- Egyptian business women have high microfinance rates
- To cope, many turn to online loan clubs
- New applications provide a lifeline in the epidemic
CAIRO, Dec. 30 (Thomson Reuters Foundation) – Nagat Mohammed was in critical condition. She borrowed money from a microfinance company to continue her business after the sale of her clothing store in the Nile Delta in Egypt – but she did not have enough money to repay it.
The 43-year-old entrepreneur has turned to traditional gaming lending system ‘Gamame’ to escape bankruptcy – turning it into an app in the 21st century.
“It was a real lifesaver,” Mohamed told the Thompson Reuters by telephone.
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“I couldn’t sleep because of the debt, but having this app saved me and my children.”
Gamame is a type of community savings pool that operates as a peer-to-peer credit system.
Members place a fixed and equal amount of money each month in a common pot. At the end of each month, one person is awarded the full amount until everyone gets their turn.
Gamas have long been unofficial and offline, but the technological advances now being made are providing financial support to women entrepreneurs in Egypt.
One in five Egyptian workers is a woman, according to the World Bank, and many run their own small businesses or home-based activities.
That makes it difficult to get a loan from a bank, which requires a fixed salary or a proof of ownership of a shop. Micro lenders typically charge up to 40% higher interest rates.
Many online games have no interest, and the registration requirements are very low: just upload an ID, sign a physical contract and submit monthly income statements.
The app allows members to pay a fee to attend the first installment, thus resolving outstanding debts and avoiding new loans at high interest rates.
Mohamed turned to Monfelous, an online app to help her microfinance company pay her ,000 15,000 Egyptian (($ 954).
“I finally paid off my loan two months ago. I am joining another financial club to grow my business and support my son’s marriage,” said the mother of three.
Many Egyptian women entrepreneurs returned to the Gambian model during the severe epidemic.
According to a study by the Egyptian Ministry of Planning, three-quarters of businesses will be reduced by 2020 and 9 percent should be completely closed.
“People are increasingly interested in online savings systems because they are simpler, easier to use and lower interest rates,” said Ahmed Wadi, CEO and founder of MoneyFellows.
The number of female entrepreneurs using the mouthpiece has risen from about 20,000 to 150,000 before the outbreak.
They borrowed an average of ,000 12,000.
One in three women will benefit from each other in Elgame, especially with a 15 15,000 loan.
“Our business has always been in demand,” said Ahmed Mahmoud Abdi, the company’s founder.
“Women were already joining offline gaming apps or paying off loans from their friends and family or growing their businesses. We just made life easier for them.”
Part of the appeal is flexibility.
Elgamea borrowers pay up to 9% of their interest rate if they want to get their money back in the first four months of the loan period, but interest rates are waived if they accept a longer wait.
Amal Abdul Ati, owner of El Mahala El Kubra Furniture Store in the Nile Delta, said she was forced to borrow two loans from microfinance companies and sell some of her assets.
Her initial loan was 10,000 10,000 at an interest rate of 24% in 18 months. Unable to repay, she borrowed another 10,000 10,000.
“It was a huge burden on me and my family,” said the 40-year-old.
Three months ago, she joined a ,000 12,000-a-week loan club in Elgamia and has already been given a full pot, allowing her to repay her first microfinance loan.
“I will go into another round and hope that the other loan will be repaid in the middle of next year,” Abdul Atti was relieved.
Renewal of old systems
Gameya loan applications are not regulated, but the central bank is operating on a licensing system.
According to Yomna El Hamaki, a professor of economics at Ain Shams University, lending clubs have a long history of increasing access to finance for marginalized communities, especially in urban areas.
There is also a religious body.
“In a Muslim community like Egypt, people prefer to go to banks or other financial institutions and sign up for gambling instead of going to interest rates, which are considered illegal by many Muslims,” El Hamaki said.
And with the booming economy, Egypt’s young business leaders have become a lifeline.
“These apps are a source of inspiration for many people affected by the epidemic,” she said.
“It is better than credit or traditional gaming because it provides easy, fast and reliable financing, especially for women who do not have this problem.”
($ 1 = 15,7200 Egyptian Pounds)
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Report by Menna A. Farouk @ MennaFarouk91; Debugging at Maya Market and Sonia Elks; Thanks to the Thomson Reuters Foundation, a charity that covers the lives of people around the world who are struggling for freedom or justice. http://news.trust.orgVisit
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