Financial development and improvement of the financial sectors are key factors of economic development, the Minister of Investment, Dr. Mahmoud Mohieldin told a major conference on credit and risks.
Sustainable development needs a highly effective financial sector that deals with the financial brokerage, mobilizes financial resources and directs them to economic sectors and activities that drive the economic growth, he added in the speech delivered by the Chairman of the Mortgage Finance Authority, Mr. Osama Saleh.
Economic efficiency is conditional upon the availability of factors that allow making finance and investment decisions, Dr. Mohieldin told the Top Officials’ Symposium on “Development of Credit Information Systems and Centralities of Risks".
Such decision, Dr. Mohieldin added, should be based on advanced systems of study and analysis of borrowers' solvency, whether an institution or an individual. This should depend on accurate data and information that helps to take the best investment decision and reduces its relevant risks.
The Minister of Investment highlighted the importance of exchanging information on credit decisions among different organizations that operate in this field including banks, mortgage finance companies, financial leasing companies and direct and indirect finance institutions. This procedure will reduce the cost of transactions, support the making of credit decisions, maximize returns on investment and reduce costs.
The Minister of Investment explained that access to finance was a major problem that faces investors, according to a survey conducted in 2004. Accordingly, the government and the Central Bank of Egypt took several steps to resolve this issue. These included an update of legislation that govern the financial sector in order to regulate the market, improve the capacities of financial supervision institutions, increase the effectiveness of financial brokerage, support the innovative capacities of financial institutions and provide new mechanisms for finance through interaction with credit applicants.
The Minister of Investment noted that the establishment of the Egyptian Company for Credit Information was approved by the Central Bank of Egypt in August 2005. The company’s database was built in October 2007 and the company was effective in January 2008. The company’s database includes more than 2.2 million persons and more than 27 thousand companies and institutions. The company has issued 3970 credit reports on individuals and companies since March 2008. The company's shareholder structure includes 25 banks and the Social Fund for Development and includes in its membership 41 banks, five mortgage finance companies and three financial leasing companies.
The Minister of Investment noted that the company will help to reduce the cost of finance by providing information on the level of customer-related risks. The company provides information necessary to take informed decisions of finance and investment to ensure sound assessment of borrowers' solvency. The company is expected to enable small and medium-sized enterprises to have access to finance resources to their activities.