The large sections of Egyptian population that are on low-incomes still struggle to access financial services such as basic bank accounts.

With banks requiring large initial deposits from customers to even open a simple current account, many people in poorly paid jobs are barred from the mainstream financial services.

“These conditions imposed by the banks are massive obstacles,” says Amro Abouesh, chairman and CEO at Egyptian microfinance firm Tanmeyah Microenterprise services.

“Banks are not geared up to deal with low-income people,” he adds, speaking to MEED during a recent conference held in Abu Dhabi.

With limited or non-existent access to mainstream sources of finance, many Egyptians resort to street lending, often paying exorbitant rates of interest for short-term loans.

The banking sector is missing out on boosting its deposit base and diversifying its sources of revenue by not tapping into the low-income population.

The Egyptian government is beginning to see the potential in bringing the unbanked elements of society into the conventional system.

The recent $8.5bn raised by the government in September using investment certificates to fund the Suez Canal expansion attracted the interest of a large number of Egyptians who were previously outside the banking sector.

According to the Central Bank, a significant chunk of the certificates were paid for by money that was not kept in conventional banks or the post office, potentially taken from “under the mattresses” as some commentators said at the time.

Approximately 82 per cent of the certificates were bought by Egyptian citizens, with a further 18 per cent purchased by institutions and companies

Abouesh says there needs to be more done to engage low-income people into the banking sector.

He argues that specialised microfinance banks should be able to take savings from low-income people is some form.

“We are looking for a massive initiative. There needs to be a champion to lead this. Signs are positive but are they positive enough? No,” he said.

Abouesh runs a microfinance firm in Cairo that has provided £E2.1bn-worth ($293.7m) of microloans over the past five years. It typically provides loans of a maximum of £E7,000 with a maximum tenor of 12 months. Borrowers are usually very small businesses such as kiosks or grocery stores.

The company is now looking to expand its financing capabilities and is in the process of launching Egypt’s first microfinance securitisation in early 2015.

The securitisation will enable the company to offload some of the loans on its balance sheet, allowing it to provide more lending.  He expects that the securitisation will raise £E400m and that asset manager appetite in Egypt for such an offering is “very strong”.