FINANCIAL INCLUSION IN

EGYPT

NAME: KAREEM MOHAMMAD MAHMOUD MOUSTAFA IBRAHIM

SALAMA
MODULE: UEL-SG-7002-64890 APPLIED BUSINESS PROJECT (64890)
ID No. A2202d13937899
29 Sept 2024
ABSTRACT

Purpose –This report attempts to dive into and explore the theoretical framework, benefits and
the current status of Financial inclusion within Egypt in comparison to other countries in the
Middle East and North Africa region. It will also assess the impacts of the initiatives and
effectiveness of the steps undertaken by the policy makers and regulatory bodies within Egypt
in terms of promoting Financial Inclusion. Furthermore, it provides a list of recommendations
to enhance and promote Financial inclusion.

Design/methodology/approach – Within this research, and in order to achieve the study's

preset goals and objectives, I catered for a qualitative research strategy that mainly enclosed
the use of various qualitative case studies. Particularly, the approach included utilizing
secondary data, which can define as previously published and readily available data accessed.
The secondary material in relation to the study topic acquired from a variety of literary sources.
The research also incorporates a descriptive approach and in-depth interviews with major FI
stakeholders in Egypt. The secondary data that was gathered were then filtered and analysed
using thematic analysis.

Findings – Financial inclusion has got many positive impacts on the economy and finances of
a country. The Egyptian authorities and regulatory bodies upon realizing the impacts of
financial inclusion introduced new regulations and multiple initiatives such as the 2016 law as
well as other regulatory reform were made, and multiple projects were unveiled which all
helped in promoting financial inclusion. Despite these efforts undertaken, it is imperative to
note that there still persists a lot of obstacles that needs to be overcome, and more work is still
required in order to elevate the financial inclusion state to be comparable to the LMIC and
other MENA region countries.

Research limitations/implications – The predominant and main limitation of this research

basically stems from it fully relying on secondary data sources only. The secondary data can in
some of the cases be outdated specially if you are collecting from various sources. Not to
mention, the potential bias for the sources of data.

Originality/value – This reports evaluates the current state of Financial Inclusion in Egypt,
highlights the importance of FI , accesses the effectiveness of the enhancements made, and
proposes potential enhancements for future performance.

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Acknowledgements

I am writing this section to express my sincere gratitude to the University of East London
professors for their invaluable support throughout my research journey. They have not spared
any effort in providing their swift feedback and insightful guidance, which has been
instrumental in shaping each section of this study.

This has significantly assisted me throughout the journey and elevated my research experience.

Thank you

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Contents
1 Section One: Introduction ................................................................................................... 6
1.1 Research Problem & Significance and Background of Research Study.................... 6
1.2 Research Aims and Objectives................................................................................... 8
1.3 Research Question ..................................................................................................... 8
1.4 Research Contribution .............................................................................................. 9
2 Section Two : Literature Review ........................................................................................ 9
2.1 What is Financial Inclusion? ...................................................................................... 9
2.2 Main Parameters for Measuring Financial Inclusion ................................................. 9
2.2.1 Availability ........................................................................................................... 10
2.2.2 Access .................................................................................................................. 10
2.2.3 Utilization ............................................................................................................ 10
2.3 Other definitions of FI and metrics used to evaluate the status of FI ...................... 10
2.4 Advantages of Attaining Financial Inclusion ........................................................... 11
2.5 Brief about Egypt’s Financial Market ...................................................................... 12
2.6 Egypt’s efforts and initiatives to enhance financial inclusion ................................. 12
2.6.1 Reforms Encompassing New Law ....................................................................... 12
2.6.2 Introducing the Electronic payment Services Law No. 18 .................................. 13
2.6.3 Reinforcing Regulations To Protect Financial Consumers .................................. 13
2.6.4 The signature of the Egyptian Government agreements with Visa and
MasterCard ....................................................................................................................... 13
2.6.5 The launch of the “Small and Medium Enterprises Program (2016) ................... 14
3 Section 3 : Methodology, Methods, and Ethical Considerations ..................................... 14
3.1 Research Approach and Design ............................................................................... 14
3.2 Research sampling & Description and sources of secondary data selected............. 15
3.3 Quality of Secondary Data ....................................................................................... 15
3.4 Data Collection Methods ......................................................................................... 16
3.5 Ethical Considerations ............................................................................................. 16
4 Section Four : Research Findings and Results ................................................................. 16
4.1 Introduction .............................................................................................................. 16
4.2 FI Indicators Analysis .............................................................................................. 17
4.2.1 Citizens Financial Inclusion Rates ....................................................................... 17
4.2.2 Women Financial Inclusion Rates........................................................................ 17
4.2.3 Youth Financial Inclusion Rates .......................................................................... 18
4.2.4 Financial Products ................................................................................................ 18
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 4.2.5 Prepaid Cards ....................................................................................................... 19
4.2.6 Total Microfinance portfolio (Banking & Non-Banking) .................................... 19
4.2.7 Number of ATMs ................................................................................................. 20
5 Section Five: Analysis of the Data ................................................................................... 21
5.1 Comparison of Egypt FI against other countries ..................................................... 21
5.1.1 Number of ATM Per 100,000 Adults ................................................................... 21
5.1.2 Number of Depositors with Commercial Banks (in thousands) .......................... 21
5.1.3 Commercial Bank Branches per 100,000 Adults ................................................. 22
5.1.4 Domestic credit to private sector (% of GDP) ..................................................... 23
5.2 Analysis Evaluation of the Current Financial Inclusion Status of Egypt and
Challenges still persisting..................................................................................................... 23
6 Section 6: Conclusion of Dissertation, Recommendations for Business Application and
Implications for Future Research ............................................................................................. 25
6.1 Conclusion ............................................................................................................... 25
6.2 Research Aims and Objectives................................................................................. 27
6.3 Recommendation to enhance Financial Inclusion ................................................... 27
6.4 Limitations of the Study and Recommendations ..................................................... 28
7 Section 7: References ...................................................................................................... 30

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List of Figures
Figure 1 - Financial Inclusion Percentage and Numbers 2023 ................................................ 17
Figure 2 - Women Financial Inclusion Rates ........................................................................... 18
Figure 3 - Youth Financial Inclusion Rates .............................................................................. 18
Figure 4 - Registered Mobile Wallets ...................................................................................... 19
Figure 5 - Number of Prepaid Cards ........................................................................................ 19
Figure 6 - Microfinance Values ................................................................................................ 20
Figure 7 - Number of ATMs..................................................................................................... 20
Figure 8 - No. of ATMs Per 100,000 Adults ............................................................................ 21
Figure 9 - Number of Depositors in Commercial Banks ......................................................... 22
Figure 10 - Commercial Bank Branches per 100,000 Adults .................................................. 22
Figure 11 - Domestic credit to the private sector ..................................................................... 23

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1 Section One: Introduction
1.1 Research Problem & Significance and Background of Research Study

Financial inclusion can be defined or referred to as the process of ensuring access for all
individuals and businesses in a community or country to appropriate, affordable, and timely
financial products and services. Special attention is always given to individuals or businesses
that are either unbanked or underbanked. The concept of financial inclusion is vital for
economies development as it promotes economic growth, sustains development, fosters
economic strength and reduces poverty by allowing people to engage in the formal financial
systems.

The increased emphasis for the financial inclusion indicates a better understanding of the
importance of it and its realized impact for advancement in society and the economy. It
demonstrates how accessibility to financial services is becoming more and more important in
attempting to minimize poverty, as well fostering prosperity, and promoting development. An
additional aspect that has been seen is the increased focus and consciousness about the
noteworthy deficiencies in financial inclusion. For example, half of all individuals worldwide
where nearly 2.5 billion do not have an account with a reputable financial institution.
(The World Bank, 2016)

The corner stones of financial inclusion entail access given to banking services, such as but
limited to savings and accounts checking, various insurance products offered, credit, and plenty
of payments systems. Neither recent developments in the digital financial services field , like
introduction of digital wallets and mobile banking, nor their impacts can go unnoticed. This is
because of their paramount contributions in driving financial inclusion by offering multiple
cost-effective and readily accessible solutions. These technologies are particularly impactful in
developing countries, where traditional banking infrastructure is often limited.

When a higher portion of the economy have access to financial services, they tend to save
securely, invest in services such as education and other emerging businesses as well as being
able to manage financial risks more effectively. This accordingly reflects positively on their
livelihoods and sort of reduces the society income inequality. Not to mention that financial

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inclusion serves in empowering women by enabling them to enhance control over their finances
and subsequently their ability to contribute to household and community welfare.

Due to the aforementioned reasons and many more that shall be discussed within this research
paper, the financial inclusion has managed to become a topic of huge interest, for governments,
researchers, policymakers and many other stakeholders all over the world. The topic acquired
the attention of around sixty seven percent of worldwide regulatory and supervisory
organizations at the national level hence was discussed in forums, like the Group of Twenty (G
20) and around more than fifty nations have established official financial inclusion aims and
goals in recent years.

Like any other part of the world, the financial inclusion has managed to become primary focus
for the Egyptian government and policy makers in Egypt during the recent years. This was
driven by the massive advantages it will bring to the economy and the essential role it would
play in achieving Egypt’s 2030 Vision. Benefits of inclusion include helping small and
medium-sized enterprises attract the unorganized sector, creating jobs, achieving sustainable
growth, and attempting to achieve a more robust economy with enhancing and promoting
financial stability.

Despite the aforementioned benefits discussed, financial inclusion still unfortunately tend to
face several challenges as well as supply and demand barriers that hinder its development. This
includes limited physical access to banks in rural areas, lack of financial literacy, high costs of
implementation for the financial services and others. Some of referred restrictions entailed
issues like cultural obstacles as well as lack of adequate financial resources, and a lack of
financial literacy.

Recent surveys undertaken by researchers have indicated that Egypt still continues to suffer
from high financial exclusion percentages in comparison other countries. Numerous Egyptians
are still substantially excluded from the formal financial system, according to a detailed
analysis of the availability, use, and quality of financial services used by individuals or
companies. Some of the main causes for the exclusion include but is not limited to Cost, lack
of proper documentation and records in addition to the distance barriers are classified as the
main causes. Furthermore, a disproportionate share of young people, women, and those with
low incomes do not have bank accounts. Accordingly, cash transactions are still more

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preferable when it comes to receiving or sending salary and transactions such as informal
borrowing or saving as well as sending or receiving domestic remittances.

The Egyptian government, concerned financial institutions, and technology companies began
working together to promote inclusive financial ecosystems in order to solve these problems.
The efforts undertaken by Egypt’s government and institutions included the introduction of
supportive regulatory frameworks as well as the increase of financial products at more
competitive prices in an attempt to engage more of the low-income portion of the population,
and further included the addition of several diversified financial education programs to the
market.

1.2 Research Aims and Objectives

This research aims to show Egypt's evolving financial inclusion experience, as well as the
challenges still facing the sector and the government's effective efforts to promote it. It seeks
to clarify what is meant by financial inclusion. Further, the research addresses the efforts
undertaken by policy makers and Central bank of Egypt to promote the financial inclusion.
This research will utilize secondary source data to analyse and determine the current stance
with regards to financial inclusion. Finally, the study will also include a list of
recommendations and steps that need to be done to promote Egypt's current financial inclusion
and accordingly attain better financial stability levels.

1.3 Research Question

This research mainly addresses the below questions in full in relation to the financial inclusion
state in Egypt and attempts to provide a roadmap to achieve full inclusion.
 What was the previous status of financial inclusion in Egypt? What is the current state?
What Metrics are used to measure?
 What are the reasons for the current status of financial exclusion and what has changed
(if any) upon analysing the availability, access and utilization factors?
 What were impacts of the steps undertaken by the policy makers and impact on FI
indicators?
 Did the new measures enhance in promoting inclusion? Or did it lead to impeding the
inclusion?
 Is the current state acceptable? And why? Comparison to levels of FI with other
countries in the region.

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  What are the main reasons impacting development?
 What action shall be undertaken by the relevant authorities to enhance the position?

1.4 Research Contribution

This study intends to first and foremost define the financial sector within Egypt and accordingly
provide Egypt's current stance in terms of achieving financial inclusion. The study will also
outline all efforts undertaken by various policy makers during the past years (since 2014) to
enhance the inclusion. The actions taken, laws introduced, and regulations amended were all
necessary and meant to enhance the stance of the financial inclusion within the country and
attract more of the users into the overall system. Statistical results will be leveraged to assess
the impacts of these actions and accordingly evaluate their effectiveness.

The report shall also provide a quick comparison of the achieved financial inclusion figures in
comparison to other inclusion figures around, to understand and have a clearer picture of the
current condition. Last but not least, delving into the persistent issues and major challenges
faced that hamper further development in the event was left unaddressed. Finally, the research
shall provide some recommendations and actions that should be followed and undertaken by
the policy makers to enhance the financial inclusion position, add more value to the services
offered and accordingly promote a more resilient economy and foster equity.

2 Section Two : Literature Review

2.1 What is Financial Inclusion?
Refers to the availability and access of various financial services, to different sectors of a
society. The access to different services shall not be limited to any gender, financial class or
profession. The primary objective of achieving the full inclusion is to engage all society
members in economic activities , facilitate services to both individuals and businesses,
familiarize individuals and businesses with tools and knowledge to better manage their finances
and accordingly promote higher life quality.

2.2 Main Parameters for Measuring Financial Inclusion

A financially inclusive system comprises of three main dimensions, where each contains a
number of multiple indicators. The indicators can be wrapped up into availability, access and
utilization as defined by Sarma (2008) as well as Park and Mercado (2018).

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 2.2.1 Availability
This is always determined or evaluated as the degree of easiness services provided by
the financial sector. Usually numbers like ATMs per 1000 people are used to evaluate.

2.2.2 Access
This defines the accessibility and availability of bank branches and POS machines.
Further, the percentage of individuals who are fifteen years and above who have ban
account and number credit and debit cards.

2.2.3 Utilization
Kempson and Atkinson (2004) defined this as the use of various real financial services
including the frequency and usage duration.

2.3 Other definitions of FI and metrics used to evaluate the status of FI

Other researchers claimed that Financial inclusion level can be determined by evaluating the
below:

 Accessibility for various Banking Services: This defines how easy can individuals
access standard banking services and be able to deposit, save or transfer funds via
various channels and the accessibility of other electronic payment services.
 Availability of Credit funds(Loans): This includes providing access to allow both
society individuals as well as operating businesses and facilitating credits which allows
them to be able to invest in sectors such as education, housing, stock markets, or
entrepreneurship. Alleviating the procedures and stringent requirements for approving
loans serves as a strong factor in encouraging individuals to invest in various sectors
and reduces inflation.
 Availability of Insurance Services: The diversity of insurance products offered that
shall be made easily accessible through predetermined channels so that people can be
able to protect their selves and belongings against various risks, such as health,
property, or income loss.
 Financial Awareness: the level of financial awareness and education for society
members is crucial as it fosters their financial decisions and how well they manage their
wealth.

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  Technological Advancement Utilization: The degree by which technology Is utilized
to reach people in underserved or rural places, an example can entail services such as
digital financial and mobile banking.

2.4 Advantages of Attaining Financial Inclusion

According to Han and Melecky (2013), Financial inclusion allows people an easy and free way
to save, which assist in attaining financial stability since a high usage of bank deposits in turn
helps banks during difficult times. Then, Atkinson and Messy (2013) contends and states that
FI should be managed in the context of a broad process of social and economic inclusion.

Moreover, Turegano and Herrero (2018) stated that further to empirical assessment of whether
Financial Inclusion helps in sorting out income inequality after accounting for other significant
factors like fiscal policy and economic advancement. They concluded that the size of the
financial sector is not as important as financial inclusion (FI) in explaining a significant drop
in income disparities. This implies that Financial Inclusion should be given top priority for
different governments and financial policy makers if the goal is to minimize income disparity.
Furthermore, Zins and Laurent (2016) confirmed in their paper a lot of poverty traps start
forming and obstruct economic progress when financial inclusion is not achieved.

Countries and financial experts all of over the world consider financial inclusion to be a main
driver to economic development. This is because attaining financial inclusion upholds
communities’ financial stability, promotes the quality level of personnel and assists in
alleviating poverty by equipping personnel with the tools to save, invest and plan for their
future.

Multiple researchers, such as but not limited to Sarma and Pais (2008), found that the degree
of financial prosperity in a country is directly interlinked and corelates with the financial
inclusion level upon studying the relationship between financial inclusion and social progress
in forty nine countries. Furthermore, Aro-Gordon in 2016 confirmed the negative impacts of
financial exclusion upon conducting a study such as impeding the development of a sound
savings culture, aiding in tax evasion and other illegal activity, reducing the opportunities open
to small and medium-sized businesses, and erecting obstacles in the way of low-income groups
trying to access banking and other financial institutions' services (Aro-Gordon, 2016).

Some of the key advantages of financial inclusion includes Reduced Poverty, Economic
Growth, increased job creation, increased productivity, social welfare improvement,

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empowerment of women, enhanced access to education and healthcare, promotes technological
innovation, financial stability and social as well as economic inclusion fostering a more
resilient community.

2.5 Brief about Egypt’s Financial Market

It is imperative to highlight that evaluating a nation's level of financial inclusion mandates
developing a robust understanding of the foundations and components of its banking industry
and consider the impact of technological advancements on it. The banking sector of Egypt
comprises of more than 38 domestic and international banks. Furthermore, the Central Bank
oversees 81 different exchange companies as well as one money transfer company in addition
to 19 foreign bank representative offices operating in the country, and 82 financial expertise
houses. In Summary, there are around four thousand five hundred and thirty two bank branches
within Egypt.

2.6 Egypt’s efforts and initiatives to enhance financial inclusion

Primarily driven by the vision of Egypt’s president as well as the financial effective members
and policy makers, the government realized the importance of complementing every segment
of the country onto a comprehensive banking system. Therefore, several measures were
adopted and new regulations were introduced in this regard. Furthermore, multiple
collaborations were initiated as well as a series of new projects were launched. The actions can
be summarized onto the below:

2.6.1 Reforms Encompassing New Law

One of the major attempts made to improve microfinance was to introduce a new law
addressing and regulating microfinance activities. This legislation was published and put to
force in November 2014.The reason being that microfinance is considered as one of the most
effective financial sub-sectors within Egypt provided that it sort of serves both the underbanked
as well as the unbanked.

The primary goal was to put a corner stone in order to establish stringent standards and guides
for the microfinance, hence regulating the full process. Also, this will serve in supervising the
organizations to ensure transparency, risk control and the smooth process progression. The law
further regulates the formation of microfinance institutions.

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2.6.2 Introducing the Electronic payment Services Law No. 18
Upon multiple rounds and revisions, the parliament accredited the electronic payment
legislation which was officially decreed in 1019. This was introduced to mainly promote
payments and foster financial accessibility. Subsequently the president of Egypt signed this bill
into law.

The law mandated all payments to service providers, labours, material purchases, contractors ,
etc.. are to be paid via an electronic payment method instead of the cash payment modes.
Further, the law included also state-owned businesses and any fee to be paid by the individuals
shall be managed electronically. The government added a complete new set of PC devices in
all of its governmental buildings to cater for the new law and cash payments were not accepted
of the dealers by any mean. Furthermore, all civil society organizations were mandated to
implement the new rule in the event they were seeking funds or received any gifts.

Accordingly, and given that a law is now in place, the government released a mobile application
that is managed directly by the CBE enabling mobile phone users to freely and without any
charge proceed with money transfers as well as mobile payment transactions via banking
channels launched in the Egyptian market. The number of users recorded 6.2 million during
the first 3 years upon the launch.

2.6.3 Reinforcing Regulations To Protect Financial Consumers

A Separate administrative department was established upon an instruction received from the
central bank to oversee the protection laws in place and defend services consumers. The
regulation as issued in February 2019 upon consulting with different banks, relevant
stakeholders, and concerned institutions.

2.6.4 The signature of the Egyptian Government agreements with Visa and MasterCard
To facilitate the receipt of the government support/assistance provided to poor families, the
government have managed to sign a memorandum of understanding with VISA by which a
total of twenty-two million families shall receive the support funds via electronic means with
VISA’s services support.

It is worth noting that the government have also signed a separate memorandum with
MasterCard and by which enables access for fifty four million Egyptians to multiple financial
services upon utilizing the digital national ID that was to be established as part of the
agreement. This step aimed to link the ID and registered phone onto the platform hence

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facilitating making payments to government, merchants, service providers, phone bills and
allowing transfers. Furthermore, this allowed the users to also claim their salaries and any
social benefits via the same card of MasterCard.

2.6.5 The launch of the “Small and Medium Enterprises Program (2016)
The bank of Egypt has managed to issue a wide scheme funding four hundred thousand small
and medium enterprises over the course of four years (2016 until 2020) at a discounted interest
rate with a total value circa two hundred billion EGP. The CBE charge was limited to 5%
interest rate in an attempt to support these businesses being the drivers of the economy.

Upon the success of the scheme and the elapse of the 4 years, the banks were instructed to
support the small and medium business with a higher value reaching to twenty percent of each
bank’s portfolio. Furthermore, each bank was requested to establish a separate department with
the bank to monitor and support as well as offer financial services to the businesses to ensure
they succeed. It is worth noting that circa forty-nine billion EGP were invested as a result of
the aforementioned initiative until 2017.

3 Section 3 : Methodology, Methods, and Ethical Considerations

3.1 Research Approach and Design
In order to address the critical components within this research, the study utilizes interpretivism
as an epistemological technique. Adopting the interpretivism philosophy, being based on
subjective and socially constructed assumptions. In terms of human context, this philosophy
enables a nuanced comprehension of the research's many components. The research topic being
mainly subjective, interpretivism is chosen as the epistemological technique to address the
study’s aim and objective. Adopting the aforementioned made it feasible to assess Egypt's
current situation in accordance with various strategies adopted and their subsequent impacts on
the economy.

The study typically utilizes an inductive methodology to critically evaluate the theoretical
knowledge within the context of the research. The strategy is best suited for qualitative research
and can assist in acquiring and processing a large amount of data. In reference to the study of
Heyle and Jacobs (2017), this method of research is employed in the study to acquire a
significant amount of data pertaining to the qualitative research.

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3.2 Research sampling & Description and sources of secondary data selected
Within this research, and in order to achieve the study's preset goals and objectives, I catered
for a qualitative research strategy that mainly enclosed the use of various qualitative case
studies. Particularly, the approach included utilizing secondary data, which can defined as
previously published and readily available data accessed. The secondary material in relation to
the study topic acquired from a variety of literary sources. In order to ensure that the study
research topic is adequately addressed from various angles, the qualitative research technique
was applied.

To address the study's goals and objectives, the qualitative method of study adopted would
entail using scoping reviews of the literature, entailing collecting specific data from relevant
journal articles in the area of study and systematically analysing and reviewing them. It is
imperative to note that the main goal of the scoping review for the literature is to identify,
consolidate, and summarize the major findings upon conducting the thorough analysis of the
current situation as well as the steps taken by the governing bodies to enhance Egypt's inclusion
in order to recommend future actions in order to achieve financial inclusion.

The aforementioned technique will potentially support in evaluating the primary problems and
determining the industry's benefits, identifying drawbacks, highlighting possible opportunities,
and underlining major challenges in an attempt to foster future growth and sustain
development. Furthermore, and as confirmed by (Purssell and McCrae, 2020) during their
study, the aims and objectives may be met using exploratory evidence that are to be acquired
from selected journal articles using scoping reviews.

3.3 Quality of Secondary Data

The Central Bank of Egypt, on a monthly basis, issues reports and bulletins that entail
information on the reported performance and status of the standard Financial Inclusion
indicators outlining the banking sector performance. It is imperative to note that I relied, in
this research, on the FI indicators from various Central bank issued reports, posted online. The
remainder of the data used in the research was obtained and analysed from the data shared by
the world bank, in addition the journals posted for the same subject and other publications
from well know international bodies, published research papers, all served as the data bank for
this research.

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3.4 Data Collection Methods
The secondary data was gathered by finding and choosing the aforementioned internet
databases as well as journals that had important data and information related to the financial
inclusion status, steps undertaken and current state. The secondary data that was gathered were
then filtered and analysed using thematic analysis. The investigation made use of secondary
data from well recognized sources such as the global Findex as well as another source of data
called FAS Database, including ownership of debit and credit cards, ATMs, and deposits not
made and amount of loans taken from banks. In particular, the research utilized multiple
methods and graphical representations to answer the research questions raised.

3.5 Ethical Considerations

While collecting the data from secondary sources, I ensured work of other researchers and
writers is given due credit and properly referenced. Given that the secondary data incorporated
for research purposes in-text is one of the main ethical challenges associated with the present
investigation,
the issue of plagiarism was eliminated by acknowledging the authors or researchers who
contributed and worked on developing the secondary databases utilized within this research.
As advised by (Ryan, 2018), I ensured to preserve the validity of study outputs and avoid
duplication, all authors' ideas and opinions are only used as references and are well cited.

4 Section Four : Research Findings and Results

4.1 Introduction
To analyse the current state of financial inclusion within Egypt, secondary data posted by the
Central Bank of Egypt as well as other regulatory institutes and statistical reports have been
analysed to extract FI related. Accordingly, graphs representing the trend over the past couple
of years were formulated in an attempt to study the change impact for the steps undertaken by
the government and other regulatory agencies to foster Financial Inclusion. The factors
assessed included but was not limited to FI rates, women FI rates, Youth FI rates, Financial
products(wallets), pre-paid cards, number of ATMs and Auto finance portfolio.

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4.2 FI Indicators Analysis
4.2.1 Citizens Financial Inclusion Rates
The Central Bank of Egypt (CBE) has unleashed the values of FI indicators as of December
2023 reporting that, the number of adults above 16 years who has got access to transactional
accounts such as bank accounts, Egypt Post accounts, mobile wallets and prepaid cards, has
risen up to around 46.9 million citizens out of a total of 66.4 million recorded adults.

Thus, the percentage of financially included citizens (16 years and above) has surged to 70.7%
at the end of 2023, compared to 64.8% at the end of 2022 (5.9% increase in one year) and
marking up a remarkable growth rate of 174% during the period from 2016 to 2023, as per the
Financial Inclusion Datahub Indicators published by the Central Bank of Egypt.

Figure 1 - Financial Inclusion Percentage and Numbers 2023

Source: Central Bank of Egypt. (2023, December 30)

4.2.2 Women Financial Inclusion Rates

With regards to the women inclusion, the indicators revealed a noticeable increase in the
number of financially involved women, reaching up to 20.3 million out of a total of 32.3 million
adult women recorded by the end of December 2023. This marks around 62.7% of the total
women are deemed financially included. Comparing the figures against the 17.1 million
included in 2016, we record a 244% increase from 2016.

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Figure 2 - Women Financial Inclusion Rates
Source: Central Bank of Egypt. (2023, December 30)

4.2.3 Youth Financial Inclusion Rates

The financial inclusion percentage for the youth has reached 51.5%, with a growth rate of
48.5% if we compared 2023 against the values in 2020, now in 2023 totalling 18.8 million
residents out of a total of 36.6 million against 12.7 million in 2020.

Figure 3 - Youth Financial Inclusion Rates

Source: Central Bank of Egypt. (2023, December 30)

4.2.4 Financial Products

Last year, Rami Aboulnaga, the Deputy Governor of the Central Bank of Egypt (CBE),
confirmed that the number of Instapay clients (service that includes mobile transfers) and
mobile wallets exceeded 39.4 million users by 2023 compared to 15.2 million in 2019.

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According to Aboulnaga, the number of financial services businesses increased from 32 to 177,
helping to attract around $800 million between 2017 and 2022.

Figure 4 - Registered Mobile Wallets

Source: Central Bank of Egypt. (2023, December 30)
4.2.5 Prepaid Cards
The number of prepaid cards issued have increased from 21.9 million in 2020 to 30.3 million
in 2023 hence marking around 38% increase within a period of three years.

Figure 5 - Number of Prepaid Cards

Source: Central Bank of Egypt. (2023, December 30)

4.2.6 Total Microfinance portfolio (Banking & Non-Banking)

The Total amount of microfinance provided to institutions have risen significantly from 6.4
billion EGP in 2016 to 87.5 billion EGP is 2023. The number of beneficiaries have
correspondingly increased from 2 to 4.6 millions. It is worth noting that during this period the
pound was devaluated twice from 15.6 EGP per dollar to circa 40 EGP per dollar.

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Figure 6 - Microfinance Values
Source: Central Bank of Egypt. (2023, December 30)

4.2.7 Number of ATMs

The number of ATMs provided is considered an important factor reflecting the availability of
financial services as it accounts for the ability and access of individuals to enable withdrawal
or deposits at any time without having to visit a bank office. One of the main drivers for the
Central Bank's new law issued on September 2020 in favour of the payment systems and
services, as well as financial technology to keep up with global advancements aimed at
boosting the efficiency and effectiveness of the financial system. The number surged from
6,488 across the country to 22,150 in 2022.

Figure 7 - Number of ATMs. Source: STATISTA. (2022, June 28)

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5 Section Five: Analysis of the Data
5.1 Comparison of Egypt FI against other countries
5.1.1 Number of ATM Per 100,000 Adults
The values of ATM numbers were compared against other countries such as UAE, Saudi
Arabia, Turkey, Algeria, Morocco, and UK. Despite Egypt’s improvement since 2004 where
the number of ATMs was 2.65 ATM per 100,000 adults and increased to 27.56 ATM per
100,000 in 2021, the number in comparison to other countries such as UAE (52.49), Saudi (62),
UK (96) and Turkey (80.37) indicate that much work is still needed and the number of ATMS
need to further multiply.

Figure 8 - No. of ATMs Per 100,000 Adults

Source : STATISTA. (2022, October 3). Egypt Number of ATMs 2022

5.1.2 Number of Depositors with Commercial Banks (in thousands)

The number of depositors in commercial bank is also deemed one of the important factors when
accessing the financial inclusion of a country. Despite that it gets impacted by other factors
such as the financial stability of the country which either positively or negatively is reflected
on the depositors, hence influencing their decision. Looking into the figures reported, Egypt
within 2021 has got 385.4 compared to values such as 1124 for UAE and 1344 for Saudi Arabia.

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Figure 9 - Number of Depositors in Commercial Banks
Source : STATISTA. (2022, October 3). Egypt Depositors 2022

5.1.3 Commercial Bank Branches per 100,000 Adults

In continuation to the data assessment undertaken within this research, i went to explore the
number of commercial banks per 100,000 adults where date from Egypt was compared against
those from UAE, Saudi, Turkey, Qatar, Algerie, Morocco and UK. The data once more showed
an improvement in Egypt’s numbers increased from 4.6 in 2011 to 6.8 in 2021. This is mainly
because of increase in banking services in Egypt. However, the number of branches is still
significantly lower than those in Morocco (22.1), Turkey (15.6), Qatar (8) , UAE(7.6) and
Saudi(7.4) further indicating that more branches need to be introduced.

Figure 10 - Commercial Bank Branches per 100,000 Adults

Source : STATISTA. (2022, October 3). Bank Branches 2022

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5.1.4 Domestic credit to private sector (% of GDP)
The Domestic credit to the private sector mainly reflects the sum of money where financial
institutions such as but not limited to banks inject to various businesses and give to individuals.
The form can vary to include loans, credits and other financial support manner provided to
private entities. The graph below shows the percentage of the GDP given to those businesses
and Egypt is compared to other countries within the MENA region such as Morocco, Saudi
Arabia, UAE, Turkey and Tunisia. The Values show that the percentage of the GDP within
Egypt has significantly varied since 2011 where the percentage was 31.2 and dropped to 29.3.
These values are way off other countries in terms of magnitude. Morocco tops with 87.8,
followed by Tunisia and UAE (64.8) and 51 for Saudi and Turkey.

Figure 11 - Domestic credit to the private sector

Source : STATISTA. (2022, October 3). Bank Branches 2022

5.2 Analysis Evaluation of the Current Financial Inclusion Status of Egypt and
Challenges still persisting

Upon thoroughly analysing the data collected entailing the financial inclusion parameters, it is
evident from that the availability, application, and calibre of the financial services offered
within Egypt and financial inclusion indicators including those offered to people or businesses
that Egypt has not yet been able to keep up with other MENA nations with respect to financial
inclusion. Despite the evident progress achieved during the past decade, many obstacles still

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persist albeit the extensive array of initiatives and actions undertaken by the governmental and
regulatory bodies.

The actions and legislations changes have undoubtedly elevated the financial inclusion levels.
Yet, more work is still to be done to address the resisting causes and shortfalls should Egypt
expand on the preliminary outcomes that have been recently attained.

I have summed up the top tier amendments that require attention by the regulatory authorities
within the below:

First and foremost, many people are still shut out of the official financial system in Egypt, even
if financial inclusion metrics have improved recently. For the remainder of adult Egyptians that
are still unbanked, it is imperative to note that adults in some cases are still unable to own their
own accounts due to the unjustified expense that get charged for people to first open an account.
Secondly, the lack of documentation where many of the people specially in the rural areas are
less educated hence do not care about documentations, despite the extra charges for issuance
of the documents required which they are not willing to pay. Furthermore, given the scarcity
of banks, specifically outside the main cities (rural areas) , the distance to the nearest
established bank plays a major role. This is because the nearest banks in some are a few hours
away from where they live. The density of banks and the quantity of branches in villages was
relatively constant. Hence, the regulatory authorities shall re-examine opening additional
branches which is now deemed super necessary. The government shall attempt to reduce the
restrictions enforced on bank developments to enable them to grow and subsequently
accessibility shall improve.

Adding to the above and in summary, thirty-eight banks maintain their operations in Egypt,
with four thousand and two hundred branches and 22,500 ATMs. financially included citizens
(16 years and above) has surged to 70.7% at the end of 2023, compared to 27.4% at the end of
2016. Also, it is worth noting that 62.7% of the total women are deemed financially included.
Comparing the figures against the 17.1 million included in 2016, we record a 244% increase
from 2016. Moreover, the financial inclusion percentage for the youth has reached 51.5%, with
a growth rate of 48.5% if we compared 2023 against the values in 2020, now totalling 18.8
million residents. Additionally, the mobile wallets exceeded 39.4 million users by 2023
compared to 15.2 million in 2019. Besides, the number of prepaid cards issued have increased
from 21.9 million in 2020 to 30.3 million in 2023. Furthermore, the Total amount of

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microfinance provided to institutions have risen significantly from 6.4 billion EGP in 2016 to
87.5 billion EGP is 2023. Finally, the number of ATMs surged from 6,488 in 2013 across the
country to 22,150 in 2022.

However, As demonstrated earlier in the earlier section, ATMs machines and bank branches in
Egypt is lower if compared to other neighbouring countries within the MENA region. Most of
the ATMs and bank branches are distributed within the big cities where upper Egypt suffers
from scarcity of banks and ATMs. The percentage of the adults possessing accounts within
banks went from 9.7% in 2011, to 14.1% in 2014, 32.8% in 2017 to 70.7% in 2023. Similarly,
the numbers of females (adults) who own bank accounts elevated from 6.5% in 2011, 9.3% in
2014, 24.3% in 2017 to 62.7% in 2023 (World Bank; CBE Reports).

6 Section 6: Conclusion of Dissertation, Recommendations for

Business Application and Implications for Future Research
6.1 Conclusion
Financial inclusion has got many positive impacts on the economy and finances of a country.
Due to its diverse advantages, financial inclusion has gained significant attention. Pros of
financial inclusion are numerous and entail but not limited to reducing poverty poverty,
fostering economic growth, enhancing the country’s financial stability, and limiting the income
disparity among citizens.

The Egyptian authorities and regulatory bodies upon realizing the impacts of financial
inclusion introduced new regulations and multiple initiatives such as the 2016 law as well as
other regulatory reform were made, and multiple projects were unveiled. Egypt succeeded in
enhancing payment connectivity, and laws were introduced by regulators to enhance and
promote cross-border transfers using mobile wallets. Moreover, during 2013, the country was
part of the Global Alliance for Financial Inclusion. Furthermore, the regulatory body called
highest council for Investing approved the creation of a payment council in 2016, to facilitate
the move to an economy without cash, automating payment systems, and fostering higher
financial inclusion. The Central Bank also introduced a couple of initiatives to assist with the
financial inclusion aim, such as drafting new regulations controlling mobile-based payments
as well as enrolling the event "Week for Financial Inclusion".

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Despite these efforts undertaken, it is imperative to note that there persists a lot of obstacles
that needs to be overcome, and more work is still required in order to elevate the financial
inclusion state to be comparable to the LMIC and other MENA region countries.

Upon examining the FI factors presented within this report, it is evident that a significant
portion of Egyptians (more than 30% of adults) remain out of the financial systems. Main
reasons include but is not limited to Distance obstacles, lack of proper paperwork,
documentations and individuals who are not registered in a permanent place or are stationed in
remote areas (Thebes Consultancy, 2017; Villasenor et. al., 2017), and elevated cost for opening
accounts and subscribing to services are major contributors to this financial exclusion state and
limits the regulatory bodies attempts and initiates.

Till date, all users within Egypt still favour cash payments when it comes to getting paying
goods, paying for services, sending and receiving domestic remittances, and even when it
comes to informal borrowing and saving, cash dealings are much more preferred. Further, the
availability of POS material at sellers is not something reliable and cash payments are
predominantly used instead.

In order to address these concerns, this report recommends adopting swift and immediate steps
to reduce financial barriers relating to cost of services offered by banks, easing the
administrative requirements to open accounts, and the physical barriers related to distances of
branches and availability of ATMs and POS machines to promote financial inclusion.
Furthermore, expanding the services offered through mobile money and electronic banking.

Additionally, the regulatory bodies and government would be advised to inject more funds to
different businesses' allowing them to expand. Moreover, the interest rates applied, and the
collateral requirements shall be altered allowing users being individuals and businesses to
obtain more funding. Last but not least, establishing a bank's collateral policy that accepts an
expanding number of transportable assets, is now more crucial than ever. Finally, the
development of a comprehensive financial inclusion plan with specified measurable targets
must be established and implemented to ensure the continuous improvement of financial
inclusion levels.

The heavy reliance on cash for doing transactions is a critical issue Egypt is facing as it fosters
the growth of the non-formal economy, also it impairs the any culture that supports savings,

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facilitates a better environment for money laundry and terrorism finance as well as allowing
the progress of other illegal activities.

6.2 Research Aims and Objectives

This research aimed to define what financial inclusion is and its main components comprising
of utilization, access and availability. Further, the paper elaborated on the multiple benefits
attained when financial inclusion is achieved such as reduced poverty, economic growth,
increased job creation, increased productivity, social welfare improvement, empowerment of
women, enhanced access to education and healthcare, promotes technological innovation,
financial stability and social as well as economic inclusion fostering a more resilient
community. Additionally, the paper spotted on Egypt's evolving financial inclusion experience,
that was proved to have been significantly improved during the past 10 years looking into the
surge of the FI indicators, as previously elaborated in Sections 4 and 5 of this research. The
efforts exerted to attain these improvements can not go unnoticed and is solely deemed to be
the result of invoking multiple laws to promote FI and further to the governmental bodies
course of actions undertaken fostering higher inclusion rates.

However, despite the significant improvement, the FI indicators still show that Egypt has got a
long way to cover before being comparable to the LMIC and other MENA region countries.
This is mainly because there still persists a lot of hurdles that need to be overcame, and more
work is still required in order to elevate the financial inclusion state.

This study also explored a list of recommendations and steps that need to be done to promote
Egypt's current financial inclusion and accordingly attain better financial stability levels as
highlighted in Section 6.3.

6.3 Recommendation to enhance Financial Inclusion

Upon analysing the weak points halting the progression of financial inclusion, below are some
of the recommendations highlighted to aid in fostering the financial inclusion state in Egypt.

First and foremost, implementing various measures and policies to attempt to close the gender
gap. Further, working on breaking down the gender-insensitive banking is a must. This can be
done by assigning employees to assist women in lending initiatives, designing special loan

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packages catered based on their needs as well as assigning certain branches specialized to
women.

The government and regulatory bodies to collaborate with institutes to introduce more tech
development and utilize of digital platforms to help overcoming distance restrictions, reduce
transactions costs and enhance transparency.

Egypt being one of the lowest MENA region countries in regard to the share of loans dealing
with movable assets where land is the main focus always. Thus, banks shall show more
flexibility to accept more of the moveable assets that will help individuals secure more loans.

Last but not least, more laws and legislations concerning the consumer protection measures
must be introduced order to provide customers with higher confidence and further protect them
against risks, fraud, and criminal activities.

Finally, Utilizing the post offices in enhancing the financial inclusion given their outreach and
positioning in comparison to the banks. They are considered more likely than traditional
financial institutions to allow access for people to especially for the poor and less educated.

6.4 Limitations of the Study and Recommendations

The predominant and main limitation of this research basically stems from it fully relying on
secondary data sources only. The secondary data can in some of the cases be outdated specially
if you are collecting from various sources. I recommend in further researches to utilize primary
data along with the secondary.

Secondly, the dependence on secondary data from different organizations that in their view
might measure financial inclusion using varying criteria can cause misinterpretation and
confusion hence impairing the comparison and analysis of results.

Furthermore, there is a Potential Bias in the Data Sources due to institutional views or
perspectives, funding sources that might influence or mislead the researcher or reader. These
biases could potentially skew the findings and limit the objectivity of the analysis.

Finally, the research should have dived more into the causes of the issues restraining further
development in financial inclusion. Also, again more data will have to be utilized and deeply
assessed and special attention shall be given to the rural areas and the issues individuals living
there are exposed to rather than relying on researchers’ data and journals shared by

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professionals who belong to major cities such as Cairo, Alexandria, Giza etc and have not been
to these areas before.

Word Count 6787 Word

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7 Section 7: References
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 17. Demirguc-Kunt, A., Beck, T., & Honohan, P. (2007). Finance for All? : Policies and
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