South Africa could be instrumental in the realignment and upgrading of Egypt?s micro-finance sector. A high-level delegation is on a ?study tour of South Africa to familiarise ourselves with the successful systems here, especially in regulation, to help us formulate a new strategy for our own micro-finance industry?, according to Nabila Habashy, the Central Bank of Egypt?s advisor in the monitoring and supervision division. The Bank oversees Egypt?s banking industry, with the exception of the microfinance sector that remains largely unregulated.
South Africa occupies a unique position in Africa, being the only country on the continent to regulate the micro-finance sector through statutory instruments, and ?this is a major reason why South Africa is hosting an increasing number of visitors from developing countries keen to understand the role of the Micro Finance Regulatory Council (MFRC) in a dynamic financial services environment,? says Rashid Ahmed, the MFRC?s manager of special projects. ?Strong interest is also being shown by foreign visitors in microlending in our National Loans Register as a means of data compilation on borrowers and lenders and their transactions to regulate against over-borrowing and resulting financial distress.?
The closest Egypt has to a micro-lending infrastructure is its Social Fund, a quasi government organisation that works as a funding agency providing grants and loans to NGOs that on-lend into the SMME or entrepreneur environment.
?A transformation in the way the poor access funding and financial services is a process that is moving the focus from microcredit to microfinance?, says Ghada Waly, assistant resident representative for the United Nations Development Programme in Cairo. ?The way it happens in Egypt is that microcredit delivers credit to the poor, while microfinance provides a range of financial services for the low income levels ? like savings and insurance ? that the poor need just as much as the rich. And that?s in the making. Some aspects are already taking place, and others are being developed.?
Waly believes that Egypt ?can learn much from the South African microfinance experience. The role of the MFRC as regulator is very interesting for us because we do not have anything similar. The roles that the MFRC plays in capacity building and borrower awareness have valuable lessons for us, because of how different we are to South Africa. We only have NGOs and Banks, not microfinance companies. Our interest rates are much lower than South Africa?s, because our operating costs are lower.?
The transformation of Egypt?s microfinance environment is taking place through a programme called ?Towards a National Strategy Through Microfinance?.
?It is basically a consultative process to engage different stakeholders in a dialogue that will result in strategy guidelines and that will direct the process towards a more formalised microfinance sector much as you have in South Africa,? says Waly.
The project will be launched in September.
The Egyptian delegation is currently touring the country with visits to such industry stakeholders as the Bankseta, MEA, micro finance institutions and a cross section of credit bureaux.
