The Egyptian Federation for Financing Medium, Small, and Micro Projects (EFFMSMP) — under the auspices of the Central Bank of Egypt (CBE) — will organise a three-year programme to raise the efficiency and promote microfinance associations operating in the Egyptian market.
The aim of the programme is to build and raise these associations’ institutional capacities to qualify them to obtain financing and reach the largest segment of financially marginalised groups and to integrate them into the formal economy.
Hassan Ibrahim — the Director-General of the EFFMSMP — said that the programme, which is being implemented in cooperation with the International Finance Corporation (IFC) and financed by the CBE, aims to upgrade 41 microfinance associations of category “C” with financing portfolios amounting to EGP 10m to enable them to rise to higher categories.
Ibrahim praised the great efforts made by the CBE to support the medium, small, and micro enterprises sector, pointing out that this programme comes within the framework of the continuous efforts undertaken by the CBE to support the microfinance industry.
Ibrahim explained that the CBE’s support was reflected in an increase in the microfinance portfolio, both from the banking and non-banking sectors, according to the definition of the Financial Regulatory Authority (FRA) to reach about EGP 56.8bn for 4.1 million beneficiaries in September 2021, compared to EGP 6.4bn for 2 million beneficiaries at the end of 2016.
Additionally, the CBE funded the training plan for the Egyptian Microfinance Federation between June 2018 and May 2019 to raise the professional competence of its members in civil associations and institutions. About 1,128 participants from 11 different governorates were trained.
On his part, Gamal Khalifa — the Director of the Institutional Upgrade Project at the EFFMSMP — said that the goal is to establish a unit for institutional promotion in the union, build the capabilities of employees, and transfer practical experiences to them through the IFC so that they can then implement the second and third phases of the programme and expand its application to the largest number of associations to ensure the sustainability of the project.
The current programme aims to raise the level of 41 microfinance associations by offering them eight to 10 training courses throughout the year in various fields, including financial management, governance, internal control, risk management, credit operations, and digital and technological transformation.
He added that the programme is presented in three phases: The first focuses on assessment processes for associations and knowledge of institutional gaps related to jobs and institutional structure, credit portfolios, and boards of directors and financing methods.
The second focuses on digital and technological transformation of associations administratively and financially and awareness on using electronic payment in lending operations.
The third includes providing a comprehensive training programme for all the basic aspects that associations are exposed to, including preparing reports and the work of financial and administrative structures, while providing the necessary guidance and follow-up to ensure the associations’ commitment to the training programme’s goals.
The total number of microfinance associations in Egypt is about 991. The FRA classified them into three categories according to the size of their credit portfolios. There are 18 institutions that are classified as Category “A” with a financing portfolio that exceeds EGP 50m. The second category is “B”, and it includes 16 associations, with the size of their financing portfolio ranging between EGP 50m to EGP 10m. The third is “C”, which is the largest, with 944 associations included. The size of their financing portfolio is less than EGP 10m. This is the category the programme is targeting.
