Commercial Banking and Microfinance in Egypt: National Bank for Development

This report describes the microfinance efforts of Egypt's National Bank for Development (NBD), the only commercial bank in the country that has established a separate unit for providing finances to the entrepreneurial poor. The report reviews the microfinance industry in Egypt and analyzes the NBD's microfinance program.

The paper discusses:

• Potential for commercial banks in microfinance - it lists reasons why banks appear well suited to lead this industry;
• Microenterprises and their enormous role in Egypt's economy;
• The National Bank for Development's microfinance program - it states that the NBD realized that providing loans to micro and small enterprises would not only combat poverty but would also provide jobs to this segment of the population;
• The objectives of the program:
  • Providing access to credit to micro and small enterprises that would otherwise be ignored by commercial banks;
  • Helping small borrowers become clients under more conventional banking standards;
  • Improving the quality of life of small borrowers while teaching them to increase control over their financial resources.

The target groups of the program were small borrowers, artisans and other entrepreneurs neglected by conventional banks.

• The credit methodology was:
  • The loan had to be approved;
  • Savings account was mandatory;
  • Loans were monitored and installments collected periodically.
• The financial results were: the bank demonstrated impressive institutional capacity and profitability.

The paper concludes that the NBD has shown microlending to be highly profitable. Microcredit borrowers are willing to pay higher costs for convenient and timely services.