CAIRO: The Association for the Development and Enhancement of Women (ADEW) embarked on its operations over 20 years ago in Mainsheet Nasser, at that time one of the largest unrecognized illegal settlements in Egypt. Field experience and academic research indicated that it was particularly difficult for women who head their own households to access credit and employment, and research conducted by ADEW showed that there were no lending programs that considered the conditions of these women. Within the microfinance framework, women are afforded the opportunity to start small businesses in and around their homes so they are not compelled to leave their children at home alone. Examples of such businesses include selling vegetables, other groceries, self-made clothing items or accessories. Women are thus able to provide sustenance, education and medical care for their children, providing them with the opportunity for improved social and professional standing. In Egypt, microfinance loans are offered to groups of at least five women without the need for collateral or guarantees, provided that each of the women has committed to working on a specific project. In order to obtain loans, women should have either an existing business or ideas for an intended one. Field research is then carried out by specialized researchers depending on the nature of each project to ensure they are profitable and suitable for the area in which they are established. Quite well known in the world of microfinance globally but less so outside it, the loan repayment rate among women who are recipients of these loans is stunningly high - 99 percent in the case of Egypt. This is so even though interest rates in microfinance are unusually high compared with those of conventional loans, as recipients typically have no credit history or even bank accounts. Furthermore, women who receive loans often succeed in establishing and expanding private projects. Unfortunately, however, there are obstacles facing the microfinance sector in Egypt. For example, there are no specific microfinance laws in Egypt comparable to other countries in the Middle East, such as Morocco, which institutionalized legal frameworks for microfinancing NGOs within which they could operate. There is also a lack of information about the program and as a result, about 80 percent of the Egyptian population is not aware of the lending processes currently in place, or the opportunities available to them. A gender quota is much needed because these loan programs, while aimed at both genders, are granted mostly to men because many women lack identity cards or other official documents. In addition, there is very little collaboration between NGOs or other institutions regarding loans. For Egypt to overcome these obstacles and ensure that microfinancing is made available to more people in need, institutional coordination is required. Commercial banks with no microfinance divisions might consider providing NGOs with special loans that would allow these NGOs to identify microfinance customers themselves, broadening the reach of credit to the poor while also increasing the margins of lending institutions. Diversification of microfinance services to include group loans, training, technical support and feasibility studies, and lifting restrictions on lending activities beyond conventional loans, could also increase the scope and benefit of initial microfinance successes. The establishment of a specialized information centre to document borrowers' credit history, and holding training courses for those working in microfinance programs, would also help improve the system. For example, ADEW is calling for coordination among practitioners and the Social Fund for Development, a joint initiative between the Egyptian government and the United Nations Development Program, which designs development programs and provides funding for various development initiatives. Lending is not a function of banks alone. NGOs working in microfinance are already playing a principal role in the development process in Egypt through their extensive knowledge of remote and marginalized areas not targeted by the commercial banking sector. NGOs like ADEW are therefore in a unique position to reach marginalized beneficiaries and promote awareness about lending processes to individuals otherwise out of reach. The close relationship with marginalized communities as well as the cooperation with bilateral and multilateral donors makes NGOs a natural actor in lending processes. While these loans will not alleviate Egypt's poverty completely, or bring about imminent economic development, they are an innovative means of survival and sustainable employment for many Egyptians and can play an important role in Egypt's overall development. Dr Iman Bibarsis chairperson of the Association for the Development and Enhancement of Women (ADEW, www.adew.org/adew) and an international gender and development expert. This article was written for the Common Ground News Service (CGNews).
