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Mobile Microfinance in Egypt: An Empowerment Prospective

  • Newcastle Business School - University of Northumbria


Mobile technology not only facilitates the delivery of microfinance services, but also transform the range of microfinance services provided for them. This transformation is a product of the new linkages mobile telecoms can make bridging the public-private partnership. In this short paper we discusses how can this new version of partnership embeded in mobile-based microfiance empower margenalised classes of the Egyptian society.
Strategic Foresight Group Volume: 2, Issue No: 11, September 2011
Mobile Microfinance and empowerment: the case of e-Masary for financial
inclusion in Egypt
Mostafa R.A.Mohamad
Doctoral Researcher at Manchester Business School
The University of Manchester
Booth Street West
Manchester M15 6PB, UK
In the cash-based economy of Egypt, only 10 percent of 84 million Egyptians have a bank
account (EFSA, 2011). Yet, there were 74 million subscribers to mobile networks in April
2011 and it is projected that every Egyptian will have access to a mobile phone by 2013
(Ministry of information communication and technology, 2012). Mobile technology has the
potential of transforming how Egyptians make monetary transactions by merging banking
and mobile users. By tapping into the mobile user base, Microfinance Institutions (MFIs) are
tapping the rural poor community. Mobile microfinance has great potential for increasing
equitable economic participation, unemployment mitigation and overall social development
in Egypt (Gunn, 2011). The low number of bank account users is attributed to several factors
such as limited branches, mainstream reliance on cash, high transaction costs and lack of
cost-effective banking solutions for the rural poor (Mas, 2011). Currently, banks in Egypt
target the urban and middle to high income population, thereby neglecting the low-income
rural segments of the population. The MFIs target the rural community, but their reach was
limited due to difficulties in mobilization, high costs of transportation and collecting small
payments (Moussa, 2008). However, mobile technology is helping them meet this gap
(Kamel et. al. 2009).
Strategic Foresight Group Volume: 2, Issue No: 11, September 2011
Masary (which means money in Arabic), a payment service by Applications and Payment
Systems Development Corporation, was launched in 2007. Its key product is the e-wallet,
which allows clients to buy credits from general stores and use those to transfer money or buy
products and services. Masary launched its first Microfinance initiative in partnership with
Assuit Businesswomen’s Association for Community Development (ABCD) in December
2008. Through this partnership, ABCD was able to take advantage of Masary’s mobile
payment service to track loan payments, disbursements and repayments in real-time and also
expand its client base. Currently, Masary serves the unbanked community in 8 governorates
in Egypt by providing them access to 8 Microfinance institutions (MFIs) through its 2965
outlets (, 2010). In June 2011, the Central Bank of Egypt allowed mobile
transfer up to EP 3000 (USD 505) per day via mobile phones (IFC, 2011). As a result of this
approval, Masary’s e-wallet service is likely to expand many fields. Masary’s mobile
microfinance and e-wallet system provides the following benefits:
Low operating costs for Merchants:
By using Masary’s payment service, merchants can reduce the cost of their products and
services as they will be able to bring down their operating costs by eliminating the need to
build up their own mobile payment service. Moreover, they will be able to tap into a wider
market. By 2010, Masary’s payment services had reached total sale volume of EP 20 million
(USD 3.350 million) (Egypt Finance, 14th October 2010).
Pro-poor Financial access:
Currently, the e-wallet system allows Egyptians to finance small businesses with EP 500
(USD 84) without having to rent a shop or premises. The company also has a “Masary’s
Small Entrepreneur MFI program” which connects MFIs with start-up microenterprise
ventures (, 22nd November 2009).
Strategic Foresight Group Volume: 2, Issue No: 11, September 2011
Low-cost Services for Clients:
Mobile banking offers e-wallet payment service, money transfer options and most
importantly access to microfinance on a 24/7 basis, low cost, low interest banking solutions
and financial aid brought to the rural poor’s handset (CGAP, 2011).
Women’s economic participation:
In 2009, there were 1.4 million microfinance borrowers in Egypt, 50 percent of who were
women, with a total outstanding debt amounting to EP 2.2 billion (over USD 370 million)
(SANABEL, 2010). The expansion of mobile microfinance will enable more women to take
up loans from MFIs, thereby increasing female access to employment and enhancing
financial independence.
Rural poor economic participation:
REDEC, a highly active NGO in Upper Egypt values its partnership with and through Masary
is able to access rural unbanked community members on a large scale. Through its “Needy
Job creation program”, Masary started to fund small businesses of 100 microentrepreneurs
along with Mawada Organization for Community Development (Ahram, 21st July 2011).
Such microenterprises are expected to gradually empower the poorest segments of the rural
community, through generating employment and income opportunities (Adams, 2001). There
is a potential for greater outreach with Masary partnering with more local institutions across
the country.
Discussion & Conclusion:
Currently, there are 289 institutions offering microlending, of which only 6 are banks and 283
are NGOs (EFSA, 2011). Almost 65% of the microfinance services are catered by six NGOs
and one bank. Yet, 90% of the potential microfinance market remains untapped and can be
Strategic Foresight Group Volume: 2, Issue No: 11, September 2011
reached by microfinance providers by expanding client base through mobile microfinance.
Mobile microfinance has major potential for replication in MENA and other parts of the
world. For instance, CHF International, which provides microfinance services in Iraq, Jordan,
Lebanon, West Bank, Gaza and Yemen, intends to rapidly expand its projects by providing
mobile payment systems to its clients (Braniff, 2009). Tunisia‟s microfinance sector which is
under pressure for mitigating youth employment could resort to mobile microfinance to tap
the unbanked (MIX, 2012). Also, in India and Indonesia where microfinance is largely agent
based could expand its client base through their fast expanding mobile users (Kabeer, 2005).
Adams, R. 2001. Nonfarm Income, Inequality, and Poverty in Rural Egypt and Jordan. Policy
Research Working Paper. The World Bank. Poverty Reduction and Economic Management
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November 2009. 350+ merchants in rural areas and 8 MFIs in 8
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Full-text available
Since the mid 1980s, Egypt has realized significant growth in information and communication technology (ICT) usage across different sectors in the economy. However, in today’s global environment, the challenge no longer lies in accommodating the growth of the ICT sector that introduced changes that are arguably the most important since the industrial revolution. The essence is the diffusion of ICT across the society and ensuring that it furthers socioeconomic development. Managing this transformational process requires cooperation and partnerships between different stakeholders in the society to ensure steady and successful progress towards the goal of realizing a fully developed information society. Moreover, in order to generate economic development and growth, ICT need to be transformed into economic activities offering services, applications and content that create new markets, reduce costs and increase productivity. While ICT are generally adaptable; their effectiveness in addressing development issues still depends on their introduction, adoption, diffusion and adaptation within a healthy and encouraging regulatory environment. In that respect, the importance of ICT in socioeconomic development in Egypt was realized since 1999 leading to the allocation of ICT on the government agenda supported by the private sector and the civil society. This article addresses the recent efforts that were exerted in Egypt, as an emerging economy, in terms of building its ICT sector while analyzing the associated investments and their impact on economic development.
Opinions on the impact of microfinance have been divided between those who see it as a "magic bullet" for women's empowerment and others who are dismissive of its abilities as a cure-all panacea for development. This paper seeks to examine the empirical evidence on the impact of microfinance with respect to poverty reduction and empowerment of poor women. It becomes apparent that while access to financial services can and does make vital contributions to the economic productivity and social well-being of poor women and their households, it does not "automatically" empower women, just as with other interventions, such as education, political quotas, etc, that seek to bring about a radical structural transformation that true empowerment entails. These other interventions simply constitute different entry points into this larger project, each with the potential for social transformation, but each is contingent on context, commitment and capacity if this potential is to become a reality.
In developing countries, banks are simply not present where the majority of poor people live and work. This imposes burdensome access costs on the part of customers who need to travel to distant branches – and the majority of the population opts out. The paucity of banking infrastructure can be overcome by enabling banking services to be offered through everyday stores that exist in every community. This can now be done safely with today’s technology and the spread of mobile communications networks. Banking regulations need to adapt to the risk mitigation strategies that modern technology permits, allowing banks to experiment with and roll out new channels and products.
Going Mobile: Egypt gears up for cell phone banking
  • Michael Gunn
Gunn, Michael. 22 June 2011. "Going Mobile: Egypt gears up for cell phone banking".
International Finance Corporation
International Finance Corporation. May 2011. Mobile Money Scoping Country Report: Egypt. Available at: +-+Egypt/$FILE/Mobile+Money+Scoping+Report+-+Egypt.pdf [Accessed in 10th April 2012].