Tamweely Microfinance

Economic Enabler: The investment will increase access to finance for underserved customers in Egypt. By accessing loans, in some cases for the first time, MSMEs will be able to better manage their liquidity and meet their growth needs, ultimately contributing to more stable and increased income for them and their families.

Direct: The projected expansion of Tamweely’s operations will create additional jobs.

Egypt

The vast majority of customers (c.90 per cent) are individuals running micro and family-owned businesses, accessing average loans of EGP 5-50,000 through the micro-enterprise loan product. Approximately 28 per cent of clients are considered low-income (i.e. household income is less than EGP 5,200/month), and 25 per cent are new to credit. Approximately 43 per cent of customers are female.

Egypt

32 per cent of total employees, 30 per cent of senior management and 25 per cent of board members are female.

• Tamweely currently serves c.171,000 customers. By 2027, management projects reaching c.312,000 customers, the vast majority of which will continue to be micro-enterprise loan customers.
• Tamweely employs c.3,400 employees (c.2,000 loan officers), and plans to increase this to c.6,150 (c.3,900 loan officers) by 2027.

Depth: Depth of impact is expected to be significant because of Tamweely’s underserved customer base, particularly those who are low-income and new to credit. Similarly, employment should be meaningful, particularly for loan officers in more far-flung locations. Duration: Tamweely's average. tenor ranges from 12-36 months depending on the product, but 12-18 months for micro-enterprise loans. New (follow-on) sales to existing clients will increase duration of impact in some cases. As Tamweely grows, new employees are likely to be full-time and long-lasting.

Our contribution for this transaction is Low, driven primarily by the high secondary component. We will be supporting a more developmental strategy post-acquisition, which provides the rationale for going ahead. We are having some financial additionality as per our co-investment contribution guidelines. We expect to contribute material value additionality.

Alignment Risk

The new business plan targets SME lending as a focus going forward, but this product is likely to have weaker low-income reach as compared to the micro enterprise loan product. This could reduce the overall impact of the transaction. This is mitigated by the micro enterprise loan product projected to remain key to the business (c.90 per cent of loan volume, c.75 per cent of origination value, and c.60 per cent of portfolio value by 2027).

Execution Risk

There is a risk Tamweely will not be able to execute its new business plan, including the various components that we believe will enhance impact over time. This is aligned with commercial risk and mitigated by confidence in the company’s capability and track record, as well as the new ownership consortium we will be part of.

External Risk

Potential macroeconomic or geopolitical shocks in Egypt could derail Tamweely’s growth ambitions. This risk must be tolerated, but is mitigated by Tamweely’s impressive growth to date, as well as its focus on lower income customers.