Head of FRA - Mohamed Farid
CAIRO - 30 August 2022: The Financial Regulatory Authority (FRA) issued the first license to a financial institution that allows it to practice the activity of financing micro projects in the non-banking financial sector according to Islamic financing formulas.
Head of the FRA, Mohamed Farid, elaborated Tuesday that the issuance of the new license adds a new dimension to the existing financing mechanisms in the local market in terms of his creation of the “Wakala Investment” formula, which is defined as a contract whereby another person is authorized to invest an amount of money owned in favor of the principal in return for a specified fee with a lump sum or a percentage of invested money.
This comes as a continuation of the efforts to maximize the development impact of all activities that comprise the non-bank financial sector, which would facilitate the access of economic entities operating in various activities and productive sectors to financing services and products.
He added that the authority is currently looking into the possibility of issuing the necessary approvals to allow the use of products based on other main forms of Islamic financing, including murabaha and all types of musharakah for other companies, to be applied for the first time with the non-banking micro-enterprise sector.
Farid pointed out the importance of a diversity in the applications of financing formulas in financing micro-enterprises, which helps to speed up the pace of addressing the problem of the informal economy through its ability to integrate new segments of micro-enterprises owners into the formal sector for the first time, which contributes at positive rates to achieving the goals of the state's strategy towards achieving financial inclusion based on diversification of financing products and their suitability to the needs and desires of all segments of society.
Number of beneficiaries of microfinance services reached about 3.8 million beneficiaries by the end of July 2022, with a financing portfolio of about LE 33.3 billion, of which the share of women amounted to about 60 percent and 2.3 million beneficiaries, and the share of young people of both sexes and beneficiaries of activity services is about 64 percent.
After the “Egyptian Microfinance Company - Maksab” obtained a new license to engage in microfinance activity based on the application of the “Wakala Investment” formula for its various financing products, the number of companies licensed by the Authority to engage in microfinance activity within the Egyptian community has increased to (19) companies.