Shell invests in Mina West gas development in Egyptian Mediterranean Sea    Egypt's FM highlights 'soft power' in Mali meeting with alumni    Egypt's foreign minister opens business forum in Niger, targets new partnerships    Egypt's FM delivers Al-Sisi message to Niger's leader, seeks deeper security ties    Rafah Crossing 'never been closed for one day' from Egypt: PM    Egypt will keep pushing for Gaza peace, aid: PM    Remittances from Egyptians abroad surge 70% YoY in July–May: CBE    Sudan's ambassador to Egypt holds reconstruction talks on with Arab League    Egypt's current account gap narrows, but overall BoP records deficit    Al-Sisi urges accelerated oil, gas discoveries, lower import bill    Egypt hosts international neurosurgery conference to drive medical innovation    Egypt's EDA discusses Johnson & Johnson's plans to expand investment in local pharmaceutical sector    I won't trade my identity to please market: Douzi    Sisi calls for boosting oil & gas investment to ease import burden    EGX to close Thursday for July 23 Revolution holiday    Egypt, Senegal sign pharma MoU to unify regulatory standards    Egyptian Drug Authority discusses plans for joint pharmaceutical plant in Zambia    Two militants killed in foiled plot to revive 'Hasm' operations: Interior ministry    Egypt, Somalia discuss closer environmental cooperation    Egypt foils terrorist plot, kills two militants linked to Hasm group    Giza Pyramids' interior lighting updated with new LED system    Egypt's EHA, Huawei discuss enhanced digital health    Foreign, housing ministers discuss Egypt's role in African development push    Korea Culture Week in Egypt to blend K-Pop with traditional arts    Egypt reveals heritage e-training portal    Three ancient rock-cut tombs discovered in Aswan    Sisi launches new support initiative for families of war, terrorism victims    Egypt expands e-ticketing to 110 heritage sites, adds self-service kiosks at Saqqara    Egypt's Irrigation Minister urges scientific cooperation to tackle water scarcity    Palm Hills Squash Open debuts with 48 international stars, $250,000 prize pool    Egypt's Democratic Generation Party Evaluates 84 Candidates Ahead of Parliamentary Vote    On Sport to broadcast Pan Arab Golf Championship for Juniors and Ladies in Egypt    Golf Festival in Cairo to mark Arab Golf Federation's 50th anniversary    Germany among EU's priciest labour markets – official data    Paris Olympic gold '24 medals hit record value    A minute of silence for Egyptian sports    Russia says it's in sync with US, China, Pakistan on Taliban    It's a bit frustrating to draw at home: Real Madrid keeper after Villarreal game    Shoukry reviews with Guterres Egypt's efforts to achieve SDGs, promote human rights    Sudan says countries must cooperate on vaccines    Johnson & Johnson: Second shot boosts antibodies and protection against COVID-19    Egypt to tax bloggers, YouTubers    Egypt's FM asserts importance of stability in Libya, holding elections as scheduled    We mustn't lose touch: Muller after Bayern win in Bundesliga    Egypt records 36 new deaths from Covid-19, highest since mid June    Egypt sells $3 bln US-dollar dominated eurobonds    Gamal Hanafy's ceramic exhibition at Gezira Arts Centre is a must go    Italian Institute Director Davide Scalmani presents activities of the Cairo Institute for ITALIANA.IT platform    







Thank you for reporting!
This image will be automatically disabled when it gets reported by several people.



Underserved potential
Published in Al-Ahram Weekly on 11 - 02 - 2010

ONE concise, yet informative, report on the microfinance industry in Egypt is the recently issued country profile by the Microfinance Network of Arab Countries, "Sanabel", a regional network that works closely with 17 members in Egypt, including the Alexandria Businessmen's Association, Banque du Caire, the Egyptian Society for Small Enterprise Development, along with a handful of other businessmen's associations and foundations.
Intended to offer donors, investors, researchers and other industry stakeholders an overview of latest trends of the industry, the report is also useful in making comparisons between Egypt and other Arab countries in the region. Sherine Nasr reviews the report
The report falls within the broad activities of the Citi Network Strengthening Programme, a three-year $11.2 million international grant programme funded by the Citi Foundation and tailored to advance the integration of microfinance into mainstream economic activity in developing countries.
According to Sanabel's report, Egypt is the largest potential microfinance market in the Arab region. In terms of its existing portfolio, Egypt ranks second to Morocco. "By end of 2008, the Egyptian market consisted of about 1.3 million active clients," the report indicated.
According to estimates by United States Agency for International Development (USAID), demand for microfinance is as high as $20 million; however, market penetration as of the end of 2008 is only eight per cent, which implies a market gap of 92 per cent. "There are almost 16 million potential microfinance clients in the market."
"While the potential size of the market for microfinance does not necessarily represent the real demand, this penetration rate demonstrates that the Egyptian market is currently underserved," indicated the report.
Some parts of the country are better served than others. According to the USAID Microfinance Programme (MAP), 48 per cent of active clients are in Upper Egypt while 31 per cent are in Lower Egypt. "The highest penetration levels, however, are found in the frontier governorates followed by the urban governorates," said the report.
The Egyptian market maintains very low Portfolio at Risk levels compared to its regional and global peers, reflecting strong portfolio quality.
In 2004, the Central Bank of Egypt led a project for developing the National Strategy for Microfinance in Egypt with the support of USAID, the United Nations Development Programme and the banking group of KFW, dedicated to encouraging sustainable improvement in different economic fields, including the small and medium enterprise (SME) sector. The aim was to develop, within five years, a microfinance industry that would allow for more sustainable and diverse financial services to that sector. Many developments have occurred since then, and a new law for microfinance is soon to be enacted.
Although there have been few studies assessing the impact of microfinance in Egypt, some impact tracking studies were conducted under USAID-funded projects between 2001-04.
On business growth and development for SME clients, it was reported that 30 per cent of clients purchased new machines and the cumulative value of loans led to a positive change in the value of the enterprise and increases in weekly sale volume.
As for household standard of living, a strong relation between accessibility to loans and the ability to make improvements in the home was reported, although no significant trends of further enrolment of children in schools or transferring savings to banks were observed.
On the employment track, given the economic recession experienced in Egypt, there was a trend towards employment preservation rather than creation, although an average increase of 43 hours of temporary employment per enterprise was reported.
Efforts to measure the impact of microfinance have been so far donor-led initiatives. Recently, Sanabel introduced the Social Performance Management (SPM) concept in the Middle East and North Africa region. SPM received a warm welcome by microfinance institutions in Egypt, many of which have developed initial action plans to integrate it into their present systems.


Clic here to read the story from its source.