Success and Challenges of Microfinance in Egypt
Microfinance in Egypt dates back to 1990 when First Cairo Bank launched microfinance services for individuals and small businesses. Since then, this type of financing has expanded throughout Egypt. Today, it has become one of the most important financial tools available to the poor and economically disadvantaged.
Rural people in Egypt are the most beneficiaries of microfinance, as these services provide opportunities for male and female farmers to improve their livelihoods and enhance agricultural production. In rural areas, finance institutions provide small loans at low-interest rates to finance small and medium projects, such as raising poultry, livestock, fish, and growing vegetables and fruits. This type of financing is particularly beneficial for rural women, as they can use these loans to start a small business and increase their income.
The limit that microfinance gives in Egypt to the poor, especially youth, are among the most important characteristics that distinguish these services. Loans are offered at a value of up to 50,000 Egyptian pounds, equivalent to $1,600, for a period of up to 5 years, with interest rates ranging from 5-10%. These loans assist the poor and young people to start their own small projects and achieve their dreams in addition to enhancing job opportunities and productivity in the country.
The Egyptian government perfectly adopts microfinance policies, as several initiatives have been launched to attract internal and external financing to small and medium financial corporations and improve the infrastructure for financial services. Hence, the government is working to develop and strengthen microfinance services and provide the necessary support to small and medium financial institutions. The state also seeks to improve the business environment, increase financial awareness among the poor and medium groups, and provide technical support and appropriate training for microfinance beneficiaries.
The institutions providing microfinance in Egypt are represented by many government and private agencies, including the Agricultural Bank of Egypt, the National Bank of Egypt, and the Industrial Development Bank. There are also many small and medium enterprises that specialize in providing microfinance, such as Tahya Misr Fund, the Nile Bank, and many others.
One of the famous models of microfinance in Egypt is Tahya Misr Fund. It is part of a governmental initiative aimed at promoting economic and social development in Egypt. It aims at providing microfinance, training, and technical support to small and medium enterprises in the country. Tahya Misr Fund is characterized by its speedy procedures and easy access to financing. Moreover, it provides financing with low interest and flexibility in repayment as well as technical support, training, and guidance to beneficiary projects, enabling them to improve their performance and growth. The Egyptian Government is working to develop Tahya Misr Fund and other similar programs and initiatives to increase the number of microfinance beneficiaries and improve the quality of services provided to them, with the aim of promoting economic and social growth in the country.
Ibrahim is grateful for micro-credit loans to start a business.
It is worth noting that microfinance in Egypt suffers from some challenges, including a lack of financial awareness and knowledge among the poor and youth about how to get financed and manage projects. Therefore, the Egyptian government and financial institutions are working to provide training and technical support to microfinance beneficiaries to enrich their financial awareness and better manage their projects.
Ibrahim Abdelmaqsoud, a man in his forties who has 3 children and lives in Al-Mataria, a poor and popular neighborhood in Cairo, opened a workshop for manufacturing plastic shoulder bags and plastic bags in a small place with only one machine. Later, he obtained 15,000 pounds from the Egyptian Small Enterprise Development Foundation (ESED) for developing his project. "I have really received funding and bought a pressing machine, a cutting machine, and a machine to make plastic bags in different sizes. Currently, the workshop has become larger", Ibrahim says. "Thanks to this funding, I have achieved great success, and now I have expanded my scope of work to cover new markets. Additionally, I have 7 employees who can support their families."
Ibrahim adds, “I now aspire to transform my workshop into a larger factory and add new, modern machines so that the product comes out with a higher quality, in addition to my ambition to own machines for printing on the bags and meet the growing market and marketing needs.”
