Bank For Development & Agricultural Credit A leading Financier Of Microenterprises
Dr. Mohsen El-Batran, chairman of the Principal Bank for Development and Agricultural Credit, revealed to Amwal Al Ghad the bank’s general strategy for the next five years, saying it targets to expand in financing micro and small enterprises through benefiting from the bank’s wide geographical extension as it has branches in many villages and hamlets more than any other financial institution in Egypt.
El-Batran said the bank targets to activate the role of the Egyptian Agricultural Development Company, totally owned by the bank, in order to establish, in partnership with a foreign company, a housing project in Cairo over a land owned by the bank.
He noted that the bank received EGP 400 million from the Ministry of Finance from its total dues owed by the government.
What is the bank’s general strategy for the next five years?
The Principal Bank for Development and Agricultural Credit adopts a strategy for the next five years aiming at expanding in financing micro and small enterprises through shifting all its investments to micro enterprises gradually. The bank plans to inject between EGP 1.5 billion and EGP 2 billion annually to these enterprises.
In addition, the bank targets to expand in Islamic transactions amid the increasing demand on sharia-compliant banking products as 60% of the bank’s transactions are made in compliance with sharia law. The bank also plans to activate the role of its investment arm, the Egyptian Agricultural Development Company, through expanding in economically feasible projects.
Is the bank competent to expand in financing micro enterprises and how it can compete with banks experienced in this sector?
The bank is characterized by its large geographical expansion in Egypt as it has many branches in many villages and hamlets more than any other financial institution in Egypt. Therefore, the bank will not face competition from other banks in these regions as the other banks focus their investments in Cairo and large cities. The bank will partner with non-governmental organizations in these regions to provide finances to micro enterprises.
In addition, the bank targets to expand in other governorates in order to meet the needs of young farmers and owners of micro enterprises in general. The bank will establish another unit in Assiut. The bank has branches in Minia, Beni Suef, Fayoum, Sharkia, Behira and Qalyubia.
The bank also plans to launch branches in Menofia and Damietta in the upcoming period. The total value of finances offered by the bank to micro enterprises is about EGP 11 million.
What is the bank’s plan for its investment arm?
The bank plans to benefit from the Egyptian Agricultural Development Company through entering in feasible projects and boosting the return on its projects. The bank targets to establish the largest housing project in Cairo over a land owned by the bank. The project will be executed in collaboration with the bank’s investment arm and a foreign company. This project is expected to generate revenue of millions of pounds.
The bank has set up a new system with its investment arm with the aim of reducing the risks of defaults on loans through providing the farmers with their needs including fertilizers, pesticides and animal fodders.
What about the bank’s plan concerning providing Islamic finances?
The bank has recently launched five Islamic banking branches in Beni Suef, Fayoum, Behira, Qalyubia and Cairo, while it received approvals to establish 14 Islamic banking branches. This move came to meet the increasing demand on Islamic banking products as most farmers prefer to conduct their financial transactions in compliance with sharia law.
The bank has 11 Islamic banks which will be restructured in the upcoming period. The bank also plans to expand in providing farmers with in-kind loans so as to reduce the probability of default through providing farmers with their needs such as fertilizers and pesticides. The farmers will pay off the value of the loans after selling their crops. The value of the Islamic deposits held by the bank reached EGP one billion which will be offered as sharia-compliant loans.
Did the bank reach an agreement with the government concerning its dues owed by the Ministry of Finance?
The bank did not reach a final agreement with the Ministry of Finance, but it received EGP 400 million till now; of which EGP 100 million was allocated for the “veal project”. In addition, the government has taken many measures which provided the bank with more finances amounting to EGP50-60 million such as exempting defaulting farmers from their debts, lowering the reserve requirement ratio and raising the rate of wheat subsidies from 6% to 6.5%.
What about the financial lease company that the bank targeted to launch in 2010 in partnership with Tanmeyah Microfinance Company?
The bank was about to establish a financial lease company in partnership with Tanmeyah Microfinance Company when there was a high demand on financial lease services, but the turmoil that followed last year’s revolution has postponed this idea. However, the bank will launch this company after the recovery of the financial lease market.
What is the establishment cost of the bank’s administrative building in El Tagamu El Khames (Fifth Settlement)?
The cost of the bank’s administrative building in El Tagamu El Khames is EGP 300 million, but we will not move to it or sell it in the current period and we are waiting the suitable time to take the right decision.
