The “Egyptian Microfinance Company - Maksab” received the first license, allowing it to engage in microfinance activity based on the application of the “Wakala Investment” formula for its various financing products
The Financial Regulatory Authority (FRA) issued its first license to provide sharia-compliant microfinancing, announced FRA chairperson Mohamed Farid yesterday. The license allows companies to engage in financing micro projects within the non-banking sector that are compliant with Islamic financing formulas.
Farid revealed yesterday that the new license will increase financial inclusion by opening up a new venue of microfinancing options for unbanked microbusinesses.
The “Egyptian Microfinance Company - Maksab” received the license, allowing it to engage in microfinance activity based on the application of the “Wakala Investment” formula for its various financing products.
“This license adopts the Wakala investment instrument, which is an investment contract done by an investment agency on behalf of the investor,” said Farid.
This brings the total number of licensed micro-financing companies in the local market to 19.
Egypt is currently looking into more Islamic microfinancing options and issuing the necessary approvals to enable more forms of Islamic financing, including sharia-compliant murabaha and musharaka financing for companies within the non-banking micro-enterprise sector, revealed the FRA head.
In a statement, Farid stressed the importance of diversifying the applications of financing formulas in general to finance micro-enterprises. He pointed out that this would help accelerate the integration of microbusinesses within the informal economy into the formal economy. He added that this would support the state’s objectives of improving financial inclusion.
According to FRA, around 3.8 million beneficiaries have received EGP 33.3 billion in financing in the first 7 months of 2022, with 60% (or 2.3 million) being women.