Egypt - The Financial Regulatory Authority (FRA) has issued the first Islamic microfinance license for the Egyptian Microfinance Company (Maksab), Chairman of FRA Mohamed Farid revealed in a press release on August 30th.

This is the first-of-its-kind license to be granted for a financial institution to practice microfinance activities in the non-bank financial sector in accordance with the Islamic financing system, Farid highlighted.

The new license adds to the existing financing mechanisms in the local market in terms of innovating the contract of “Al-Wakalah Bi Al-Istithmar” under which a person is mandated to invest a sum of money in favor of the investor in return for a specified fee or a share of the invested money, he said.

The authority is currently considering the possibility of issuing the necessary approvals to allow the use of products based on other main forms of Islamic financing, including murabaha and musharaka, he noted, adding that such forms would be applied for the first time in the non-bank micro-enterprise sector.

It is worth noting that the number of companies licensed by the FRA to engage in microfinance activities in Egypt reached 19 following Maksab's new license.

In July, the number of beneficiaries of microfinance services reached nearly 3.8 million, with a financing portfolio amounting to about EGP 33.3 billion, of which women’s share accounted for 60% or 2.3 million beneficiaries and the youth’s share made up 64%.

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