Consumer finance has emerged as a key driver of purchasing power in the domestic market, according to traders and economic experts, helping sustain production activity despite challenging economic conditions.
However, they caution that this expansion is not without risks, as the potential accumulation of debt could pose serious challenges, underscoring the need for strict regulatory oversight and close monitoring of the growth of credit portfolios.
Consumer finance refers to financial products and services that provide individuals with credit or payment options to purchase goods and services in installments rather than paying the full amount upfront. It includes loans, installment plans, credit cards, and “buy now, pay later” schemes and is a major driver of household consumption and broader economic activity.
Companies working in this field provided LE87.211 billion in financing to their clients during the first 11 months of 2025, compared to LE55.067 billion during the same period in 2024, recording a growth rate of 58.4 per cent, according to data from the Financial Regulatory Authority (FRA).
George Zakaria, former head of the Electrical Appliances Division at the Giza Chamber of Commerce, told Al-Ahram Weekly that installment payment schemes have played a significant role in stimulating the buying and selling of household appliances in the local market, leading to a growth of no less than 10 per cent, despite the sharp rise in product prices.
The FRA has indicated that electrical and electronic appliances accounted for 19.6 per cent of total financing, followed by cars and vehicles at 17.7 per cent, household appliances at 13.8 per cent, and consumer goods financed through credit cards at 5.3 per cent.
Zakaria expected manufacturers to roll out special promotional offers during the month of Ramadan, which is one of the most important seasons for household appliance sales in Egypt, in an effort to further boost market demand.
The markets are currently witnessing discounts on selected products in preparation for the holy month, followed by additional reductions on other items, including household electrical appliances, with these offers continuing until the end of the month.
Zakaria noted that manufacturers have moved to diversify the financing mechanisms available to consumers by partnering with banks and finance companies and aiming to sustain the sales momentum in the market.
High commission rates, which can reach up to six per cent, are widely seen as a key factor discouraging traders from engaging with consumer finance companies, in contrast to manufacturers that continue to apply such schemes within their own retail outlets.
Zakaria explained that consumers currently have access to two financing systems. The first is offered by manufacturers in cooperation with the banks and finance companies through a scheme known as “Triple Zero”.
This is a consumer finance and installment programme that allows consumers to purchase products such as appliances and furniture without paying a down payment, interest, or administrative fees, for specified periods.
The second system is based on manufacturers offering discounts to traders, which are then passed on to consumers when purchasing products using Visa cards, while the installment process is handled by the banks.
Bahaa Demitri, a board member of the Engineering Industries Chamber at the Federation of Egyptian Industries, pointed out that the markets have been suffering from inflation since the flotation of the Egyptian pound, driven by rising production costs resulting from higher raw material prices, such as for copper and steel sheets.
He explained to the Weekly that the banks play a key role in financing deficits during periods of non-recurring economic crisis, helping support economic recovery.
The banks have developed easy-payment financing programmes for consumers, moving from systems requiring down payments and administrative fees to current installment schemes extending up to 12 months, with the aim of stimulating market activity, he added.
He stressed the strength and resilience of the Egyptian economy, noting that despite having gone through several crises, it remains capable of rapid recovery, supported by strong economic fundamentals.
He also noted that factories producing electrical appliances are currently operating at only about 50 per cent of capacity due to prevailing market conditions.
Karim Adel, president of the Al-Adl Centre for Economic and Strategic Studies, a think tank, told the Weekly that the availability of consumer finance has played a significant role in creating greater financial facilitation, more liquidity, and greater purchasing power for individuals amid the current economic conditions.
This has been particularly evident in the light of the noticeable rise in price levels for both essential and consumer goods, at a time when individual incomes have remained largely stagnant and have not increased in line with inflation.
Throughout 2025, consumer finance contributed to an exceptional state of market activity and helped shield the economy from the risk of recession, especially against the backdrop of declining interest rates, he said.
However, he noted that this advantage remains temporary and has been accompanied by a number of risks, most notably the expansion of debt, heightened default risks resulting from income erosion, and potential negative impacts on the wider economy, including rising inflation rates and the entrenchment of an unsustainable consumer culture.
He explained that the scope of such risks extends to the institutional and financial and to the finance companies, where liquidity risks and rising non-performing loans come to the fore. In addition, consumers face mounting risks stemming from accumulated debt, as some borrowers may delay or cease repayments, leading to the rollover of debt and a substantial increase in interest burdens.
Greater access to consumer finance may lead to cases of financial distress due to high installment payments, which turn into an additional burden on individuals, particularly amid eroding incomes. This, in turn, drives up default rates and negatively affects borrowers’ credit scores, he added.
Moreover, some recipients of consumer finance resort to monetising the financed goods in order to obtain cash liquidity at a value lower than that of the financed product, a practice that significantly increases costs and leads to the accumulation of interest.
The FRA has issued a decision obligating the Egyptian Federation of Consumer Finance Entities to prepare a blacklist of entities and individuals proven to be engaged in the cash monetisation of consumer goods.
On the behavioural front, greater consumer finance has contributed to a noticeable shift in the consumption patterns of individuals and households, as the prevailing tendency has leaned towards borrowing to meet immediate needs rather than saving and investing, a trend that may weaken the economy over the long term, he explained.
Adel said that despite the benefits consumer finance has delivered at the macroeconomic level, its risks remain present. It contributes to rising inflation rates as a result of finance-driven demand, which pushes market prices higher.
Rapid expansion in this activity also poses a potential threat to financial stability if not managed with transparency and discipline, particularly in the light of rising non-performing loan ratios, he added.
This, in turn, affects the banking sector through the transmission of risks from consumer finance companies to the banks, potentially constraining their ability to finance investment and production.
“While consumer finance represents a lifeline for the economy, supporting the continuity of employment and production cycles during periods of economic slowdown, it may simultaneously generate negative repercussions for individuals, households, finance companies, as well as the financial and banking system as a whole,” Adel said.
Given the rapid growth in the volume of consumer finance, the FRA has sought to ensure market stability by suspending the acceptance of applications to establish new consumer finance and microfinance companies through traditional channels for a period of one year, starting in October 2025.
The decision aims to reorganise the market and reassess the financial soundness of existing companies, while exempting firms operating under financial technology (FinTech) models, in a move intended to safeguard market stability and protect stakeholders.
Adel stressed that there is no dispute over the importance of consumer finance for individuals, households, and the economy at large.
However, ensuring its sustainable and disciplined growth requires the adoption of strict regulatory policies, close monitoring of credit portfolio expansion, enhanced awareness among companies and customers regarding full disclosure, and the enforcement of stringent regulations governing debt-collection entities, in order to protect customer rights and achieve a balanced approach between growth and stability.
* A version of this article appears in print in the 26 February, 2026 edition of Al-Ahram Weekly
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