This could be deciphered as a burden of unemployment but it also points the way that banks should shift their traditional operations towards micro-finance, entrepreneurship funding, along with small and medium enterprises. Financial inclusion has become a nation- wide mandate endorsed by the Central Bank of Egypt. Egyptian banks are faced with a new mandate, which requires new arrangements as it provides rising growth potential.
In the same context, funding clean energy and energy efficiency is a new track that is becoming very relevant to the Egyptian context. What opportunities do you see for foreign investments? There are countless opportunities untapped for Egyptian and foreign businesses. Egypt is currently showing promising growth rates when compared other emerging markets.
Investments in Egypt tend to provide relatively high return compared to risk. Egypt is characterized by a resilient economy that has been able to withstand and overcome internal and external shocks.
Continuing with the structural reform program, Egypt is expected to witness an uptick in growth rates over the medium term due to the inherent advantages in the Egyptian economy; namely a large population, deep market and a highly diversified economy.
What advisory services does Arab African International Bank AAIB offer to help individuals and corporate investors achieve their investment objectives? Its distinction lies in being a front runner in providing outstanding investment banking and corporate finance services. These can vary from short to long-term loans. Our corporate portfolio services include advising on equity placements, mergers and acquisitions, feasibility studies, valuations, escrow arrangements, agency services and raising finance through syndicated loan market.
We also lead the local debit capital market in terms of issuing corporate and securitization bonds. AAIB corporate services is backed by integrated services of its financial subsidiaries along with its regional branches.
With 90 branches in your network, what are your plans for expansion and development of your self-service channels? AAIB has strong business relations with many countries in the region. On the other hand, AAIB has made a significant investment in expanding its local branch network. Egypt has a large youth population, which constitutes a great opportunity for retail banking growth. With a total number of banks in Egypt of 40, number of branches for total banks.
Banking density is 1 branch for each 23, persons which is very low compared to the rest of the world. AAIB is targeting to be the third bank among peers in terms of customer reach by the end of The planned network expansion is to reach almost branches by the end of The additional branches that will be launched during are scattered among different untapped governorates and include branches in strategic areas such as vital Egyptian ports.
The bank also has 2 Auto branches. Enhancement in offering the payroll service as well as an ongoing innovation of new products and market segments introducing unique products and service offerings.
AAIB is now also preparing branches to serve for special needs and is planning to have 5 fully equipped branches. AAIB has evolved from being just a bank to a fully integrated financial group offering asset management, brokerage, leasing, and mortgage services. How does this benefit your clients and what plans do you have for future growth? Therefore, AAIB has realized the benefit of synergies and consolidated services to our clients through its financial arms, perfected by a related diversification within the financial services markets.
Can you tell us more about this agreement and what it means for investors? Besides holding projects and partnerships between the public and private sectors including navigation sector and its affiliated ports. The role of SMEs proved efficacious in the development of many economies around the world including the United States and China.
That is because they are easily initiated and carry benefits to the citizens as well as the state. SMEs have the ability to provide a large number of jobs to subdue unemployment and substitute imports of finished goods. Egypt has a total of 6. Although the government has taken steps to bolster the sector, little success has resulted.
Compliance with the new norms requires working on the demand and supply side categorically. Commercial banks are yet to remain conservative with respect to lending to this segment. The main challenges facing borrowers are collaterals, access to finance, and lack of entrepreneurial skills and managing accounts. Banks have to be equipped with the necessary infrastructure, training of manpower, delivery channels, business and operational model, credit and risk management.
In this context, we are constantly building the infrastructure necessary to substantiate this move. We are structuring a fully-fledged specialized SMEs unit inside our bank, considered the best new revenue streams. Can you tell us about some of the support services you offer SMEs and how does the support offered to SME clients differ from the needs of large corporations?
A green field microfinance company will serve the untapped microfinance segment in Egypt. Creating a completely new microfinance institution that requires an innovative, proactive approach to the challenges of risk assessment and efficiency of the low and middle-income segment. The support given to the SMEs differ from the needs of large companies in many ways. A crucial element in the development of the SME sector is access to finance, particularly to bank financing, given the relative importance of the banking sector in serving this segment.
Small businesses cannot usually afford to pay for the kind of accounting and book keeping services they need, nor can their new employees be effectively tested and trained in advance. Moreover, to compete in global markets, SMEs need to develop new business strategies and deploy new technologies.
The banking sector consists of commercial banks, which are local banks and non-local banks. It also includes specialized banks and financial institutions operating in the fields of investment and credit for industry, agriculture, housing and rural development. In addition, there are branches affiliated to these banks and institutions. Deepening this sector and its reform would lead to higher rates of economic growth.
This mechanism is achieved mainly through the role of the banking sector in mobilizing more savings and channelling them to better investment allocation. This, in turn, would lead to higher productivity and more capital accumulation. To achieve these results, an efficient banking system, prudential controls and a friendly, non-distorted macroeconomic framework are required. The Banking industry in Egypt is amongst the oldest and largest in the region. Banking reform started as part of the open door policies in the mid seventies when foreign banks were allowed to operate in Egypt.
The Government of Egypt has been currently undertaking a comprehensive reform strategy for the financial sector as a whole and the banking system in specific. The goal of banking reform was creating an efficient banking sector which offers better quality services.
The financial reform measures taken in the early s emphasised reform of the monetary and fiscal policies, not the revamping of financial institutions. Egypt is currently moving steadily towards becoming the biggest financial center in the region. Owing to the flourishing privatization program and the prospering domestic bond market, banks have encountered new investment fields which helped them diversify their portfolios and lower their financial risks. Meanwhile, most banks expanded on providing non traditional services such as brokerage, investment consultations, asset valuation and sales, and mutual fund operations which also helped improving capital market services.
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