Consumer finance in Egypt has shifted from a small-sized activity to one of the fastest‑growing segments outside the banking sector in recent years. The boom has been fuelled by shifting consumer habits, rising prices, and the spread of installment‑based purchasing plans across everything from mobile phones and household appliances to cars, education, and healthcare.
Yet the pace of expansion has also stirred concern over mounting risks. Hisham Ezz Al‑Arab, chief executive of the Commercial International Bank (CIB), Egypt’s largest private lender, has recently cautioned against certain practices in the sector, warning that unchecked growth could sow future credit problems and social strains.
Despite the controversy sparked by the remarks, officials and experts in the sector have stressed that the industry operates under a strict regulatory framework and that default rates remain within safe limits.
In a statement issued after Ezz Al-Arab’s remarks, Egypt’s Financial Regulatory Authority (FRA), the regulator for all non-banking financial activities, said default rates in the sector do not exceed three per cent, describing these as safe levels.
Consumer finance volumes rose in January to around LE8.5 billion, compared to LE5.5 billion in the same month a year earlier. The number of clients also rose to 1.2 million from just 761,400 during the same period last year, according to the FRA’s latest monthly report.
Walid Gaballah, an economic expert and member of the Egyptian Society for Economics and Legislation, told Al-Ahram Weekly that Ezz Al-Arab’s remarks reflect the perspective of a veteran banker leading Egypt’s largest private-sector bank, making it natural for him to view the banking sector as stronger and more disciplined.
Gaballah said that consumer finance companies do not operate outside regulatory oversight but are supervised by the FRA and follow proper operational standards. “The Egyptian banking sector is among the strongest banking sectors globally and applies Basel III standards [on lending], but this does not mean the non-banking sector operates without controls,” he said.
Gaballah added that the rules governing the two sectors differ due to the nature of their activities, especially as consumer finance loans are generally small and more diversified. As a result, the default of a single customer does not imply a failure to repay large sums, as may happen with major bank loans.
Gaballah noted that the relationship between the banking and non-banking sectors is not one of competition, but rather of cooperation, particularly through securitisation transactions in which banks purchase debt portfolios from non-banking finance companies, providing fresh liquidity and supporting their expansion.
He also confirmed that the market has not witnessed any major defaults by consumer finance companies, despite economic pressures and rising inflation and interest rates in recent years.
In April, the Central Bank of Egypt (CBE) issued new instructions regulating the banks’ dealings with non-banking financial companies. The directives emphasised the need for the banks to conduct regular and accurate assessments of the creditworthiness of non-banking firms receiving financing facilities, while ensuring the existence of clear risk-management policies related to the financing granted to the sector.
The CBE also instructed the banks to monitor the quality of companies’ credit portfolios, ensure adequate capital provisions, and avoid expanding financing without careful assessment of the companies’ ability to manage default risks.
The instructions included setting clear credit limits for each company, linking financing to actual risk levels, and enhancing governance, internal oversight, and disclosure requirements.
From their side, the consumer finance companies have rejected any portrayal of the sector as a “ticking debt bomb”, arguing that their market size remains limited compared to other financing sectors within the Egyptian economy.
Walid Hassouna, CEO of ValU, said in televised remarks that spending through consumer finance in Egypt reached around LE96 billion last year, a figure “far lower” than spending on credit cards, which he said indicated that the market still has significant room for growth.
ValU is a good example of how fast consumer finance company activities are growing. It provides buy‑now‑pay‑later services, credit cards, cash redemption, auto and luxury financing, and small and medium-sized enterprise (SME) solutions through its app and a network of more than 9,000 merchants, enabling millions of customers to shop, borrow, invest, and pay in flexible installments of up to 60 months.
Hassouna added that the consumer finance companies cannot operate without the banks’ approval, as the latter are the primary sources of funding for the industry. He explained that the banks would not continue financing the sector if risk levels were high or if the business model proved unsustainable.
He also noted that the companies rely on the “iScore” database to assess customers and are subject to FRA supervision, with the CBE represented by two members on the FRA’s board. iScore is Egypt’s official credit bureau, which collects, analyses, and provides data to assess the creditworthiness of customers.
Hassouna pointed out that several consumer finance companies are publicly listed on the stock exchange, subjecting them to higher levels of disclosure and oversight. He added that the FRA is also working to implement standards similar to Basel III within the non-banking sector.
He confirmed that the risk ratio within ValU’s portfolio does not exceed 1.25 per cent, describing this as low relative to the nature of the business.
Despite the companies defending the sector, experts believe the real issue is not solely related to financing, but also to changing consumption patterns within society.
Gaballah argued that “social behaviour is part of the problem,” explaining that some consumers purchase goods and products for the sake of appearance or to imitate spending patterns that do not match their actual income.
He added that some people may obtain loans to buy products they do not need, while finance companies assume a degree of economic rationality among clients that is not always present.
Gaballah also pointed out that some company representatives occasionally help customers arrange paperwork to facilitate obtaining financing in exchange for commissions, potentially leading to loans being granted to individuals who are not sufficiently creditworthy.
He believes more financial awareness has become an urgent necessity, especially with more young people and low-income groups entering the installment-payment market.
Between warnings against excessive borrowing and companies defending the importance of the sector, Egypt’s consumer finance market appears to be at a delicate balancing point, as regulators seek to preserve growth without allowing installment-based financing to turn into a debt crisis that could become difficult to contain in the future.
* A version of this article appears in print in the 21 May, 2026 edition of Al-Ahram Weekly
Short link: