CAIRO: Persistent customer service problems and frequent dysfunctions aside, some of Egypt’s banks are making serious efforts to improve capacity and quality.
Sometimes all it takes is the advice of experts, and the International Finance Corporation (IFC) has the know-how needed to reform local banks from the inside out.
The IFC, a private sector-focused arm of the World Bank Group, provides advising and investment to regional enterprises as part of their overall goal of promoting private sector development and growth.
From its Cairo offices, the IFC oversees projects for the MENA region, including Pakistan and Afghanistan. Drawing upon both internal resources and donor funding from countries like Canada, France, the United States and Kuwait, the IFC has worked to provide a variety of financial instruments and consulting services to large private sector enterprises.
In banking particularly, the IFC has made its presence felt on the Egyptian scene, working on both the macro and micro levels to bring change to the industry.
On a structural level, the IFC worked with partners to pioneer Egypt’s first credit bureau, i-Score, and to establish a factoring company to support the start-up of small businesses.
The IFC has also partnered with individual banks to help them expand capacity in new areas such as financing for small and medium enterprises (SME’s) and microfinance.
In line with the organization’s larger mission of promoting development, the IFC’s work in banking sector reforms has an eye towards expanding financing options for different segments of Egypt’s population.
“IFC s assistance is always targeting better access to finance for the under-served segments of society, such as micro, small and medium entrepreneurs. Hence, all our advisory services address this area and we help banks build a capacity and an appetite to provide financial services to such sectors, explained Kaiser H. Naseem, program manager for bank advisory services at the IFC.
The IFC approach to development through banking is a unique one in Egypt, where the focus is often on promoting big business at the expense of smaller enterprises.
But focus on SME’s could actually help Egypt’s banking industry as a whole over the long run, according to Naseem.
“With increased focus on the SME sector, the banking sector should be able to diversify its portfolio and hence manage risk more effectively. This would definitely enhance the quality of the banking sector’s portfolio, he said.
But in order for banks to help spur economic development through smaller-scale loans, internal accounts need to be balanced and healthy with a strategy for growth firmly in place.
Through its consulting services and broader projects in the private sector, the IFC is helping to further a vision of a strong banking infrastructure as a foundation for future development.
For Naseem, this approach is dependent on the initiative of local banks and their ability to position themselves as contributors to progress in Egypt’s financial sector.
“The banks have a very important role to play in economic development. It is the banks that distribute funds – taken from society in the form of deposits – to various sectors and help businesses grow. Hence, strong banks would be able to play this role more effectively.
