Companies to provide microcredit for the first time in Egypt

Egypt’s cabinet has approved a new law organising and supervising microfinance through the Egyptian Financial Supervisory Authority (EFSA) which will allow companies to enter the industry for the first time, according to a ministerial statement released on Thursday.

The law aims to motivate informal microenterprises to enter the formal sector by facilitating access to credit.

Companies specialised in the provision of non-bank microfinance services and products will be allowed to enter the Egyptian microfinance industry which has so far been restricted to banks and NGOs.

Mounir Fakhry, Egypt's investments minister, said in the statement that microcredit is set at a maximum of LE100,000, but the cabinet will have the right to raise the amount 5 percent annually if requested by the EFSA.

A new unit will be created in the EFSA to implement the law and supervise the microfinance industry.

Banks and the state-run Social Fund for Development are excluded from the law as they are subject to central bank supervision, but companies and NGOs will fall under the EFSA's supervision.v