Egypt’s financial penetration rate is low compared to peers in the MENA region and other emerging economies. About 14% of the adult population has an account at a formal financial institution while only 9.3% of women do. Only 4% of adults save at a financial institution. Still, policymakers have identified data as a major issue and prioritized developing a comprehensive database to enable evidence-based policies for financial inclusion.
The Microfinance market in Egypt comprises of 725 licensed NGO Microfinance Institutions and three commercial companies. Microfinance is provided to 1.9 million clients, out of which 66% are women. Market share of NGO MFIs accounts for 80% in terms of number of active clients. MFIs mainly offer microcredit and, to some extent, micro-insurance products (credit life insurance, insurance-based savings).
The MFMR programme in Egypt is supporting cross-sector initiatives through technical advisory at policy and regulatory level to the Central Bank of Egypt (CBE) and the Egyptian Financial Supervisory Authority (EFSA). The programme assists the partner institutions and policymakers in the financial inclusion policy process by supporting.
- The CBE to establish a comprehensive evidence base needed to inform policy development for greater financial access through conducting supply-side data gap analysis of the financial and non-financial sector in view of enhancing data availability and to produce financial inclusion reports. The newly established Financial Inclusion Unit is being capacitated to lead the financial inclusion process.
- The EFSA in strengthening the regulation and supervision of microfinance and micro-insurance as well as in the building of the capacities of the Microfinance Unit and the multi-stakeholder platform on Micro-insurance.
- The Egyptian Banking Institute (EBI) and the national steering committee for financial education in developing the national financial literacy strategy.
The Central Bank of Egypt is leading the country’s financial inclusion policy process. It joined the Alliance for Financial Inclusion (AFI) in mid-2013 and the network’s Working Groups on Data and on financial inclusion strategies ever since.
Being active in the country’s task force for financial inclusion, the CBE established the national steering committee on financial education, which is led by the Egyptian Banking Institute (EBI) – CBE’s training arm – to develop the National Strategy for Financial Literacy.
The CBE established a Financial Inclusion Unit and a Data Committee to systematically collect and analyze supply-side data. It is coordinating among national stakeholders in the collection of data.
In an effort to expand financial inclusion, the CBE has developed regulations to increase banks’ SME loan portfolios to 20% by 2020 and issued new regulations for mobile payments at end-2016 in view of allowing cross-border remittances from mobile wallets.
A National Payment Council has been established in Egypt in order to promote digital payments and reduce the share of informal financial transactions. Since the launch of mobile payment services in Egypt in 2013, 6.8 million subscribers for mobile payment accounts have registered.
The Microfinance Law has been ratified in November 2014 to address key regulatory gaps that constrained the development of the industry, allowing commercial companies and NGO MFIs to engage in microfinance. Ever since, the Egyptian Financial Supervisory Authority (EFSA) has licensed three commercial microfinance companies and 725 NGO MFIs.
In November 2016, EFSA issued directives to formalize the micro-insurance sector by defining the types of products, the requirements for policies, and the distribution channels. A national multi-stakeholder platform now supports the micro-insurance market by bringing together the supervisory authority, insurance companies, MFIs and other relevant players.
A Credit Bureau, I-Score, has become effective and provides financial institutions with borrower information for sound decision-making in the credit approval process.
Egypt will host the 2017 AFI Global Policy Forum from 13-15 September in Sharm El Sheikh. Under the theme “Exploring Diversity, Promoting Inclusion”, the event will highlight financial inclusion initiatives from Egypt and beyond acknowledging the diversity of the unbanked population in the AFI member countries across the globe.
The Egyptian Financial Supervisory Authority (EFSA) is the independent regulatory authority for non-banking financial services. It was established in 2009 by a merger of three former non-banking financial services regulatory authorities.
For the MFMR programme, EFSA is leading the reforms in the non-banking financial services and is responsible for a sound microfinance and micro-insurance regulation and supervision.
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The main objective of the Central Bank of Egypt (CBE) has been realizing price stability and ensuring the soundness of the banking system. However, in line with the new thinking that assigns a central role for financial inclusion in the pursuit of economic and social development, CBE has recognized that financial inclusion can play a critical role in improving economic growth, reducing extreme poverty, boosting shared prosperity and reducing socio-economic inequalities in the society.
For the MFMR programme, CBE plays an important role in leading the financial inclusion process and coordinating among the multi-stakeholders towards greater and sustainable financial inclusion.
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