Egypt Conducts Study on Microfinance, Revealing Key Insights

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The Egyptian Union for Funding Medium, Small, and Micro Enterprises recently organized a forum to highlight the state of microfinance in Egypt, presenting findings from a comprehensive study conducted by the National Center for Social Criminological Center. The study, which surveyed 3,500 respondents between November 2020 and January 2021, and between August 2022 and October 2022, revealed significant insights into the impact of microfinance in the country.

One notable finding from the study is that 71.2 percent of microfinance recipients are women, reflecting the growing role of women in entrepreneurship and economic development. Moreover, an impressive 96.8 percent of enterprises supported by microfinance reported profits, with a substantial portion being reinvested in business growth and development. The study also highlighted that microfinance recipients utilized their profits to improve healthcare for their families and renovate their homes, contributing to overall well-being and standard of living.

Certain trends emerged regarding the demand for microfinance, with some beneficiaries seeking additional credit during peak seasons such as religious holidays and the start of the academic year. The study also identified specific demographics that achieved higher profits, including males, rural individuals, Upper Egyptians, and university graduates.

The forum shed light on the operational aspects of microfinance, with loans ranging from LE10,000 to LE240,000 and payback durations extending from six to 36 months. Interest rates, which can reach up to 33 percent, encompass the Central Bank of Egypt’s rate and administrative fees.

Mona Zulfacar, the chairwoman of the union, emphasized the significant scale of microfinance in Egypt, with LE78.3 billion disbursed to 4.7 million customers by June 2023. Nevine Badr El Din, Head of the Central Sector for Microfinance at the Micro, Small, Medium Enterprise Development Agency (MSMEDA), outlined a target of 12.5 million customers and highlighted the importance of measuring the impact of microfinance to tailor products effectively.

Mohamed Farid Saleh, Chairman of the Financial Regulatory Authority (FRA), stressed the importance of providing not only credit but also technology, insurance, and market development guidance to microfinance beneficiaries. He emphasized responsible pricing and rigorous assessment of business viability before approving loans. The FRA also published a manual on measuring market needs and customer behavior to support microfinance entities.

Overall, the forum underscored the transformative potential of microfinance in Egypt while emphasizing the need for responsible practices, effective supervision, and continued support to ensure sustainable growth and development in the sector.