The government of Egypt reportedly has issued its first microfinance law, which regulates lending by non-bank entities in an effort to expand access to capital for microenterprises.
Microlending in the country has until now been limited to banks, but the new law will allow non-bank entities, including NGOs and private companies, to issue loans of up to EGP 100,000 (USD 13,985) per microenterprise. A new unit will be established within the Egyptian Financial Supervisory Association (EFSA) to oversee and implement the law.
The law was initially approved in May 2014 by the country’s interim cabinet, subsequently was approved by the State Council and has been finally issued by decree of Egyptian President Abdel Fattah al-Sisi. According to EFSA, the Egyptian government consulted the World Bank and other institutions when drafting the law.
The 16 Egyptian MFIs reporting data to the US-based nonprofit Microfinance Information Exchange (MIX) between 2005 and 2012 served 1 million active borrowers with an aggregate microcredit portfolio of approximately USD 266 million. None of these institutions accept deposits.
By Ananya Tiwari, Research Associate
About Egyptian Financial Supervisory Authority (EFSA)
The Egyptian Financial Supervisory Authority (EFSA) was established in 2009 with the aim of supervising and regulating the financial services sector, including non-bank financial markets in Egypt. EFSA supervises capital markets, insurance services, mortgages, leasing, factoring and securitization. EFSA is also responsible for licensing non-banking financial services, as well as for the inspection of licensed institutions. As of 2014, a new division is being created within EFSA to regulate microfinance.
Sources and Additional Resources
[1] Reuters, http://www.reuters.com/article/2014/11/14/egypt-microfinance-idUSL6N0T41EX20141114
MicroCapital, June 19, 2014, Egypt Approves Microfinance Law in Effort to Expand Access to Microcredit, Bring Microenterprises into Formal Economy, https://www.microcapital.org/microcapital-brief-egypt-approves-microfinance-law-in-effort-to-expand-access-to-microcredit-bring-microenterprises-into-formal-economy/
MicroCapital, March 25, 2014, European Union, European Bank for Reconstruction and Development (EBRD) Support 100 Small, Medium-sized Enterprises (SMEs) in Egypt, https://www.microcapital.org/microcapital-brief-european-union-european-bank-for-reconstruction-and-development-ebrd-support-100-small-medium-sized-enterprises-smes-in-egypt/
MicroCapital, July 10, 2013, European Bank for Reconstruction and Development (EBRD), European Union Launch $3m “Small Business Support” Facility to Bring Technical Assistance to Firms in Egypt, https://www.microcapital.org/microcapital-brief-european-bank-for-reconstruction-and-development-ebrd-european-union-launch-3m-small-business-support-facility-to-bring-technical-assistance-to-firms-in-egypt/
MicroCapital, October 15, 2009, Egypt Government to Draft Legislation Regulating Microfinance and Microinsurance Providers, https://www.microcapital.org/microcapitalorg-story-egypt-government-to-draft-legislation-regulating-microfinance-and-microinsurance-providers/
MicroCapital Universe Profile: Egyptian Financial Supervisory Authority, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Egyptian+Financial+Supervisory+Authority
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