JEDDAH, 1 October 2006 — The Grameen-Jameel Initiative, an innovative collaboration between Grameen Foundation and the Abdul Latif Jameel Group (ALJ) to fight poverty in the Arab World through microfinance, has brokered the first investment by the country office of international commercial bank in Egypt’s microfinance industry, an ALJ announcement said here yesterday.
Dakahlya Businessmen Association for Community Development (DBACD), a leading microfinance institution (MFI), secures a local currency loan from BNP Paribas, one of the largest international banking networks. With this new funding, DBACD can provide much-needed loans to 16,000 poor Egyptians just in time for the start of Ramadan.
This is the largest deal negotiated by the staff and advisers to the Grameen-Jameel Initiative, from Grameen Foundation’s Growth Guarantee Program and from the Mohammad Jameel Guarantee Fund, established to provide guarantees for MFIs to receive local currency financing from local commercial banks. Citibank and Banque Saudi Fransi issued the guarantees.
“This landmark transaction opens a new era in microfinance in Egypt, with commercial banks playing an increasingly important role in bridging the vast gap between supply and demand for microfinance in Egypt,” said Alex Counts, president of Grameen Foundation.
“We hope the 16,000 families who receive these loans are the tip of the iceberg, with this deal encouraging other Egyptian banks to get involved. We salute the leadership of our partner Mohammad Jameel in bringing microfinance to one million new families by 2011, and this transaction will move us towards reaching that goal.”
In another first, this transaction is the only one to date where an Egyptian MFI has received leveraged funding from a commercial bank. Historically, banks in Egypt have required a 100 percent guarantee.