“Buy now and pay later,” is the slogan raised by consumer finance companies in Egypt that offer loans and non-bank installments to citizens.
The slogan raised by the companies attracted millions of citizens, in light of the economic crisis and the decline in wages in Egypt during the past years, to provide for their needs, whether to buy electrical appliances or pay school installments, amid warnings from deputies and economists about the impact of these companies on the economy in general and the stability of families in particular, in light of economic conditions that may lead many to default on payments.
One of the major companies, which holds 27% of the market, reported a customer default rate of 1.25%.
Mohamed Fouad, an economist and head of the parliamentary body of the Justice Party, said that all consumer finance companies are subject to the supervision of the Financial Regulatory Authority in accordance with Law 18 of 2020, but he warned that not all companies have creditworthiness standards, or practice credit checks properly.
He added in televised remarks that the default rate in the sector reached 3% according to data from the Financial Control Authority.
He explained that one of the major companies, which holds 27% of the market, stated that the rate of customer default was 1.25%, which means that the default rate of the remaining companies may reach 4% according to estimates.
“The last chance”
“Payment today is the last chance,” was the first sentence in a message received by Mohsen Abdelkader, after he failed to pay installments on a loan of 30,000 pounds that he obtained 6 months ago to buy electrical appliances from one of the consumer finance applications on the Internet.
He says the message contained an explicit threat that the day it arrived was the last chance to stop all legal proceedings.
He says that the installment payment is due on the first of each month with a grace period of 5 days, and that he was unable to pay on time three months ago, and was surprised to find that new interest had been added to the loan.
Mohsen tried to resolve the matter by contacting customer service, but he was surprised when the employee insulted and cursed him after he objected to the interest rate, which exceeded the value of the loan principal, so he decided to stop making payments.
A Facebook group called “Victims of Loan Applications and Electronic Fraud in Egypt” included dozens of complaints about threats of imprisonment and property seizure that citizens receive as soon as they are a few days late in paying their installments, while others talk about applications sending court session dates due to defaulting on installments.
Citizens face threats of imprisonment and property seizure simply for being a few days late on their loan payments.
Hisham Ezz Al-Arab, CEO of Commercial International Bank, warned of the rapid expansion of non-banking finance companies and the credit risks it may carry, threatening to create a “financing bubble” in the market, at a time when the sector is recording record growth rates driven by the large expansion of installment services.
He stressed that a small spark in the non-banking finance sector could shake the entire economy, comparing the situation to what happened in the “Subprime” crisis in the United States, where the collapse of some small institutions led to a global crisis.
He pointed out that there are real cases of citizens who obtained loans without guarantees or bank inquiries, noting that a driver from Port Said obtained a loan of 400,000 pounds without applying the “i-Score” system to assess their creditworthiness, and was forced to sell his home furniture and his car to pay off the loan and its interest.
The Arabs stressed that banks adhere to rules such as reserve ratios and capital adequacy, procedures that are not applied to finance companies or funds.
Large expansion
Data released by the Financial Regulatory Authority revealed a significant expansion in consumer finance activity over the past two years.
According to data from the Financial Regulatory Authority, the number of companies and entities under its supervision reached approximately 2,532, serving more than 64 million customers across the country, including the most underserved areas. The data also indicated that by the end of 2025, the non-banking financing portfolio had reached approximately EGP 417 billion, with over 9.8 million financing contracts, while default rates remained below 3%.
Approximately 2,532 companies and destinations, serving more than 64 million customers across the country.
The value of the financing granted exceeded 55 billion pounds during the first 11 months of 2024, compared to about 43 billion pounds during the same period of the previous year, with the number of customers reaching about 3.7 million customers.
During 2025, growth rates continued at a higher pace, with financing exceeding EGP 38 billion during the first half of the year alone, before total consumer finance reached about EGP 87 billion by the end of the year, with a growth rate exceeding 58% compared to 2024. These figures reflect the rapid transformation of consumer finance into one of the fastest-growing financial activities in the Egyptian market, at a time when the purchasing power of wages and real incomes is declining due to inflation and the continuous rise in the cost of living.
parliamentary intervention
The crisis reached the halls of Parliament, and Hassan Ammar, a member of the House of Representatives, submitted a request for information addressed to the Prime Minister, the Governor of the Central Bank, and the Chairman of the Financial Regulatory Authority, regarding the uncontrolled expansion in the activity of consumer finance and non-bank installment companies, and the increasing economic and social threats it poses to the financial stability of Egyptian families, and pushes society towards excessive reliance on debt and consumption.
He stressed that recent years have witnessed a widespread and unprecedented spread of consumer finance companies, whether through branches spread in malls and markets or through electronic applications and social media platforms, until debts have become a daily product marketed to citizens as a lifestyle, amid huge advertising campaigns that push towards buying on credit and borrowing in a way that is alarming.
A request for information was addressed to the Prime Minister, the Governor of the Central Bank, and the Chairman of the Financial Regulatory Authority.
He pointed out that the worsening economic pressures and rising living costs have pushed large segments of the population to rely on loans and financing to cover basic and luxury needs, which portends a dangerous shift in the nature of Egyptian society, from a society based on work, production and saving to a society burdened with debts, installments and financial difficulties.
He pointed out that the data of the General Authority for Financial Supervision revealed that the volume of financing granted through consumer finance activity reached about 1.4 trillion pounds for the benefit of approximately 64 million customers through 2532 companies, which reflects a huge expansion in this activity that raises real questions about the ability of regulatory bodies to closely and effectively monitor this diversified market.
He warned of the danger of some finance companies resorting to facilitating the granting of loans without a real study of the customers' ability to repay, which pushes thousands of families into a continuous cycle of installments, interest and fines, and threatens to raise the rates of financial default in a way that may affect economic and social stability. He added that the sharp decline in savings rates in Egypt, which have decreased from 15% to about 1% of the gross domestic product, reflects the growing culture of consumption on credit, in conjunction with the expansion of “securitization” operations and the conversion of debts into tradable securities, which raises fears of a recurrence of financial crises similar to what the global economy witnessed in the 2008 crisis if strict oversight and governing controls are absent.Alarm bell
He pointed out that the recent warnings issued by a number of banking experts, including Hisham Ezz Al-Arab, regarding the risks of expanding lending to individuals outside the banking sector, represent a real alarm bell that requires urgent regulatory and legislative action to protect the financial and monetary stability of the state.
Ammar also wondered who is monitoring this rapidly expanding market, whether regulatory bodies have sufficient capacity to monitor more than 2,500 financing companies, what controls protect citizens from falling into the trap of excessive debt, whether there is a clear vision to prevent society from becoming one drowning in debt and financial difficulties, and what the impact of the expansion of securitization activity will be on financial stability in the future.
A member of parliament called for the preparation of a comprehensive official report to be presented to parliament and the public regarding the risks of uncontrolled expansion in consumer finance activity.
The member of parliament called for the preparation of a comprehensive official report to be presented to parliament and the public regarding the risks of uncontrolled expansion in consumer finance activity, along with a review of the regulations governing the granting of finance to individuals outside the banking sector, tightening control over companies and electronic applications operating in this field, and setting strict rules for advertisements and marketing campaigns that encourage citizens to take on excessive debt.
In addition, Senator Walaa Hermas submitted a formal request to conduct a study measuring the legislative impact of Consumer Finance Activity Regulation Law No. 18 of 2020, in light of the challenges that have emerged from practical application that directly affect citizens.
She explained that the expansion of consumer finance activity reflects an aspect of promoting financial inclusion and facilitating citizens’ access to goods, but at the same time it carries increasing risks related to high rates of default, which requires a careful review of the practical applications of the law.
Hundreds of complaints
The MP revealed that she had received hundreds of complaints from citizens regarding practices she described as undisciplined by some collection companies, noting that some representatives had deviated from their legal role to methods of pressure that contradict the constitution and the law.
She noted that cases were observed involving contacting clients’ employers and relatives, and threatening to damage their social and professional reputation, with the aim of forcing them to pay, which she considered a clear violation of the principles of honesty and integrity.
A member of parliament revealed that she had received hundreds of complaints from citizens regarding what she described as unregulated practices by some collection companies.
She added that other complaints included citizens being asked to pay amounts three times the original debt, under the name of “fine and administrative expenses” that were unclear or unjustified in the contracts, which represents a breach of the principle of transparency and disclosure.
She pointed out that there were instances of the use of inappropriate language, insults, slander, and threats of imprisonment via telephone calls by some representatives, stressing that these practices go beyond the scope of legitimate collection and fall under crimes punishable by law.
She called for the launch of a national campaign to raise awareness of the dangers of ill-considered consumer finance, to inform citizens of their rights, and to tighten control over collection companies.
She stressed that regulating the work of these companies does not conflict with encouraging investment, but rather represents a necessity to ensure the sustainability of the sector in an organized manner, calling for “responsible financing” that protects the citizen and maintains market stability without harming the dignity of individuals.
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