The total number of credit facilities registered at the database of the Egyptian Credit Bureau by the end of October 2015 registered 35.8m for individuals and SMEs, compared to 34.19m in January 2015 and 30.38m in January 2014, according to Managing Director of the Egyptian Credit Bureau, I-Score Mohamed Refaat Al-Houshy.
In exclusive statements to Daily News Egypt, he said approximately 10.494 million customers obtained credit facilities from banks and joint partners by the end of October 2015, compared to approximately 9.56 million in January 2015 and 8.678 million in January 2014.
There were a total of 10.353 million individual customers in October 2015 compared to 9.464 million in January of the same year, and 8.656 in January 2015.
Al-Houshy said the number of SMEs that work with banks increased to 140,516 by the end of October 2015, compared to approximately 127,508 in January 2015, and 112,357 in January 2013.
I-Score was founded on 5 September 2005 as the Egyptian Credit Bureau, and the company’s capital contributes to 25 banks, in addition to the Social Fund for Development (SFD). The company obtained the licence required to practice its activities from the Board of Directors of the Central Bank of Egypt (CBE) on 22 January 2008.
According to Al-Houshy, the company provides information and credit rating services, including compiling information about customers and lenders. The company also forms official, approved records for the information and analyses, classifies, and categorises it while simultaneously creating creditworthiness indicators for borrowers, whether individuals or institutions, that allow them to formulate a proper credit history.
The company also offers financial advice, practical solutions, and specialised consultation work for individuals or institutions who wish to improve their creditworthiness. The company sells information services, associated service products, and other modern services for all beneficiaries in Egypt in a manner that does not contravene with provisions for confidential accounts within banks.
Al-Houshy said I-Score provides several products, the most important of which include the consumer credit report, SME credit report, and credit scoring. The company has begun establishing infrastructure for other products, such as Self Inquiry via Bank Portals, and Credit Score via ATMs.
The company offers value-added products to its bank and company members, such as account monitoring, MIS reports, signature verification, portfolio review, scoring application, NID inquiry, and bankruptcy.
Approximately 92 entities utilise I-Score products, according to Al-Houshy. Forty of these clients are banks while others include the SFD, 10 financial leasing companies, nine mortgage companies, and a number of others that operate in the field of granting credit as well. I-Score is working to attract more institutions to its services.
The company provides credit reports for individuals who have received an unlimited amount of credit and SMEs who have received credit worth up to EGP 1m. This amount is expected to increase in light of the unified tariff established by the CBE for these ventures in December 2015.
I-Score is planning to establish a specialised department to assess the creditworthiness of SMEs and create a collateral registry. This will also include NGOs and microfinance companies in cooperation with the Egyptian Union of Microfinance.
He said these organisations or companies are entitled to choose between direct enrolment with I-Score, or may make inquiries through the Egyptian Microfinance Federation. The company also plans to launch the Self Inquiry via Bank Portals service, the Self Inquiry via ATMs service, and collection services, and develop negative lists. Al-Houshy confirmed a need to take on more interest in financing SMEs in the near future, since these ventures are extremely vital to the Egyptian economy.
There is a consensus among all relevant parties in Egypt regarding the role of these ventures and the positive impact they have on generating income and distributing it equally, as well as the fact that they comprise an element of Egyptian national security.
SMEs face difficulties obtaining funding required for growth and development, which negatively impacts their activity. This causes losses in the work opportunities provided by these ventures. The role of SMEs and their contributions to the economy will be developed based on three main criteria; the extent of their contributions to operation, the volume of production they generate, and their share of the total number of enterprises within the economy.
“Developing SMEs requires building or identifying a supervising agency to develop this sector and ensure coordination between those projects and other bodies and establishing a specialised bank to serve these companies, taking the role of the Social Fund for Development into account,” he said.
The government should create a stimulus plan to support SME growth through several mechanisms, including the tax system. This would provide some facilities for these companies and create homogenous clusters of basic and feed-in industries, allowing them to obtain land with the infrastructure required to establish their projects. The company must also direct 10%-20% of their purchases toward these companies and develop a central database that includes more detailed information on them.
Al-Houshy believes bank employees’ skills also must be developed to serve these businesses, while training and managerial and employee skill development should be provided within the companies.
“In order to support SMEs, non-banking financial products must be provided to finance them, such as leasing, venture capital, and capital funds,” he said. He praised President Abdel Fattah Al-Sisi’s recent decision to grant loans to SMEs with a 5% interest rate, which will prove significant help in providing the loans these ventures require.
He also emphasised a need to establish a collateral registry and a department specialised in SME scoring. Al-Houshy said errors present in the bankruptcy law, with regard to the process of creditors acquiring assets, must be amended.