MICROCAPITAL BRIEF: Egyptian Financial Supervisory Association Regulates Microfinance Companies, Setting $2m Capital Requirement

The Egyptian Financial Supervisory Association (EFSA), a governmental body that supervises and regulates the financial sector in the country, recently issued a resolution regulating the activities undertaken by microfinance companies. The resolution encompassed topics such as anti-money laundering provisions, corporate governance requirements, customer protection, investment criteria and credit portfolio regulations. Furthermore, the resolution states that all microfinance companies must be licensed as joint stock companies with minimum promulgated capital of EGP 15 million (USD 2 million).

The resolution was issued in light of a November 2014 microfinance law that allowed non-bank entities including NGOs and private companies to offer microcredit. The Egyptian government reportedly 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] Daily News Egypt, http://www.dailynewsegypt.com/2015/01/05/companiess-micro-financing-face-new-regulations-efsa-head/

MicroCapital, December 3, 2014, Egypt Issues Microfinance Law in Effort to Expand Access to Capital for Microenterprises, https://www.microcapital.org/microcapital-brief-egypt-issues-microfinance-law-in-effort-to-expand-access-to-capital-for-microenterprises/

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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