Commercial Microfinance in Egypt - The Case of the National Bank for Development

This paper is a case study of the program started by the National bank for Development (NBD) to aid microfinance development in Bangladesh. The paper states that:

• The NBD program combines the attitude of NGOs and the sound financial principles of banks to make micro enterprise lending a sustainable operation;
• In the short run:
  • The bank's objective is to provide microfinancial access to credit to those who would be denied credit by conventional banks.
• In the long run,
  • Its objective is to enable the transition of these borrowers into clients under more conventional banking standards.

The paper also discusses the following:

• Features of the NBD program are:
  • Mobile banking units;
  • Repeat borrowing;
  • Quick and transparent loan approval procedures.
• Challenges faced by the bank are:
  • Maintaining steady growth in its client base;
  • Incurring high costs;
  • Finding a level of loan charges that maintains profitability but does not cut off program growth over time.
• Impact of the program, which has been an increase in:
  • The number of employees in enterprises;
  • Incomes by more than 50%;
  • Living standards of micro credit recipients, including nutritional benefit.
• Success factors are:
  • Senior management and staff commitment to the program;
  • An enabling policy environment;
  • Institutional innovations;
  • External catalysts;
  • The ability to change market-determined rates and fees.

The paper concludes that the NBD's experience has proved that:

• The poor are willing to pay to have continued access to simple, quick credit;
• Significant growth can occur in the microfinance industry if commercial banks join in;
• Public policy could help the industry grow by making it easier for microfinance NGOs to borrow from banks or to become banks themselves and accept deposits.