Regulation and Supervision of Microfinance in Egypt

This essay provides a practitioner's overview of regulation and supervision of the microfinance industry in Egypt. The essay is divided into three sections: Section one introduces the reader to:

• The range of microfinance services offered;
• The institutional setup of the various service providers;
• The Egypt Microfinance Strategy as it relates to regulation and supervision.

Section two:

• Outlines relevant laws and regulations concerned with the micrfinance sector and service providers;
• Provides a brief description of the entities entrusted with the role of supervision and the practical application thereof;
• Ends with a discussion of the impediments to sector development/ service outreach that result from either legal aspects or supervision practices. These include constraints in the areas of:
  • Access to funds;
  • Checking of endorsement by the treasurer;
  • Auditing and reporting requirements of the 'Ministry of Social Solidarity' (MSS);
  • Interest rate restrictions.

Section three concludes the essay by:

• Highlighting current activities underway to overcome the impediments and expand service coverage.
• Discussing the following recommendations made by the author:
  • Encourage adherence to reporting standards and performance benchmarks;
  • Establish clear and unified criteria for financing MFIs;
  • Institute the use of international rating agencies;
  • Establish a non-prudential self-regulatory mechanism;
  • Recognize specialized credit NGOS;
  • Promote the establishment of non-bank commercial MFIs.