Financial Regulatory Authority (FRA) has held an online meeting to discuss ways to overcome obstacles, and presented proposals to develop the financing activities for MSMEs.
Islam Azzam, Deputy Chairperson of the Financial Regulatory Authority (FRA) has held an online meeting to discuss developing funding mechanisms for micro, small, and medium enterprises (MSMEs).
Also participating were members of the FRA’s advisory committee for MSMEs financing, and board members of the Egyptian Microfinance Federation (EMFF).
This comes in light of the importance of these enterprises for the Egyptian state, and the fact that 3.1 million citizens benefit from microfinance activity.
Supporting such enterprises financially will take place in line with the goals of economic development and social justice in accordance with Egypt Vision 2030.
Azzam revealed that demands to directly provide financing to target segments of customers were made during the meeting.
Additionally, the obstacles facing the culture of non-cash payments among business clients was also discussed, especially in micro-enterprises. This particularly relates to complying with the requirements of Law No 18 of 2019, which regulates the use of non-cash methods, while facilitating the means of providing digital finance.
Additionally, the meeting discussed the importance of responsible financing, which will help promote financial inclusion by providing adequate financing for all MSMEs categories. This ensures that justice and competitiveness among agencies are achieved.
The importance of working on developing incentives for financing agencies was also discussed during the meeting. These incentives aim to encourage financing agencies to continue increasing providing financing services in geographical locations, especially in rural areas, where financial services outlets are scarce.
Azzam urged the attendees to continue to move towards non-traditional sources of financing to reduce costs. This includes increasing securitisation operations for micro-enterprise financing activity portfolios, and activating investment funds in transferred financial values.
It would include clarifying the nature of these funds, their role, and the consequent exemption from value-added tax, and would make them a source for providing funds at a convenient cost to finance MSMEs.
Azzam stressed the need for a new mechanism to be established to allow the conclusion of agency or partnership agreements between micro-finance institutions with banks. They would target collecting the savings of micro-enterprise clients and depositing them in banks, which would reduce the cost of finance.
