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Nano Finance in Egypt is boosting Financial Inclusion: the Khashat and Now Pay Loan cases

nanofinance in egypt

Financial inclusion has increased substantially in Egypt over the past couple of years. Data released by The Central Bank of Egypt (CBE)  show that bank penetration jumped 131% from 2016 to June 2022.

Today, out of the country’s 65.4 million citizens aged 16 and above, 60.6% currently have a bank account, totaling 39.6 million people, the regulator said. And now the country is pushing forward financial inclusion. But how to achieve this goal? A suitable answer has been nanofinance.

Smart Solutions for Financial Inclusion: The “Nano Finance Project”

Financial inclusion is one of the main pillars of Egypt’s Vision 2030, an ambitious national agenda launched in February 2016 that aims to eliminate poverty by 2030, achieve social equality and inclusion, develop a robust economy, and encourage innovation, among other goals. 

That’s why in January 2020, the Egyptian government has begun a microfinancing programme called “Nano Finance” to integrate the informal economy in the formal sector and empower economically marginalised people through financing mechanisms that improve their living conditions. The Financial Regulatory Authority said terms and conditions for granting nano loans include a maximum of approximately $190 per individual to be reimbursed in three months. This pilot project has warmly welcomed bu people and financial intuitions both. 

“The Nano Finance product supports the poor class in Egypt, especially craftsmen who need a small capital to jump-start their professional life”, said Yasser Amara, Economic analysist. According to data, the micro-fiancee portfolio surged to EGP 1.5 million, directed to 7,562 beneficiaries, in mid-July 2021, compared to EGP 790,000, directed to 3,429 beneficiaries, at the end of 2020.

In August 2021, the Financial Regulatory Authority approved the launch of the second nano-finance product in the Egyptian market. The product was launched with the aim to cover the financial needs of the neediest persons owning micro-enterprises, including farmers and street vendors, borrowing up to EGP 3,000 to be repaid over a period not exceeding 90 days. 

The Key-Role of Technology 

With its already vibrant entrepreneurship ecosystem, Egypt-based regulators have been making moves to encourage the development of its fintech sector to boost not only digital finance but micro and nanofinance too.

Last year in November, the CBE has launched its Financial Inclusion Strategy 2022-2025, a national development plan focusing on expanding access to financial services, facilitating the introduction of innovative financial products that meet consumers as well as micro, small and medium-sized enterprises’ needs. Including banks too. Following this path, already in August 2017 state-owned investment bank NI Capital launched a LE50m ($3.3m) microfinance arm called Tamweely (Arabic for “funding”) in conjunction with government-backed private investment entity Ayady for Investment and Development, and Cairo-based private equity firm Post for Investments. NI Capital, a privately managed and incorporated subsidiary of National Investment Bank, said Tamweely was part of its commitment to providing finance mechanisms to bolster the local economy, with a focus on Upper Egypt and the Nile Delta.

Two App for nano loans: Khashat and Now Pay Loan 

Improved access to financial services comes on the back of a rapidly evolving fintech sector that’s seen increased consumer adoption and soaring funding activity.  Today there are so many financial apps in Egypt that offer quick credit for emergency purposes such as medical expenses, school fees and more. Among them Kashat and NowPay are the most notable.

Launched in 2019, Kashat is a mobile platform providing micro loan solutions for businesses, unbanked and under-banked demographics in Egypt. Providing micro-loans and nano-financial services to Egypt’s unbanked sector, Kashat is tapping into a market that constitutes more than 70 % of the population. In 2020 it was the first app to offer micro loan service. The users can sign up on the Kashat using their national ID card, a selfie of themselves, and by answering a few questions in the registration form to disclose their details. The users are then provided with a limit if their profile is approved. Kashat allows users to pay back the loans in 61 days over two equal monthly installments.

Headquartered in Cairo, NowPay enables employees to receive salary advances at any time. There is a significant market and demand for salary advances, which is growing rapidly, especially now that the country is facing economic struggles. Employees can request up to 80% of their salary, in advance, at any time. The platform currently serves hundreds of companies that are focused on the wellness of their employees across Real Estate, Manufacturing, Tech and more. However, users can request micro loan too. Using NowPay Loan, users could request  loans from EGP 100 to EGP3000 at low interest rate of 8% per month and a longer repayment period up to 3 months.