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Egypt Financial Sector Assessment

Identifying constraints to inclusive finance in Egypt
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This report presents an overview of the microfinance sector in Egypt. It urges the private sector to play a more active role in providing inclusive finance.

Egypt's microfinance industry currently reaches only about five percent of the more than two million potential borrowers. Constrains to sector growth include:

  • Scattered and conflicting policies that have minimal impact on micro and small enterprises (MSEs);
  • Lack of support in access to training facilities, credit, serviced land and extension services;
  • Lack of coordination among MSE-focused donor programs;
  • Lack of interest from banks in serving MSEs;
  • Reluctance from the Central Bank of Egypt (CBE) to license non-bank credit institutions;
  • Restrictions to NGOs;
  • Constraints to private sector involvement in microfinance.

These constraints could be tackled if the CBE adopted a more demand-oriented licensing policy that enables creation of financial institutions that fulfil a proper intermediary function targeting the private sector. The enabling environment should also be improved to allow financial intermediaries to capitalize on MSE demand and enhance their full operational potential.

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