Ibrahim Bakr is an Egyptian government employee, a proud family man, and owner of his own modest home in Dakahlya—in the heart of the Nile Delta region. However, until recently, life was not so straightforward for the 40 year-old father of four. He was forced to live in tough conditions with his extended family in a rundown apartment building.
"Living conditions were really hard, and I was short on money. I wanted to move away quickly from the family house, but I couldn’t afford to... a loan sounded like a very good solution," said Ibrahim.
With the support of Dakahlya Businessmen's Association for Community Development (DBACD), a leading microfinance institution (MFI) in Egypt and key IFC partner, it was easy for Ibrahim to get a loan of 20,000 Egyptian pounds ($2,800). That was all he needed to finish building his own house on a patch of inherited land, and significantly raise his standard of living, as well as that of his wife and children.
"The process was so simple,” said Ibrahim. “And it only took me a week to apply for the loan and then receive it."
DBACD was founded in 1995 and has risen to become one of the largest and most successful MFIs in Egypt. As of December 2013, the association had reached 115, 000 active borrowers—over half of whom are women—with a portfolio of 220 million Egyptian pounds ($31.5 million).
Since 2012, IFC has been helping DBACD move into housing microfinance (HMF)—an important untapped market in a country with immense demand for affordable housing, but sorely lacking any sort of serious mortgage financing. Indeed, the government estimates that about 560,000 families need new homes every year, but only 90,000 units are supplied.
Most existing banks and MFIs in Egypt simply have not provided the kind of loan products and services required to help build or renovate homes. Whereas, in Egypt, the the public sector has historically been the only provider of low income housing, they have not been able to meet demand and, as a result, many low income families turn to poor quality informal housing. The construction or refurbishment of this informal housing is usually paid for by money borrowed from family or friends, since very few people have access to the financial services that can lift them out of poverty.
IFC’s support was instrumental in helping DBACD develop a type of loan that could appeal to people like Ibrahim, who want to buy an affordable property or to upgrade/improve conditions in an existing home. In particular, IFC was able to leverage its global expertise in housing finance, including a recent success story in Afghanistan.
With grant funding of $245,000 from IFC, DBACD has been able to conduct a market research survey, hire a local engineer to help develop a housing technical guide and train their loan officers, and bring in an HMF practitioner from IFC’s partner in Afghanistan (First Microfinance Bank). They began pilot-testing the new product at the end of 2013, and already over 500 families have benefited from new housing loans. This is expected to increase dramatically in the coming years.
Today, by helping extend access to credit to the people that need it most, IFC is helping to developing a viable housing sector in Egypt, one which creates jobs, improves overall health, strengthens the financial sector, provides a sense of ownership to the populace, and helps further develop institutions that provide benefits across many sectors of society.
The project is part of the World Bank Group MSME Technical Assistance Facility. The Facility is supported by the Canadian Department of Foreign Affairs, Trade and Development, the Danish International Development Agency, Japan, Switzerland’s State Secretariat for Economic Affairs and UKaid.