Law controlling work of microfinance companies encourages banks to finance them: Ghada Waly

The CBE's initiative supports these bodies before international financing institutions, young people and women are the largest benefiters

Minister of Social Solidarity Ghada Waly said that the issuance of Law No. 141 of year 2014, which controls the activity of associations working in the field of microfinance, will encourage banks lend them in order to help them expand their activities.
Waly called upon banks to help these institutions reach areas they cannot otherwise reach, especially in remote villages and areas in Egypt, stressing that the support of banks to these institutions greatly supports them before international financing institutions and helps them obtain financing from them. She said this in the conference held by the Central Bank of Egypt (CBE) last week to announce launching the microfinance initiative.
During the conference, Waly revealed that in 2004 she was assigned to prepare the first national micro-financing strategy in coordination with the CBE and the Egyptian Banking Institute (EBI). She noted that the strategy was launched in 2005, after a year of study and observing international experiences; however, this strategy was not utilised the way it was hoped.
According to Waly, the CBE's initiative is a step to encourage banks to deal with associations working in microfinance, noting that companies working in this field offer about a third of the financing, while associations offer the rest.
She pointed out that the timing of launching the initiative is important, especially with the goal to achieve financial inclusion and includes new segments of clients to deal with the banking system. The initiative is also important in providing financing opportunities to young people, and hence creating jobs for them and eliminating unemployment.
"Young people and women will benefit the most from this initiative. Banks must use the immense need for this kind of financing, especially since the rate of committing to repay microfinance loans is high," Waly said.
She added that it is important to work on turning microenterprises into small and medium enterprises (SMEs) through offering financial and technical support to owners of these projects. She also stressed that the initiative promotes the principles of social justice, as it allows any citizen to obtain financing, regardless of their conditions, location, or class.
"The only mechanism to get rid of poverty is work, and work needs financing, and the CBE's initiative provides this financing," said Waly.
The Egyptian Center for Economic Studies was assigned to conduct an extensive report of the impact of obtaining micro-financing on the conditions of citizens, especially in terms of education and health.