The International Finance Corporation (IFC), a member of the World Bank Group, signed an agreement on Wednesday with Tanmeyah, Egypt’s largest micro-finance organisation, to help increase its sustainability and boost its outreach to underserved groups across the country, especially low-income citizens.

According the agreement, the IFC’s advisory services team will work with Tanmeyah through its 259 branches to identify areas of weakness through 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.

Chairman and CEO of Tanmeyah Amr Abouesh told Ahram Online that this is the first cooperation of its kind between the two sides, and that it aims to introduce more quality services for low-income citizens.

"The micro-finance sector has witnessed a notable shift since 2014 after the activation of the micro-finance projects act and the appointing of the Financial Regulatory Authority (FRA) as a supervisor to the sector. This act has helped in attracting more investments to the sector, and resulted in increasing the number of private companies in the sector from just two companies in 2014 to seven operating companies, and about four companies have licences to work," Abouesh told Ahram Online.

Moreover, as he said, banks have raised funds for the sector, and the Central Bank of Egypt has launched a number of initiatives that were beneficial for the sector. All these efforts have resulted in an increase in the amount of finances that have been pumped in the domestic market.

“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. 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. This agreement will help us address the financing needs of this under-served group,” he added.

Abouesh also revealed that his company is looking to make deals worth about EGP 5 billion in 2020, and is looking forward to counting on other sources of finance including entering the securitisation field.

IFC country manager for Egypt, Libya and Yemen Walid Labadi told Ahram Online that the IFC has invested a total of $4 billion over the last decade in Egypt, and that it is committed to investing about $300 million in 2020.

Labadi also said that Egypt's unemployment rate has started to go down in the formal sector, but poverty is still a big issue for Egypt and its economy. So, the micro-finance sector plays a key role in dealing with this issue through creating more job opportunities, combating poverty, and giving people hope.

"The micro-finance sector in Egypt is a huge market with huge potential. Yet, there are number of challenges on the ground, including the current regulations and insufficient private capital in the sector. Actually, the micro-finance sector is serving the majority of the Egyptian people," Labadi said.

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, Labadi said.

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.

He explained that the IFC delivered more than $19 billion in long-term financing for developing countries in FY2018/2019, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.

The agreement is part of the IFC’s wider strategy to expand access to finance and support financial inclusion in Egypt, he added.

The IFC is a sister organisation of the World Bank and a member of the World Bank Group. It is the largest global development institution focused on the private sector in emerging markets.

The IFC works with more than 2,000 businesses worldwide, using its capital, expertise, and influence to create markets and opportunities where they are needed most.