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Egypt – MicroStart

Improving Access to Financial Services for the Working Poor


MicroStart, a global initiative by the United Nations Development Program (UNDP), was designed to help improve the access of the working poor to appropriate financial services offered by local organizations, in order to enhance their economic activities, increase their revenues and create employment. In Egypt, the informal sector, which provides a substantial share of employment for the poor, accounts for as much as 50 percent of the country’s total economic activity. In addition, poverty in Egypt is significantly more prevalent among female-headed households. ACDI/VOCA served as the technical service provider (TSP) to MicroStart-Egypt, which strengthened the capacity of three microfinance institutions in Upper Egypt to provide loans to the poor, including women and other disadvantaged individuals.

A four-year project, MicroStart-Egypt was awarded to ACDI/VOCA in 1999. By working with the Egyptian Social Fund for Development (SFD), UNDP’s partner in Microstart, ACDI/VOCA project staff addressed:

  • lack of knowledge and experience with microfinance best practices of the SFD and the microfinance institutions (MFIs) involved in microlending in Egypt
  • limited management and implementation capacity of young, start-up organizations to operate a micro-lending program
  • modest amount of loan capital funds and the need to leverage additional funds from alternative sources

ACDI/VOCA’s MicroStart Project identified models for lending procedures that work best in Egypt. Best practices and other effective tools and methodology were incorporated into MicroStart training and technical assistance. Project staff was composed of experienced Egyptian microfinance professionals who assist eligible organizations in the preparation of Micro-Capital Grant proposals. Following approval by UNDP, ACDI/VOCA conducted specialized training seminars and workshops for MFI executive managers, accountants, financial managers and credit officers in:

  • strategic planning
  • microfinance financial analysis, bookkeeping and financial management
  • governance issues and microfinance “best practices”
  • business skills, loan appraisal, communication and project loan policies and procedures
  • client selection and follow-up

MicroStart’s three partner MFIs made impressive progress and built their institutional capacity in several areas. All were transformed from charity-oriented to business-oriented nongovernmental organizations and share a unified vision of sustainability. They developed strong financial planning skills, including the ability to use financial information to make strategic and management decisions. They also acquired, installed and applied a good management information system, a loan-tracking system and an accounting and financial system. They were able to develop business plans using Microfin, a financial projection modeling system. Strong financial and resource management enabled all three MFIs to move toward financial self-sufficiency and other set targets.


As of March 2004, MicroStart-supported loans were made to 5,761 active borrowers, of whom 63 percent were women, and the client outreach is constantly increasing. The total loan portfolio as of the end of the project was $774,333, almost triple that of 1999. All three MFIs are now operationally sustainable or able to cover all of their operational costs with internally generated income. By the end of 2002 all three MFIs were 100 percent financially sustainable or able to cover all operating costs as well as maintaining the value of capital over the long term.


In recognition of their good performance to date, the three MFIs received additional loan capital funds: two received a total of $300,000 from the Social Fund and the third obtained a grant of $652,174 from the Swiss Fund.


Loans dispersed by the MicroStart MFIs supported a cross-range of economic activities throughout Fayoum. Clients have used these loans to invest in opening a corner convenience store and a barber-shop, starting up various craft-making businesses, engaging in small-scale dairy processing using simply equipment, as well as many other small enterprises. Many clients successfully repaid their initial loans and returned to expand their businesses with second loans. These small entrepreneurs developed both an attitude of personal economic self-sufficiency and the capacity to provide for their families’ needs through successful income generating initiatives.