 million debit cards, and about 8.648 million prepaid cards by the end of 2016. The CBE said that greater financial inclusion was important for social and financial stability as well as being a pillar of economic development. It offered financial services to different segments of society through regulated channels, which in turn helped these segments to avoid unregulated sources not adhering to any form of supervision, the CBE said. One way of boosting financial inclusion was through expanding the network of bank branches that offer financial services and increasing the number of ATMs, it said. Another way is developing payment systems through expanding payments by mobile phones. The CBE also said there was a need to set up databases recording the credit history of individuals and businesses in Egypt.
