FISCAL SAFETY NET

Nagat Mohamed was in dire straits. After sales at her clothes shop in Egypt’s Nile Delta plummeted, she took out a loan from a microfinance company to keep the business going – but did not earn enough to pay that back either.

To escape default, the 43- year- old entrepreneur turned to a traditional money- lending system known as a “gameya” – revived with a 21st- century twist as an app.

“It was a real lifesaver,” Mohamed told the Thomson Reuters Foundation over the phone.

“I could not sleep because of the debts, but finding this app saved me and my children.”

A gameya is a type of community savings pool which also functions as a peer- to- peer loan system.

Members deposit a fixed, equal amount of money into a joint pot every month. At the end of each month, one person is awarded the full amount until everyone has had their turn.

While gameyas were long organized informally and offline, they are now being offered through apps in a tech transformation that is revolutionizing financing for Egypt’s cashstrapped female entrepreneurs.

One in five Egyptian workers are women, according to the World Bank, many of whom run their own small businesses or home- based initiatives.

That makes it quite hard to get a loan from banks, which require documentation proving a fixed salary or ownership of a shop.

Microlenders, meanwhile, typically impose exorbitant interest rates it, she has to took out another 10,000- pound loan.

“It was a huge burden on me and on my family,” the 40- year- old said.

Three months ago, she joined a 12,000- pound lending circle at ElGameya and has already been awarded the full pot, allowing her to pay back the first microfinance loan.

“I will get into another round and hope that the other loan will be paid by the middle of next year,” Abdel Aty said with relief.

Reviving old systems

Gameya loan apps are not regulated, but the central bank is working on a system of authorization.

The money- lending circles have a long history of boosting access to finances for marginalized communities, particularly in urban areas, according to Yomna El Hamaki, a professor of economics at Ain Shams University.

There is also a religious element. “In a Muslim society like Egypt, people usually prefer to register for gameyas rather than go to the banks or other financial institutions which offer loans at interest rates that are considered forbidden by many Muslims,” El Hamaki said.

And with economies squeezed by the COVID- 19, they have become an online lifeline for Egypt’s budding women business leaders.

“These apps are a buffer for many who got their financials adversely affected by the pandemic,” she said.