Paper

Microfinance and Regulatory Environment in Egypt

Should microfinance in Egypt be regulated?
Download 9 pages

This paper argues against regulating microfinance in Egypt. The author states that a lack of regulation has resulted in the evolution of many best practices such as:

  • Stepped lending approach;
  • Quick credit procedures and client friendly services;
  • High repayment discipline;
  • Use of positive real interest rates;
  • Efficient administration;
  • Decentralized credit delivery.

The paper also states that as a majority of the microfinance institutions (MFIs) are small, they may not respond well to regulation and may deviate from their original missions. Finally, the author makes some policy recommendations:

  • Creating favorable competition between MFIs and catering to the different needs (individual vs. groups, urban vs. rural);
  • Providing successful NGOs the option to maintain a special new legal identity to capture savings and to offer a wider range of financial services;
  • Creating a data base for the sector (credit Bureau option), creating a useful national network for MFIs, and promoting best practices among MFIs in financial and business development services (BDS).

About this Publication

By El-Shami, N.
Published