Closing session

Good afternoon everybody. First of all I would like to say that it is my honor to be here to represent the Social Fund for Development My name is Medhat Massud and I am the head of the Community Development Unit of the Social Fund for Development.

First of all, I would like to say that the Social Fund for Development has been one of the main actors in the field of microfinance in Egypt since 1992. Since the beginning, the Social Fund for Development has promoted microfinance as an effective tool to fight poverty even if at the beginning we had no unit specifically devoted to microfinance.

The new Egyptian law on SMEs (n. 141, 2004) is giving the Social Fund a wider role as an actor in the endorsement and delivery of these services. Now we are operating with a specific unit which constitutes an apex body working under the umbrella of the Social Fund for Development. Also, the Social Fund is now in the phase of introducing new microfinance services in the Egyptian market: we are testing different ideas and ways to find new microfinance services and we are thinking of delivering diversified products, for example, by funding some kind of micro health insurance programs. The Social Fund is also engaged in projects supported by the UNDP and the EU in establishing a new national strategy for the microfinance sector here in Egypt. I think that my colleague Ghada Waly will give you clear ideas about this kind of activity.

Eng Guido Benevento, Italian Cooperation

Thank you, Dr Massud, for your brief but precise presentation on the effective role of the Social Fund in Poverty Alleviation Programs. Microcredit and microfinance have been growing up year by year, and because of the mandate of the Prime Minister they are now more and more expanding their role in poverty alleviation in Egypt.

At the moment, the Social Fund has the full mandate to manage and to guide the strategy and the policy of microcredit in the country and I wish that, after the discussion and the conclusion of this seminar, we will be able to provide the Social Fund with some inputs for extending and making more effective policies to the field of the Poverty Alleviation Programs.

Mrs Ghada Wali, UNDP Cairo

Thank you and good afternoon. I am the assistant of the country representative of UNDP, and I am responsible for Poverty Alleviation Programs and Small and Microenterprises development projects. Microfinance is one of the fields in which the UN is involved. UNDP has participated with many other partners such as public foundations, the Social Fund for Development and Egyptian commercial banks in this field.

Four years ago the United Nation Development Program supported and implemented a project in El Fayoum Governorate. This project was a pilot project to assess the best practices for a microloan program to be carried out with three public foundations. From such an experience we benefited very much, and assessed that this important sector needs a transparent and clear strategy to be followed by all the actors who work in this field.

In the year 2004, with the supervision of the UNDP and the American Assistance Program, by means of a German subsidy, a one year project, called "Towards a National Strategy for Microfinance", has started. This project aims at having a general view on the entrepreneurial initiatives in Egypt and focuses on the weak points that block the spreading of this kind of activities in the country.

Egypt has carried out projects like these since the 1960s (the productive families projects supported by the Government). Any way, the potential beneficiaries are still underserved: the number of the debtors is not higher than 350/400 thousand people and 80% of the needs recorded have not been covered yet.

The project we have established will last for one year, and will be monitored through round tables and meetings to discuss different issues related to microfinance. Such round tables and meetings are to be prepared with written documents on given issues, such as the role of commercial banks or public foundations in microfinance, but also the legal framework, the product diversification, the information mechanisms, the role of donors.

Each round table has discussed an issue that was prepared by experts, and usually an average of 30 to 50 participants have given their opinion, views or recommendations on the topic. All the ideas have been summarized in a paper: in the end the document collecting the results of each round table will constitute the National Strategy for Microfinance in Egypt.

While we were working on our research, the resolution n. 141, 2004 has passed and this gives the opportunity to define small and micro loan tracking systems. Moreover, the resolution defines the Social Fund as the main body for planning and coordinating in the context of microfinance policies. For these reasons, we contacted the Social Fund in the coordination of the project committee and since then the Social Fund has been working on the creation of a new policy.

The main goal of these round tables is to bring together the Ministry of Social Affairs, the Central Bank, commercial banks, public foundations and the private sector, in order to create a shared vision for the sector. From the discussions, one recommendation emerged: that is, we should call for facilitating the work of public foundations by creating links with banks, which are the natural financial place and not with the donor bodies in order to seek for sustainable mechanisms for this sector.

At this point, the question that arises is about the role of banks and of public foundations. Although many banks have many branches, a great number of workers, mechanisms and infrastructures, they cannot reach the poorest and cannot provide services to rural regions, because they are not aware of the potentialities related to lending to the poor. For this reason they are not able to provide a better service.

However, there are four commercial banks which are already involved in microfinance⁵, but they need more technical support, because they should look at microfinance as an initiative separated from other initiative, with specific mechanisms and needs.

Moreover, the state must adopt specific policies in order to assist this sector, and the Central Bank should apply those policies to help revive and develop this sector efficaciously. Thank you.

Dr Mohammed Tawfik, Ministry of International Cooperation

Thank you Ghada.

I would like to remind all of you that the UNDP was present in the process of the establishment of the Social Fund and assisted the management of the new born institution.

Now, after many years, the Social Fund has become a permanent institution in Egypt and the relations between the Social Fund and UNDP have always been strong and productive. I fully share Mrs Ghada’s opinion that the national policy will establish the rules mainly for some specific bodies, like banks and governmental institutions. Anyway, after years of experience here in Egypt it is our duty to formulate a policy and a strategy which takes into consideration all these experiences, and my wish is that this seminar and the outcomes of the discussion will really give a concrete contribution for formulating this policy.

Now, we will open a discussion.

Open Discussion

Q1: (to Mrs Ghada Wali): you said that the program lasts only one year, and that there is a working group of about 30 persons, that has organized the roundtables. So, what measures have been taken to choose these persons? What recommendations will be submitted? And, to whom will they be submitted? And who will benefit from these recommendations in the conference that will conclude the project next September? Thank you.

Mrs Waly: Regarding the first question, one of the activities which was set at the beginning of the project was the assessment of the stakeholders and the members of the working group have been chosen according to this assessment; they also include commercial banks working in the field of microfinance, such as Banque du Caire. The conclusions of the roundtables will be collected in a paper and submitted to all microfinance practitioners in Egypt, in order to build a National Strategy for microfinance.

Q2: (to Dr Medhat Massud) How do you consider the role of the Social Fund for Development in this strategy?

Dr Medhat Massud: We all know that the Social Fund has many programs, and our experience in the filed might be standardized. In Egypt, we run many programs at a national level, such as the Abolishment of Illiteracy.

If we are talking about recommendations and results, we must fully trust our governmental institutions, whether they are banks, the Social Fund, or the Bank Nasser. There is a great hope in the roles of those institutions for the next coming phases.

Intervention of Mr Anwar Ibrahim Yousef: The latest cooperation between the Social Fund and the General Agencies for Adult learning was not fruitful at all; many problems emerged there and I am ready to study with you all the financial problems, the technical and institutional supports.

Intervention of Mr Magdi Farouk, Director of El Ghad Board, Minia

I would like to thank the Egyptian - Italian project, and give our
thanks to the Social Fund of the Governorate of Minia. I would like to say that we do have two projects with the Social Fund: one on the procreative health, and one on the Abolishment of Illiteracy. The first project has provided 25 job opportunities in 3 years, and through the cooperation with the Social Fund we mean to extend that project, after it had achieved proper results. Concerning the Abolishment of illiteracy project, granted by the Social Fund, we have set up 20 classes for illiteracy abolishment.

Dr Medhat Massud: I think that these topics should not be dealt with at present. Today we are discussing microcredit, studying the success of a project, PAP, and trying to find out the useful lessons from this project. However, since you raised such issues, I will rapidly respond to some of them.

First, the Social Fund is an open agency and its regional offices are in all the Governorates, so any complaints should be made directly to the Social Fund office that is present in your Governorate, and in case it does not solve the problem, you should contact the Cairo based Social Fund office.

Second, the mission of a local association is considered to be a volunteer work, so we must understand that everyone working for any association should obtain his/her rights.

Third, concerning the illiteracy abolishment issue, the Social Fund is not working independently from any national agency in Egypt. I mean that the Social Fund, when dealing with the project of illiteracy abolishment, is not ignoring the role of other agencies. Moreover, an agreement has been almost reached between the Social Fund and the agency branch in the Gavernorate, and the role of a local association is to integrate the implementation of such projects.

Conclusions

Moderators: Eng Guido Benevento and Dr Mohamed Tawfik

Eng Guido Benevento, Italian Cooperation

I would like to present my appreciation to all of you.

You have participated in the activities concerning the management of the microcredit scheme established with the Poverty Alleviation Program. And as Her Excellency, the Minister Ameena El-Guindi as well as His Excellency, the Ambassador of Italy, have said this seminar marks the startup of a new phase of this joint Program. Starting from now, the Program is fully manageable and all the activities can be implemented by you, by the CDAs and by the Federations under the supervision and control of the Ministry of Insurance and Social Affairs.

For the Italian cooperation, this is a very important achievement, and we are very much confident that the project is fully sustainable and all of you will be able to run the activities and even to increase these activities with your own resources and your own efforts.

This is a very big achievement, and I really would like to express the appreciation of the Director General of Italian Cooperation to have reached this point: this was a great challenge for the Italian cooperation in Egypt and the results are very positive. Last but not least, let me express my gratitude to all the staff who worked and is still working to make this project a success.

I think we can summarize the conclusion of this seminar in a few words, as a result of the discussion, of the presentations and of all the four workshops: that it is still necessary to establish proper rules and regulations in the microcredit and microfinance sector and to establish the proper role of some actors like the financial institutions.

The Poverty Alleviation Program has given some indicators on this: it is very clear that the revolving fund applied to microloans for the sake of the beneficiaries has had a huge impact on the life of the community. This capital is not in a bank; in this precise moment almost all of the 28 CDA’s have something like 500,000 Egyptian pounds as outstanding loans. The revenues of the Program are reinvested in activities that have a huge impact on the communities.

PAP focalized on social interventions: after all it is a poverty alleviation program. The Italian Cooperation point of view is that microcredit is a tool of development and it has to be considered as such. This is one of the reasons why we hope to contribute to the debate on the role of the International cooperation on one side and of the traditional financial institutions, namely the banks, on the other.

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5. Also see: Segrado C. "The involvement of commercial banks in microfinance: the Egyptian experience", University of Torino, Italy, MEDA Project "Microfinance at the University", August 2005