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Escaping Poverty

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Escaping Poverty

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									Escaping Poverty

      Microfinance in Egypt
Commercial International Bank [Egypt]
             June 2005

                                        1
            Poverty Alleviation
Global:      The United Nations Capital
             Development Fund (UNCDF), declared
             2005 as “International Year of
             microcredit

National:    Egypt has pledged to reduce poverty
             as part of its Millennium Development
             Goals
                                                 2
             Social Duty

It is our responsibility to help those who are
unable to produce sufficient income for
themselves and their families“The unprivileged ”

This is not an act of kindness but our social duty
as they are an integral part of our society


                                                 3
 Value Added
Micro-Finance       Micro borrower     Income
 Institutions                         generation




Profit Generation      Economic
                      Development


                                     employment
Entrepreneurship
                                     opportunities


                                                     4
   Social Strategy
Microfinance outreach   More Microfinance institutions
Awareness               Through Media, Government
                        NGOs, Community Development
                        Associations CDAs
Funds availability
      Locally:          Financial institutions own funds
      International:    Through donor countries


                                                     5
    What after the conference


We are committed to realize what we pledge that is
to help the poor lead a dignified life economically
and socially

Joint efforts should be mobilized to draw an effective
strategy to implement practical solutions

                                                   6
What after the conference (cont)
 Egypt’s millennium Development Goals

 – Reduce poverty: from 1.7% to 0.4%
 – Increase per capita income: 17% are living
   below $1/day
 – Improve education: 44% of population are
   illiterate*
 – Unemployment rate stands at 10%**
                                            (*World Bank)
                                           (** MFTI 2005)


                                                       7
      The Vehicle

Micro lending
has a proven record of being one of the
most effective and sustainable
mechanisms of improving income
generations for the poor and escape from
the vicious cycle of low income, low
savings, low investment.



                                           8
      Real Effective Measures
“Build a National Strategy for Micro-
financing in Egypt” Program was
launched for Egypt on February 2004
Stakeholders: EBI, UNDP,USAID and KfW
Strategy:  Transform the legal and institutional
environment in which microfinancing operates in
Egypt
Objective: Make it easier for Egypt’s poor to access
small loans from different financial institutions,
including public and private banks
                                                   9
Market consideration
 •Plenty of room to grow:                In 2003 over
 250,000 borrowers benefited from micro loans in Egypt yet
 only 5% of it is served


 •Rewarding returns:                 Egypt annual Micro loan
 portfolio is over $250 million with an average flat rate of
 16%


 •Minimum risk:            Default rate is not more than 3%
                                                      (source UNCDF)




                                                                10
Why Lend NGO
Better knowledge of micro entrepreneurs
Wider network in remote areas
Lower administrative cost
Group lending ability thus reaching the poorest
of the poor
Flexible terms


                                                  11
Current Obstacles
     We must exert our best efforts to remove the
difficulties faced by NGOs as financial intermediaries:

 Endorse Creditworthiness through creative guarantee
schemes
 Increase their capacity through the appropriate technical
assistance and training
 Provide up-to-date loan tracking systems
 Wean NGOs form their dependency on Grants
 Orient them towards commercial loans
 Lobby for savings mobilization

                                                             12
    Commercial International Bank
• Largest Private sector Bank in Egypt
• Highest in profitability
• Largest in Fund Management
• Largest in private sector branch network
• Future growth focused on upper Egypt and other
  green field areas
• Training capabilities beyond any other institution
  in the country with wide outreach capabilities
                                                   13
CIB Microlending Experience
 First Phase:        Partnership between CIB and
National Bank for Development rewarding their
excellence in this field

 Second Phase: Lending to creditworthy reputable
NGO with free capacity building and technical
assistance from CIB

 Third Phase:     Wider network of NGO and
CDA based on lessons learned from stage one and
two                                             14

								
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