CAIRO: Minister of Industry Mounir Fakhry Abdel Nour announced Wednesday that the Cabinet approved a draft law for regulating microloans given to microenterprise owners.
The law aims at finding new mechanisms for funding microenterprises that cannot get funding from ordinary funding institutes due to their size, Al-Maal economic news website reported Thursday.
Abdel Nour said this law will also monitor companies that give microloans to guarantee competence and transparency and that these companies further social justice and fight poverty because the majority of entities who take microloans are from poorer backgrounds.
The draft law will also establish a unit under the General Authority for Financial Monitoring to monitor microloan companies and ensure they are not used in illegal activities, Abdel Nour said.
He also added that the law will decrease the financing gap through the regulation and licensing of microloan companies. The law also defines microloans as loans less than 100,000 EGP ($13,985) and limits them to 5 percent annual interest.
The Federation of Economic Development Association member Fouad Thabet told The Cairo Post Wednesday that Egypt needed this law a long time ago because microloan operations and regulations currently suffer from a lack of organization.