Gamal Negm, Deputy Governor of the Central Bank of Egypt (CBE), said that the CBE affirms its permanent role in supporting the national economy and works on the soundness of banks’ performances, keeping up with the most important international developments that affect the Egyptian banking market positively.
Negm added that financial inclusion is one of the most important international concepts that have attracted the attention of international organisations and central banks in general, which includes many banking concepts and principles that lead to achieving the goals of the state as well as the development of society.
This was mentioned in a speech delivered by Negm during the opening of the 9th annual conference of the Egyptian Banking Institute held last week.
According to Negm, financial inclusion means providing all financial services to different segments of society, and its institutions and individuals, especially the poor and the marginalised segments. It is also focusing on providing financing to small and medium sized-enterprises (SMEs).
He added that this is being implemented through the official channels of the financial sector, including banking transactions, such as savings, credits, insurance, financial leasing, or other financial services, in addition to creating more suitable financial services at competitive and fair prices, working on the rights of consumers of financial services and encouraging all categories of citizens to manage their funds and savings properly to avoid resorting to informal channels and means that are not subjected to any control.
Studies have confirmed the difficulty of achieving financial inclusion without having a stable financial system, and it is also difficult to continue to achieve financial stability of a system that includes segments of the population that are excluded financially, socially, and economically, according to Negm.
He stressed that the stability of the financial system is a fundamental element to resist unfavourable economic conditions. He pointed out that financial inclusion enhances competitiveness among financial institutions and leads to diversification of financial services provided to customers, in addition to its role in incorporating the informal sectors into the official economy.
Negm pointed out that as part of the CBE’s efforts towards promoting and consolidating concepts of financial inclusion, as well as its social and economic role, the CBE launched several initiatives in the market, including initiatives that encourage financing companies and SMEs.
He revealed that the number of companies that were granted credit facilities between the issuance of this initiative on 31 December 2015 and 31 December 2016 amounted to 37,000 SMEs at a value of EGP 101bn.
Negm added that the CBE has launched another initiative to stimulate low-income and middle-income real estate financing, in order to put an emphasis on delivering subsidies to various segments of society. He said that the initiative was extended to include lower and middle income people.
Negm pointed out that real estate financing companies were involved in the initiative in order to open new channels of marketing to them. The CBE also approved financing pensioners, beneficiaries of pensions, and financing of people with special needs and freelancers.
According to Negm, the total value of real estate financing directed to the low and medium income people under the umbrella of the initiative since the launch in February 2014 until 30 April 2017 is EGP 6bn.
He added that besides launching these initiatives, the CBE has issued several instructions to strengthen the financial efforts, including instructions, to open small bank branches, the rules of operating mobile payment orders, and the rules governing the provision of banking services through the Internet.
He pointed out that the rules governing the provision of mobile payment services included expanding the scope of the service providers to include post offices, branches of SMEs, and non-governmental organisations (NGOs).
According to Negm, these rules also included the possibility of providing all types of payment and collection services in Egypt via mobile phones, and providing new financial services such as payroll, collection of bills, collection of micro-finance installments, as well as government payments, and remittances.
He pointed out that the CBE held several meetings involving the relevant parties, including the FSA, the Egyptian Company for Credit Information i-Score, and Egypt Post. A committee will also be formed to collect and analyse data and information on financial inclusion, and establishing an independent department for financial inclusion in the CBE.
He added that the CBE joined the financial inclusion team of the Arab banking supervision committee through a decision of the Council of Arab Central Banks Governors. It also joined the international alliance for financial inclusion and one of the working groups of this alliance in order to benefit from the technical expertise of its members.
In terms of the main challenges that impede the achievement of financial Inclusion, Negm said that the availability, quality, and reliability of the data are some of the most important obstacles, in addition to the coordination and cooperation with the concerned parties in a legal framework.
He noted that the CBE is preparing a report on the status of financial inclusion in Egypt to determine the objectives and policies to be adopted to support the financial inclusion. The CBE is also seeking to stimulate micro-finance through an initiative to be launched by the end of May.
He added that the CBE is also considering issuing instructions to protect the consumers of financial services, in addition to its keenness on spreading the financial culture among all citizens, which started by preparing the financial education strategy through the Egyptian Banking Institute.