Egypt’s movable collateral registry collects 14,000 assets since March: I-Score

By Amwal Al Ghad English On Oct 16, 2018

Mohamed Kafafi, chief executive of the Egyptian Credit Bureau (I-Score), speaking at the Egyptian Third Annual Leasing Conference in Cairo on October 16, 2018.

Egypt’s registry for movable assets, launched earlier mid-March this year, had collected 14,056 collaterals worth around 424 billion Egyptian pounds ($23.6 billion), head of the Egyptian Credit Bureau (I-Score) said on Tuesday.

Aiming to reduce credit risks related to loans to small and medium-sized enterprises, Egyptian government and I-Score launched last March the country’s first collateral registry for movable assets. The registry will inform banks’ credit decisions and improve their ability to secure movable collateral, such as a borrower’s machinery, inventory, patents, and crops among other assets.

Moody’s Investors Service had lauded the move describing the country’s movable collateral registry as “credit positive” for the banking sector.

“We expect the registry to help banks reduce their credit risk, particularly for loans to SMEs and especially smaller and less-established SMEs, whose movable assets are often the main or only collateral available to a lender,” the ratings agency stated.

“The registry will allow banks to check whether pledges of movable assets are already pledged elsewhere and will allow banks to establish the priority of creditors against third parties, diminishing their credit risk,” it added.

Such reform has resulted in the registration of around 14.6 million people and 288,000 SMEs in I-Score, the company’s chief executive Mohamed Kafafi said at the Egyptian Third Annual Leasing Conference.

Founded in 2005, I-Score provides services to credit providers including banks, non-bank financial institutions, and suppliers of goods and services for taking lending decisions. It maintains a database of credit information for SMEs and consumers and enables authorised users, I-Score members, to access I-Score database to carry out creditworthiness checks on consumers.

SMEs, which account for about 80 per cent of the country’s GDP, have been hurt by a lack of access to financing due to “relative lack of financial transparency” the report said. This made the government launch an initiative to increase SMEs’ access to finance in 2016, whereby the central bank instituted a requirement to increase lending to the SME sector to 20 percent of total loans by 2020.