EGYPT – The International Finance Corporation (IFC) has signed an agreement with Tanmeyah, Egypt’s largest micro-finance organisation, to help boost its outreach to underserved groups across the country.
The agreement paves the way for IFC’s advisory services team which to work with Tanmeyah through its 259 branches to identify areas of weakness.
IFC notes that the agreement with Tanmeyah will be executed in a two-phase project that will include a strategic review of Tanmeyah’s current loan products, an in-depth risk management diagnostic, and a review of its human resources.
In an interview with Ahram Online, the Chairman and CEO of Tanmeyah Amr Abouesh said that this is the first cooperation of its kind between the two institutions and that it aims to introduce more quality services for low-income citizens.
“Micro-finance has been increasingly proving highly successful as a way to end the cycle of poverty, decrease unemployment, increase earning power, and aid the financially marginalised,” Abouesh noted.
He added that despite being a young and vibrant segment of the population, the majority of Egyptian small businesses remain outside the scope of the traditional banking industry.
Abouesh also revealed that his company is seeking to make deals worth about EGP 5 billion in 2020, and is looking for other sources of finance including entering the securitisation field.
IFC country manager for Egypt, Libya and Yemen Walid Labadi said that Egypt has high unemployment rates, which makes a strong micro, small and medium enterprise (MSME) sector critical to spurring job creation and economic growth in the country.
“Egypt’s micro-finance sector plays a key role in dealing with the issue of unemployment through creating more job opportunities, combating poverty, and giving people hope,” said Lambadi.
He however noted that there are number of challenges on the ground, including the current regulations and insufficient private capital in the sector that greatly hampered the success of SMEs in Egypt.
Labadi added that only a third of adults have access to a bank account, while the formal MSME finance gap was estimated at $46.7 billion in 2017, representing a significant opportunity for financial institutions to increase their outreach to individuals and the sector.
Lambadi explained that IFC’s participation in the agreement with Tanmeyah was part of its efforts aimed at narrowing this financial gap in the MSME sector.