The recent “Banking on Microfinance” conference, organized by Italy-based Intesa Sanpaolo, underscored the “for-profit vs. non-profit” debate in the microfinance industry.

Microfinance in Egypt has largely been confined to NGOs, which in turn receive funding from donor agencies. According to some, like Hanaa El-Hilaly, director of general planning and international cooperation at Egypt’s Social Fund for Development (SFD), this format is preferred because NGOs, unlike traditional firms that offer financial services, do not seek profit and thus primary emphasis is placed on assisting the poor with credit and job opportunities. [1]

But many participants in the conference expressed opposing viewpoints, arguing instead that microfinance can only be sustainable in the long-run through commercial, profit-seeking organizations. Mahmoud Abdel-Latif, chairman of the Bank of Alexandria, qualified the role of microfinance, saying “Microfinance is not a strategy for assisting the poor; it is a method for those who have an idea and need money to implement that idea.” [1] Karim Fanous, CEO of Lead, an Egyptian microfinance institution founded in 2003, reiterated similar sentiments. Fanous explained that microfinance organizations must make a profit to sustain their existence and pointed out that, while microfinance was initially pioneered in Bangladesh as a non-profit effort, it was commercialized as early as 1990. [1]

By: Jay Kumar, Research Assistant

About Intesa Sanpaolo (ISP):

Formed in 2007 through the merger between Banca Intesa and Sanpaolo IMI, Italy’s Intesa Sanpaolo also operates in Central and Eastern Europe. The bank, which reportedly employs 44,000 people and has about seven million customers, focuses on four main business areas: retail, corporate, Italian subsidiary banks, and international subsidiary banks. In 2008, it reported a profit of EUR 2.553 billion (USD 2.6 billion) and has EUR 636.1 billion (USD 910.4 billion) in assets.

About Social Fund for Development (SFD):

Established in 1991, the Social Fund for Development focuses on sustainable development projects primarily in Yemen. It has reportedly created 355,000 job opportunities. Its major donors are: the European Union, Japan International Cooperation Agency (JICA), Kuwaiti Development Fund and KfW, which is a German government-owned development bank.

About Bank of Alexandria:

Established in 1957 by the Egyptian government, the Bank of Alexandria is one of the largest banks in Egypt, with a market share of approximately 7 percent and assets of EUR 5.2 billion (USD 6.5 billion).

Additional Resources:

1. Source Article: Zawya, “Loans for Ideas” http://www.zawya.com/Story.cfm/sidZAWYA20091226082307/Loans%20for%20ideas%20/

2. Social Fund for Development: http://www.sfdegypt.org/

3. Bank of Alexandria: http://www.alexbank.com/

4. Intesa Sanpaolo: http://www.intesasanpaolo.com/scriptIbve/retail20/RetailIntesaSanpaolo/ita/home/ita_home.jsp