Significant increase: The social role of the Egyptian Agricultural Bank
Agricultural financing plays an important role in economic systems, as a means of payment after the increasing role of banks in economic activity, and the state is working to increase and improve investments in the Egyptian agricultural sector، The agricultural credit policy aims to provide the necessary credit for agricultural activity by setting rules and controls that are linked to providing the required loans to farmers, and raising the capabilities of small farmers to obtain agricultural production requirements، The Egyptian Agricultural Bank has achieved a great development in this regard through the credit facilities it provided to farmers and companies in the recent period، This is with the growing social role of banks. The Egyptian Agricultural Bank appears as a strong supporter of sustainable development policies pursued by the state in its policies after 2014.
Clear development and tangible reflection:
First – The Lending Side: The Egyptian Agricultural Bank witnessed a remarkable growth in the loan portfolio during 2022 compared to the previous two years 2021-2020، Where the size of the loan portfolio increased last February to 60 billion pounds compared to 49.7 billion pounds during the previous period, and 80% of it accounts for agricultural production، The bank also worked to restructure troubled loans worth 10 billion pounds, in addition to that this increase was directed to financing small, medium and micro enterprises, while giving priority to agricultural production loans and agricultural industrialization loans.
1- Agricultural financing programs:
During the first half of this year, the bank doubled the amount of financing for agricultural loans, given that the bank adopted new policies to support farmers and small farmers، It aimed to adjust the credit categories for agricultural crop production twice during the recent period in rates ranging between 25 and 70% for some crops, especially strategic crops, to help farmers bear the large increase in production inputs and costs، And agricultural requirements, as a result of the current global changes, to reach the volume of crop loan financing more than 7.6 billion pounds, benefiting about 280 thousand farmers.
It is noted through the previous schedule that the Agricultural Bank provided many credit facilities in this regard, which contributed to the creation of rural development to which the state aims. Among the funds provided by the bank are the following:
( * ) Agricultural Constraint Financing Program: This financing has helped the Egyptian farmer cover the agricultural land service, as this program targets small farmers, and the return price is limited to 5% for subsidized crops، For unsupported crops, the return price is the central bank’s lending rate of 5% and is characterized by payment facilities and a grace period at the beginning of financing.
( * ) Financing the transition from the traditional irrigation system to the modern irrigation system: From the previous figure it is clear that the bank has allocated about 55 billion pounds to finance the transition from the traditional irrigation system to the modern irrigation system، Where the agricultural bank provides this financing without interest in cooperation with the Ministry of Agriculture and Land Reclamation, with the aim of shifting to increasing production and increasing crop quality, and it is noted that it targets small farmers and owners of agricultural projects. The areas of financing provided by the bank include financing the costs of establishing drip irrigation networks, and financing the costs of establishing spray irrigation networks, and one of the advantages of this financing is a grace period at the beginning of the project of one year. Also, a loan without interest, which is considered a major advantage in this financing, the repayment period reaches 10 years, and the installments are paid annually. In addition to that, the bank has put in place a work program to motivate agricultural cooperative societies to switch to modern irrigation systems. Among these incentives is to increase the credit categories of agricultural crops irrigated by spraying and drip by 25% For the category granted to crops irrigated by immersion, with many credit facilities available for other agricultural loans.
( * ) Financing Livestock Projects: The Agricultural Bank offers various programs to finance livestock projects, in relation to education, fattening and dairy production programs, with the aim of supporting small breeders and producers and contributing to the development of livestock، This achieves self-sufficiency in red meat and dairy.
2 – Funding programs for large, medium, small and micro enterprises:
The goal of financing large and medium enterprises is to finance new machines, equipment or production lines with a return of 5%، Whereas, among the areas of financing for small and micro projects are industrial activities related to agriculture, financing the establishment of rural, environmental and service development projects / sorting stations, fruit processing / refrigerators, freezing expenses, and the operation and establishment of agricultural industrial projects.
According to the classification of the loan portfolio, the Agricultural Bank has achieved a remarkable growth in the volume of loans directed to finance medium, small and micro activities to reach 70% of the loan portfolio, given the importance of projects in supporting the national economy، And providing real job opportunities in line with the initiatives launched by the Central Bank of Egypt, to support the vital sector, where the volume of financing micro-projects for individuals and companies reached about 34.444 billion pounds, benefiting 452.765 clients، While the number of small companies increased from 6,121 companies by the end of 2021 to 6748 companies, the volume of their funds reached 4.903 billion with a growth rate of 20%. Also, the bank has paid great attention to financing major projects for its ability to provide direct and indirect job opportunities، Where the number of major companies funded by the bank increased from 63 companies with a size of 4 billion pounds at the end of December 2021 to 94 major companies with funds amounting to about 7.886 with a growth rate of 83%.
Second – the filing side: It is also noticed in the recent period, a large jump occurred in the size of the deposit portfolio of the Egyptian Agricultural Bank, according to the following form، Deposits increased to 119 billion pounds in the current half of 2022 compared to 92 billion pounds in 2021, which reflects customer confidence in the agricultural bank، This increase is supposed to increase the credit granted by the Agricultural Bank, which increases community participation in projects that increase sustainable development in the country، In addition, the higher this percentage and the greater the volume of loans, the higher the credit rating of the Agricultural Bank.
By reading the previous table numbers، It can be emphasized that despite the increase in the volume of loans granted by the Agricultural Bank – we find that the ratio of loans to deposits did not increase in relation to the volume of deposits with the Agricultural Bank، Where we find that this percentage decreased from 60.9% in 2021 to 51.3% in 2022, which means that the agricultural bank still has the ability to expand credit more than it is now، Rather, contributing to many development projects that the country aims for.
The limits of the bank’s societal responsibility expand:
Careful follow-up and monitoring of the community engagement of the Agricultural Bank, confirms that it has achieved strong performance in the field of community responsibility, especially in rural societies, and to achieve the goals of the Decent Life Initiative، As the bank provides all support to the most needy groups in the villages of the Egyptian countryside، It also through its branches started in banking products such as the door of livelihood to empower young people and women through an infinite loan from 2000 to 10,000 pounds as a first stage at an interest rate of 3% for three months and 6 % For six months, the maximum loan is estimated for a full year, and the total funding pumped into this initiative is 150 million pounds, and there are convoys of the agricultural bank to be close to villages and streets، It searches for the most needy and facilitates funding within 24 hours.
It is also noted through the previous figure that the Egyptian Agricultural Bank granted one billion pounds of financing to invest in the agricultural and animal production sectors in the New Valley Governorate, by directing 58% of them to land reclamation projects، And providing modern irrigation systems, and solar energy worth 600 million pounds, in line with the state’s directions to increase the agricultural area, and support agricultural production projects to provide strategic crops to achieve self-sufficiency and increase the production of export crops، In addition to that 39% of the volume of funds – that is, a value of 400 million pounds, which benefited the owners of small and medium enterprises operating in the agricultural sector, in addition to the 3% directed to micro-enterprises، Within the Bab Rizk initiative to support small farmers, the value of financing 30 million and 780 thousand pounds, which achieves comprehensive development in the governorate.
To know the limits of societal responsibility carried out by the agricultural bank, and the degree of general satisfaction with it, the trends and opinions of the study sample in the social responsibility of the bank to achieve rural development were identified، 40 individual clients were relied upon, as follows:
Borrowers’ opinions and attitudes regarding the social responsibility of the Agricultural Bank
This part includes identifying the trends and opinions of the study sample in the social responsibility of the bank to achieve rural development. 40 clients were relied upon.
|The relative importance of the opinion|
|agree||Don`t know||Don`t agree|
|1||The bank deals with its clients on the basis of the principle of transparency||60||20||20|
|2||The bank provides products in an easy and convenient way||80||–||20|
|3||The duration of obtaining the loan is simple and does not exceed days||80||–||20|
|4||Do you consider that the bank plays its full role towards customers, especially small farmers among them||70||20||10|
|5||Responds to complaints and analyzes problems||60||20||20|
|6||In the event of emergency situations in the productive project that used the loan for its purpose, do you find support from the responsibility in the bank with the postponement of payment||20||–||80|
|7||Is the loan follow-up and periodic monthly follow-up||60||20||20|
|8||Concessional lending terms||50||20||30|
Source: Compiled and calculated from a quick rural interview
Digital transformation policies within the bank:
Within the framework of the agricultural bank’s facilities for its clients ’transactions, it has launched a new electronic application for ACERS, and for immediate electronic evaluation of agricultural credit and risk assessment، Which accelerates this credit operations as well as the bank’s intention to launch the agricultural portfolio on mobile phones ، It also provides a service to provide agricultural production loans entirely electronically through the digital agricultural platform “ Egypt ” in cooperation with e-aswaq, where the bank allows the financing of all agricultural crops through the platform.
It notes, through careful monitoring of the statements of the President of the Bank’s Board of Directors to the media, that the bank aims to expand the establishment of electronic branches، In cooperation with « e-finance » to allow the customer to benefit from banking, finance and government digital services around the clock, as well as expanding the issuance of the national payment card، Prepaid « feature » for non-account holders, and non-bank dealers, as the number of cards reached 3.2 million cards.