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Context - The needs of the sector in Egypt:
According to the World Bank, 43.9% of Egyptians lived on less than $2 a day in 2004/05, which represents nearly 30 million persons. Although Egypt is improving with respect to certain social and economic indicators, progress still needs to be made in many areas.
Therefore, development of microfinance can be seen as a tool to fight against poverty, especially in a country where micro and small enterprises play a substantial role in economic life, representing 39.5%* of the total Egyptian workforce.
The country has at least 2.6 million** microenterprises, accounting for 93,7% of establishments. Given the weight of microenterprises in the Egyptian economy, microfinance should be viewed and planned for as a major vehicle for economic development on a national scale. This is the main premise underlying the need to monitor closely what is happening in the microfinance sector, learn from the experience, and better gear financial products to the needs of microentrepreneurs.
In March 2009, the cumulative number of active clients in Egypt was estimated just over 1.32 million. Loans are mainly distributed by specialized NGOs — the microfinance institutions (MFIs) and 6 commercial and public banks. A new regulatory framework, waiting for parliamentary review, should in 2010 allow the creation of Microfinance Companies, which heralds a new commercialization stage of microfinance sector in Egypt.
There is still a considerable gap between current microfinance clients and potential clients. Egyptian microfinance sector is mainly focused on loans. However, it could benefit from saving products offered by the Egyptian Post, which already have a network of 3,600 branches, many of them in remote areas.
In this context, PlaNet Finance Egypt is providing technical assistance and consulting services to MFIs. The office started its operations in 2005 and, since then, developed projects in partnership with Egyptian Non Governmental and Governmental Bodies as well as National and International Donors.
* Egypt Labor Market Panel Survey, 2006
** The SME Landscape in Egypt, 2003
Project: Promotion of Renewable Energy (RE) and Energy Efficiency (EE) through Microfinance, in Morocco and Egypt.
Expertise: Renewable energy technology, Strategic guidance, and Technical training and assistance.
Description: Development of renewable energies and energy efficient system to reduce the cost burden for vulnerable population groups in urban and rural areas. To accomplish this PlaNet Finance will build the technical capacities of local actors and MFIs to incorporate financial programs that facilitate clients’ access to RE and EE. The project will also consist of an information campaign to raise awareness of the significance and benefits of efficient and renewable energy. Finally, the project will promote the Micro and Small Enterprise sector in both countries as a stage for the development of new sustainable energy systems that can be scaled and/or duplicated.
Microfinance partners: Microfinance Institutions in Morocco: ARDI foundation and Egypt EACD (Egyptian Association of Global Development) and DBACD (Dakahleya Businessmen Association for Community Development).
Technical partners: GERES: French association, specialized in renewable energies and local development, ADEME: French agency for Renewable energy, GERERE Morocco: local association specialized in energy, CDER: Morocco agency for Renewable energy.
Financing: European Commission (75%)
Project: Improve Access to Microfinance for Women in Rural and Semi Urban Areas, Egypt and Syria
Expertise: Institutional Strengthening, Business Development Services, Technical Training
Description: The project will improve the social outreach of local partner Microfinance Institutions and their capacity to respond to the specific financial needs. Also, it will improve access to quality financial and non financial products in these regions through training that is tailored to the needs of poor women living in the targeted areas. Lastly, the project will provide strategic guidance to the female micro entrepreneurs to further develop their income generating strategies.
Microfinance partners: BEST (Egypt), ABA (Egypt), and Bidaya (Syria)
Financing: European Commission, Orange Foundation
Project: GTZ Project
Expertise: Research, Studies, Data Analysis
Description: PF developed an index based on the assets of clients to measure their level of poverty. In the index, clients both individuals and households were segmented according to their socioeconomic characteristics. The study allowed for a more precise understanding of the financial and nonfinancial needs of each targeted client segment. With this insight, PF designed targeted and effective products for each client segment.
Microfinance partners: GTZ Egypt
Financing: GTZ Egypt
Project: Development of new microinsurance products for the Egyptian microfinance sector
Expertise: Innovation, Research, and Studies
Description: Qualitative and quantitative surveys of 400 clients and Microfinance institution employees in four governorates (Aswan, Cairo, Alexandria, and Fayoum) to identify the main risks of microentrepreneurs. This data was analyzed and developed into a formal report with recommendations in October 2009. Following the report, PF began to design innovative products for MFIs, to improve coverage of clients and response to identified risks. Efforts are now also being made to promote microinsurance opportunities to mainstream insurance companies. The project also promotes dialogue for potential regulatory support required in development of microinsurance products. This will facilitate expansion of microinsurance in the future for Egypt.
Microfinance partners: DBACD (Dakahleya Businessmen Association for Community Development), The Lead Foundation, First Microfinance Foundation (FMF), Alexandria Business Association (ABA), Al Tadamun and Catholic Relief Services (CRS) through its partner BEST.
Financing: FMO (Dutch Bank for Development) and Allianz Egypt
Project: Information Sharing System
Expertise: Sector strengthening, Credit bureau, Risk management
Description:
Creation of an Information Sharing System (ISS) for the Egyptian Microfinance Sector. The Egyptian Micro finance Network (EMFN) is willing to establish an Information Sharing System (ISS) dedicated to network members and implemented by PlaNet Finance Egypt. This Information Sharing System is part of the action plan of the National Strategy for Microfinance in Egypt and will be opened to the member Microfinance Institutions (MFIs) of the EMFN to share information at a defined cost.
To know more:
The creation of information sharing system (also called credit bureaus) helps to improve coordination between MFIs quickly detecting insolvency risks among borrowers and by thus providing better security to micro-entrepreneurs who are likely to become clients of MFIs. One of the most important drivers for success of MFIs is the ability to effectively manage risk, and in particular to maintain a low portfolio at risk.
Microfinance partners: Egyptian Network of Microfinance. 5 MFIs are participating in the pilot: ABA, DBACD, SBACD, El Mobadara, Lead
Financing: SFD/French Economic Mission
Project: National Impact Survey of Microfinance in Egypt
Expertise: Studies, Impact evaluation and market research, Training
Description: A socio-economic drawing on the whole MFI sector was carried out to construct
profiles of microfinance clients and their socio-economic status and to assess the impact of
access to microcredit on their businesses. Results were based on a sampling of 2,500 MFIs
clients across the different institutions.
Microfinance partners: Bank Misr, LEAD, ABA, ASBA, DBACD, FMF, ABWA/CRS, REDEC, EDF, ADEW Egypt and Mobadara/ CDSEA
Financing: Egyptian Ministry of Finance, German Technical Cooperation (GTZ), Social Fund for Development/PNUD, Aga Khan Microfinance Agency/ FMF and PlaNet Finance.
Click on the links below to download the documents:
For more information on the PlaNet Finance projects in Egypt:
www.planetfinance-as.org/EN/projets.php