BNP Paribas Egypt and USAID/Egypt today signed a deal with LEAD Foundation, loaning the organization a sum of LE 27 million ($4.6 million) over 3 years.
The loan will give around 20,000 – 25,000 entrepreneurs the opportunity to borrow money, varying in amounts from a few hundred Egyptian pounds to LE 25,000. No information was provided regarding the interest rate.
The three year loan will finance sustainable projects studied and assessed by LEAD Foundation, said BNP Paribas Egypt Deputy Managing Director, Pierre Delhaise.
The Group has also allocated another 100 million Euros ($133 million) for supporting microfinance activities in Egypt, Delhaise stated in a press release.
"We are trying to extend loans in order to reduce the high liquidity in the banking sector," Delhaise told Ahram Online.
The Egyptian banking sector has a very low ratio of deposits to lending, at around 50 per cent. Retail accounts for 19.7 per cent of total lending, according to the website of the Central Bank of Egypt.
USAID/Egypt, which will guarantee 50 per cent of the loan value, considers the deal a good opportunity to expand loans that serve small and micro enterprises. Since 1990, the organization has been targeting low income, female-headed households, located in economically-disadvantaged areas. The organization has supported several microfinance institutions that provided more than 8.3 million micro-credit loans worth $2.5 billion to 3.4 million small and micro entrepreneurs. These institutions serve almost 1.1 million clients, in which 65 per cent are poor women, according to a press release. The default rate has been so far been less than 2 per cent, according to the press release.
Poverty in Egypt affects almost 20 per cent of the population, according to the latest government statistics.
"BNP Paribas is our fourth partner, as we also work with Alex Bank, National Bank Of Egypt and National Societe Generale Bank," said LEAD Foundation Financial Manager Jamal Hassan to Ahram Online. According to Hassan, the Foundation will target Upper Egypt with this loan programme.
LEAD Foundation has been operating since 2003. It has 15 branches covering seven Egyptian governorates, with a target of increasing the total to 28 branches over the next few years.
In December 2010, LEAD reached almost 194,000 active clients, of which 87 per cent received poverty loans (amounts of less than $425) and 82 per cent were loans to women. It has also provided over 1.4 million loans to approximately 560,000 small and micro entrepreneurs.
The agreement was signed by LEAD Foundation Executive Director, Karim Fanous, BNP Paribas Deputy Managing Director, Pierre Delhaise, and USAID/Egypt Mission Director, James Bever.