The year 2025 saw a remarkable boom in consumer finance activity in Egypt, coinciding with a complex economic context marked by an unprecedented rise in the burden of public debt, which reached about EGP 18.37 trillion in the budget for the fiscal year (2025/ 2026), as well as the rise of debt payments to EGP 4.38 trillion, the worsening of inflation rates, which stood at 12.5% at the end of last November, and the widening scope of poverty, which recorded a rate of between 29% and 30%, according to the Prime Minister.
Cumulative indicators point to a rise in the number of consumer finance clients to about 9.25 million during the period from January to October 2025, compared with 3.27 million clients during the same period of 2024, a growth rate of 182.7%. The value of consumer finance granted also rose to about EGP 74.98 billion, compared with about EGP 47.45 billion during the same period of the previous year, an increase of 58%.
At the monthly level, last October saw a sharp jump, as the number of beneficiaries reached about 1.15 million clients, compared with 374,500 clients in October 2024, a growth rate of 208.1%. In the same context, the value of finance granted during the month rose to EGP 8.95 billion, compared with EGP 5.54 billion in the corresponding month of last year, an increase of 61.6%.
During the first nine months of 2025, consumer finance companies pumped EGP 66.03 billion to clients, compared with EGP 41.9 billion during the comparison period in 2024, an annual growth of 57.5%, according to the Financial Regulatory Authority, and the Egyptian market currently includes 34 licensed companies operating in the field of consumer finance, the most prominent of which are: Fawry Consumer Finance, U Consumer Finance (valU Consumer Finance), Global Contact Consumer Finance, Halan Consumer Finance, B.Tech Finance, Aman Consumer Finance, One Finance for Consumer Finance Services, Maak Consumer Finance and Abu Dhabi Islamic Consumer Finance, which work in cooperation with banks and retailers to provide instalment and payment solutions for consumers to purchase goods and services.
The term consumer finance refers to all forms of financing aimed at enabling the borrower to purchase a durable good for the purpose of consumption, with its value repaid over an extended period of time. It primarily targets the household sector and falls within the non-banking financial activities subject to the oversight of the Financial Regulatory Authority, as the competent body under the provisions of the Consumer Finance Activity Regulation Law No. 18 of 2020.
It is regarded as one of the main means of achieving social justice, as it gives the middle and low-income classes access to financial services, contributing to the promotion of financial inclusion, which is considered one of the fundamental pillars of the Sustainable Development Goals adopted by the United Nations, as well as being a key element of Egypt Vision 2030. However, this rapid expansion, described as a boom, raises questions about its nature and limits, and about whether it reflects a real economic improvement or is an indicator of a deepening debt crisis and the erosion of households’ purchasing power.
At a time when the state continues to rely on domestic and external borrowing to cover the budget deficit, which rose to 3.2% of gross domestic product during the first four months of the current fiscal year, and debt service, whose interest rose by 54%, recording EGP 695 billion of the total budget, household incomes are being eroded under the pressure of successive inflationary waves that have raised the prices of food, energy and basic services and weakened the purchasing power of broad segments of society. The historical comparison reveals a clear upward trajectory: the number of consumer finance clients rose from 323,000 in the third quarter of 2021 to 686,000 in the same period of 2022, and then to 811,000 clients during the third quarter of 2023, while finance values multiplied from EGP 4.5 billion in 2021 to EGP 7.6 billion in 2022, and then to EGP 12.1 billion in 2023. The number of consumer finance clients rose to 3.27 million during the same period of 2024, and recorded about 9.25 million during the same period in 2025, while the value of consumer finance in the third quarter of 2024 rose to about EGP 47.45 billion, and reached about EGP 74.98 billion at the same time this year.
The available data show a remarkable acceleration in the growth rates of consumer finance activity in Egypt during the period from 2021 to 2025, in terms of both client numbers and the value of finance granted. During the third quarter of 2022, the number of consumer finance clients achieved an annual growth rate of 112.7%, while the value of finance granted jumped, by a growth rate of 69%. The upward trend continued in the third quarter of 2023, as the number of clients increased at a relatively slower growth rate of 18.2%, against a strong rise in the value of finance to EGP 12.1 billion.
Cumulatively, the period from January to October 2024 reveals an unprecedented boom, as the number of consumer finance clients rose at a sharp annual growth rate of 303.7% compared with the corresponding period of 2023, and the value of finance multiplied, rising by 292.6%. The activity continued to grow during the period from January to October 2025, at an annual growth rate of 182.7%, while the value of finance rose, achieving an increase of 58%.
These indicators reflect a clear imbalance between the accelerating growth of the client base and a relative slowdown in the growth of finance values during the last year, indicating that the circle of consumer borrowing is widening at a faster pace than the increase in the average value of finance per person.
False Growth or Financial Inclusion?
For her part, Dr Sally Salah, an expert in strategic planning and international marketing, believes that this expansion does not reflect economic success so much as it reveals a structural crisis based on deepening debt instead of increasing income or production. She explains that the volume of consumer finance during the first ten months of 2025 reached about EGP 75 billion, compared with about EGP 47.45 billion during the same period of 2024, an increase of nearly 58%, a jump the expert describes as a catastrophic increase in debt, while she considers that the rise in the number of clients from about 3.27 million to more than 9.25 million, which means that about 6 million new people have entered the circle of borrowing, at a growth rate of 182%, does not reflect real financial inclusion, but rather a widening scope of indebtedness.
The expert stresses, speaking to Zawia3, that consumer finance does not represent a source of growth, because it is based on debt, not on production, explaining that most loans are used to cover basic needs such as food, medical treatment, education and household appliances, not for leisure spending, which reflects the erosion of citizens’ purchasing power amid rising prices and stagnant incomes. She warns that the continuation of this pattern will lead to the financial collapse of households, especially with new increases expected in the prices of electricity, taxes and services, at a time when instalments are devouring most monthly incomes.
At the macroeconomic level, Sally Salah believes that what is happening represents false growth that inevitably leads to stagflation, as sales rise temporarily because of debt, then real demand contracts as disposable income erodes after instalments are paid. She considers that the rise in finance companies’ profits does not reflect a healthy market, but rather an inflation of debt that will soon turn into widespread default.
She says: “The Egyptian economy suffers from a structural imbalance, as it is a consumer, non-productive economy, amid the absence of industrial expansion, weak job creation and a persistent trade deficit estimated at about $50 billion, which puts pressure on the local currency and pushes the state towards more borrowing”.
She warns that the domestic debt crisis poses a greater danger than external debt, pointing out that the government absorbs liquidity from the market by borrowing from banks at high interest rates, which crowds out the private sector and hampers investment and production. She explains that domestic debt cannot easily be restructured and leads to gradual economic paralysis.
She notes that rising default rates, currently between 3% and 4%, are likely to escalate, portending a wave of seizures of individuals’ property and deepening social crises, amid the declining quality of public services, especially education and health, and the decline in government spending on them compared with the constitutional percentages. She stresses that real growth can only be achieved through production, exports and job creation, not through widening the circle of debt, which represents “a social and economic time bomb”.
In the same context, Saher El-Saadi, a business consultant and member of the World Economics Association, considers that the expansion of consumer loans and of loans for small and micro enterprises through private finance companies is a dangerous indicator for the economy, warning that this path does not lead to real development, but rather opens the door to domestic debt crises and wide-scale social problems.
El-Saadi explains that previous international experiences, foremost among them the Chinese experience, clearly show the risks of uncontrolled expansion of lending through private companies and electronic applications. He points out that China saw, in earlier periods, a wide spread of fast-lending companies that granted loans very easily through apps, prompting large numbers of citizens to borrow without any study of their ability to repay. However, the borrowers’ later defaults led those companies to resort to methods of pressure, threats and defamation, which ultimately prompted the state to intervene decisively, abolish the activity of these companies and restrict lending to individuals to banks subject to the oversight of the state and the central bank, while cancelling the loans and interest granted by the illegal companies.
El-Saadi stresses to Zawia3 that personal loans, whether for consumption or directed at small and micro enterprises, do not usually lead to an economic recovery, explaining that a business owner who relies on borrowing remains captive to repaying instalments and interest, which devour his profits and prevent him from expanding or growing. He considers the common idea that loans help small enterprises achieve economic leaps to be a widespread illusion, because the main aim of lending companies, according to him, is to maximise interest, and even to benefit from borrowers’ defaults.
He points out that the expansion of this type of loan transforms the enterprise from being the property of its owner into being “the property of the debt”, stressing that the financing of small and micro enterprises must be exclusively under government supervision and the oversight of the Central Bank, and not through private companies, even if they are licensed, because the nature of this activity affects the economic and social security of citizens.
Regarding the consumer loans widespread in the countryside and in poor areas, El-Saadi explains that citizens’ resort to borrowing to marry off their children, cover health expenses or repay previous debts leads them into a closed circle of indebtedness, in which one debt is repaid with another, which worsens poverty instead of alleviating it. He considers that this pattern of consumer lending serves only the lending companies, which seek to subject as many citizens as possible to long-term financial obligations.
He says: “Lending should only take place under strict controls and direct government oversight. Loans must be granted with the aim of achieving an economic return, not to cover emergency consumer expenses. Moreover, the expansion of consumer finance is, in essence, akin to creating a loan crisis, which ends with citizens being unable to repay, and being forced to sell their property or having it seized in favour of the lending companies”.
On the classification of consumer finance within what are known as “shadow banks” or the non-bank economy, El-Saadi warns of the serious risks of this sector, foremost among them suspicions of money laundering, explaining that the funds circulating within private lending companies are often not subject to the same strict oversight imposed on banks supervised by the Central Bank. He questions the sources of the huge sums pumped into the market through these companies, the speed of their geographical spread and the intensity of the promotional offers they make, considering that these indicators raise legitimate questions about the nature of the financial flows.
He adds that fintech applications have contributed strongly to accelerating the pace of expansion of consumer finance, as a result of the extreme ease of obtaining loans, which are sometimes granted within hours or a few days without sufficient credit studies, pointing to the existence of global warnings about links between some non-bank lending companies and suspicions of money laundering, in his words.
He stresses that the uncontrolled expansion of consumer loans and loans for small and micro enterprises represents an economic and social danger, and requires a radical reconsideration of the lending system, to ensure that it is fully subject to state oversight and to protect citizens from falling into the debt trap.
Changing Consumption Patterns
For his part, Dr Ehab El-Desouky, professor of economics at the Sadat Academy, believes that the expansion of consumer finance carries divergent implications, which differ according to the angle from which it is viewed, as consumer finance allows consumers, amid the sharp rise in prices, to buy high-cost durable goods, such as cars and electrical appliances, which are difficult to obtain in cash. He explains that the matter may be positive from the consumer’s perspective, but it poses real problems at the macroeconomic level.
On the other hand, he points out that the main problem lies in the behaviour of banks and financial institutions, whose main role is supposed to be directing finance towards investment loans earmarked for businessmen and productive projects, contributing to increased investment and production within the Egyptian economy.
However, the decline in investment loans, according to El-Desouky, pushed banks to expand their investment in treasury bills and then in consumer finance, given the high profits it generates, which may sometimes exceed the profits of productive loans, and this reflects negatively on the economy by reducing the volume of productive investment.
He tells Zawia3: “There is no problem in itself in the existence or even the expansion of consumer finance activities or non-bank financial activities, since economic growth ultimately aims to enable the consumer to consume. However, the danger appears when the growth of consumer finance exceeds the growth rates of productive investment, upsetting the required balance between consumption and production.
Regarding the implications of the sharp rise in reliance on consumer finance, the professor of economics stresses that it does not reflect an improvement in citizens’ purchasing power, but mainly indicates mounting inflationary pressures on their incomes, adding: “If purchasing power were improving, consumers would not have been forced to resort to loans, especially given their rising cost”, and considering that this trend essentially reflects the erosion of incomes and a reduced ability to buy without borrowing.
He also points out that this situation has led to a marked change in the consumption patterns of Egyptian households, as citizens now tend to focus on buying basic goods and to stay away from luxury goods, as a result of high inflation and weak wage growth, which does not allow them to consume freely as was previously the case.
El-Desouky concludes that the continued expansion of consumer finance, without real parallel growth in productive investment, reflects a structural imbalance in the economy, stressing that addressing the crisis requires policies that restore consideration to production and to increasing incomes, instead of growing reliance on loans to cover living needs.
According to the chairman of the Financial Regulatory Authority, durable goods and cars represent about 80% of consumer finance portfolios, and according to the report on the third quarter (July–September) of 2025 issued by the Financial Regulatory Authority, electronics and electrical appliances accounted for the largest share of the value of consumer finance granted during that period, at about EGP 4.96 billion, or 17.80% of the total value of finance. Cars and vehicles came second with 17.75%, at about EGP 4.94 billion, while electrical and household appliances came third, with finance worth about EGP 4.6 billion, or 16.65%.
The large increase in consumer finance rates mainly reflects the state of recession afflicting Egyptian markets, according to economist Dr Zohdy El-Shamy, a leading member of the Socialist Popular Alliance Party, who considers that this expansion is not a positive indicator of economic recovery, but a temporary tool for confronting declining demand and weak economic activity.
El-Shamy explains to Zawia3 that the expansion of consumer finance comes at the expense of financing directed to productive activities, such as industry and agriculture, pointing out that a considerable part of the financing goes to the real-estate sector, which gives a negative indication about the course of real economic development, which is supposed to be concentrated in productive sectors capable of creating added value and sustainable jobs.
“The increase in consumer finance is linked, indirectly, to general economic conditions, foremost among them inflation rates,” he says. However, he does not see this type of finance as primarily targeting poor segments, explaining that its main beneficiaries mostly belong to the middle and upper-middle segments, which resort to loans to buy durable goods, such as cars and other non-essential goods, in order to adapt to rising prices, not to meet essential living needs.
He adds: “Poor groups do not have real opportunities for regulated borrowing, except through fragile and unsafe forms, such as informal loans or lending apps, which exacerbates their economic vulnerability instead of improving their conditions”.
Regarding the spread of small loans through electronic applications, especially in the Egyptian countryside, El-Shamy warns that these patterns of borrowing may carry great risks and may open the door to fraudulent practices targeting small borrowers, pushing them into a vicious circle of debt similar to what Egypt previously witnessed in the cases of indebted women (al-gharimat), describing these practices as “a form of exploitation of the weakest groups, who resort to borrowing to secure urgent needs, without full awareness of the consequences of high interest and of repayment mechanisms”.
Regarding the impact of government economic policies, the expert stresses that rising inflation rates necessarily lead to increased poverty rates, since inflation acts as an indirect tax imposed on those with fixed incomes, from wages and pensions, leading to the continuous erosion of the purchasing power of their incomes, while social increases and compensation remain below actual inflation rates. He stresses that the continuation of this path, based on giving priority to consumer finance at the expense of production, deepens economic and social imbalances instead of addressing them at the root.
Declining Living Standards
The large rise in consumer finance mainly reflects the depth of the economic crisis and its direct impact on consumption patterns, not an improvement in citizens’ conditions or a real expansion of fair access to finance, according to Mohamed Ramadan, a researcher on economic and social justice at the Egyptian Initiative for Personal Rights, who attributes the boom in consumer finance figures to the shift in the structure of the financial sector, as the traditional banking sector remained “hostile to non-saving segments” unable to provide collateral, which made the question of access to finance one of the chronic problems in Egypt.
On the other hand, the researcher believes that the non-banking financial sector, especially instalment and consumer finance companies, played the role of intermediary between banks and end consumers, benefiting from the spread of financial technology (Fintech) applications, which allowed this sector to grow rapidly in recent years. He points out that what is striking about this expansion is that it occurred despite the sharp rise in interest rates over the past two or three years, especially since 2023, which should have led to a reluctance to borrow; but what happened, according to Ramadan, is that the economic crisis pushed households to use instalment and consumer finance tools as a means of coping with living pressures.
He stresses to Zawia3 that what happened is an expansion in the ability of different segments to buy consumer goods in instalments, not an expansion in their ability to obtain financing that supports production or creates jobs, and “this expansion does not mean improved access for the poorest groups to productive finance”, explaining that individual consumer finance is growing at a high pace, while financing for small and medium enterprises remains very limited compared with the volume of loans directed to large companies or with the volume of the banking sector’s assets and deposits.
He explains that under normal conditions households turn to savings to cope with rising prices, but in their absence, and with households forced to maintain a basic level of consumption they cannot do without, resorting to instalments becomes an almost compulsory option. He points out that the weakness of the available data on the nature of the beneficiaries of consumer finance limits the ability to identify the social groups most involved in these debts.
Nevertheless, the researcher on economic justice believes that household debt in Egypt remains relatively limited compared with the size of the public debt or government debt, or even with the assets of the banking sector, which are estimated in the trillions of pounds. But he warns that these debts represent a deferral of poverty to the future, as households resort to borrowing to maintain their current standard of living amid the crisis, only to bear the cost later in the form of instalments and interest stretching over years, in the absence of radical solutions to low wages and rising prices.
The Financial Regulatory Authority, chaired by Dr Mohamed Farid, had previously issued Decree No. 138 of 2025 amending Decree No. 81 of 2023, raising the maximum amount of advance cash finance for consumer purposes granted to a single client for all financed transactions to EGP 50,000 from EGP 10,000.
While consumer loans are an important financial tool for meeting individuals’ needs, they carry serious risks if they are not managed rationally, whether at the level of the borrower, financial institutions or the macroeconomy. The most prominent of these are an increased debt burden on borrowers, leading to the accumulation of instalments that consume a large part of monthly income, which reflects negatively on the ability to meet basic obligations. Moreover, default on repayment, resulting from the loss of a job or a sudden drop in income, may result in fines and legal proceedings, as well as a decline in the ability to save and entry into a vicious circle of debt, according to Dr Adel Amer, professor of public law and international economics and director of the Egyptians Center for Political, Legal and Economic Studies.
Regarding the risks at the level of banks and financial institutions, Amer explains to Zawia3 that the ill-considered expansion of consumer loans raises credit risk and leads to a deterioration in the quality of credit portfolios, especially if consumer loans increase at the expense of productive loans, which may weaken banks’ profitability and financial stability in the long term. He warns of the operational risks associated with the pressure on credit assessment and income verification systems, which may lead to loans being granted to ineligible clients.
As for the macroeconomy, the centre’s director stresses that excessive expansion of consumer loans encourages unproductive consumption and limits the channelling of resources towards investment and production, creating inflationary pressures as a result of increased demand without a parallel increase in supply, and notes that rising rates of collective default may threaten financial stability and affect confidence in the banking system.
The expert addresses the social risks resulting from consumer loans, explaining that the accumulation of debt may cause psychological and family pressures and social problems, as well as a decline in living standards, as individuals are forced to cut spending on education or health because of repayment obligations.
On the legal level, he explains that the penalties when a borrower defaults on repayment differ from one company to another, pointing out that some companies resort to trust receipts, which often end in acquittal, while other companies rely on promissory notes, which are heard before civil courts and lead to rulings obliging repayment and to the seizure of the debtor’s funds. In most cases, the guarantor is the main party harmed when the borrower defaults.
Amer points out that the Consumer Finance Activity Regulation Law No. 18 of 2020 aimed to curb illegal activities and combat money laundering, by subjecting consumer finance companies to licensing and oversight by the Financial Regulatory Authority, requiring compliance with governance and disclosure rules, and linking the activity to the anti-money laundering system and the Money Laundering Unit at the Central Bank. He explains that it obliged companies to apply “know your customer” procedures, report suspicious transactions, document contracts and financial data and use official payment channels, narrowing the opportunities for passing through funds of unknown or illicit origin.
He also points out that the law prohibited fictitious or sham financing by linking finance to real goods and services, which helped close one of the common outlets for money laundering under the cover of instalment sales. But he stresses that the law’s effectiveness remains contingent on proper implementation and strict oversight, warning that any regulatory laxity may open the door to new forms of circumvention, especially given the development of financial technology.
The risks of consumer finance cannot be separated from the wider context of the economic crisis the country is going through, as the large expansion of this type of finance reflects deteriorating living conditions, and not merely a legislative or regulatory flaw, according to the conclusion of human rights lawyer Malek Adly, director of the Egyptian Center for Economic and Social Rights.
The human rights lawyer believes that the Consumer Finance Regulation Law No. 18 of 2020 did not provide real protection for citizens from the risks of borrowing; rather, in his view, it allowed widespread excess in the use of consumer finance, to the point of its extension to the financing of very simple consumer goods, which reveals the depth of the economic crisis and the pressures of poverty on broad segments of citizens.
He explains that the non-repayment of loans, whether linked to consumer finance or otherwise, often ends in custodial penalties, directly or indirectly, clarifying that debts linked to cheques and trust receipts lead directly to imprisonment, while civil debts relating to loans lead to rulings obliging payment, to seizure and to charges of misappropriating seized assets, crimes that also carry prison sentences and fines. The legal framework governing these matters is the Compulsory Enforcement Law, not the Consumer Finance Law itself, which makes the imprisonment scenario always present.
He tells Zawia3: “Many of these companies operate in illegal ways, using methods of blackmail, threats and defamation, including storming debtors’ homes and leaking their personal data. These practices have become a terrifying phenomenon in Egypt in recent years, affecting citizens from various social classes, whether in their dealings with consumer finance companies or even with banks”.
He also explains that some collection companies operate under the cover of law firms specialising in collecting debts, cheques and trust receipts, pointing out that the debt trade itself has become a profitable activity, as debts are sold to collection companies that take charge of recovering them in exchange for a percentage, which opens the door to practices closer to thuggery instead of resorting to the normal legal route, which requires months and perhaps years of litigation.
Adly stresses that this reality calls for urgent legislative intervention, by toughening penalties for blackmail and defamation practices in debt collection, along with greater control of consumer finance activities, considering that granting loans without real guarantees, in a society where a large part of the citizens suffer from poverty, raises fundamental questions about the feasibility and the danger of this model.
Last September, the Financial Regulatory Authority issued a decision obliging the Egyptian Federation of Consumer Finance Entities to prepare a ban list including the entities and persons proven to have carried out the cash liquidation of finance granted for consumption purposes, including sellers and providers of goods and services, brokers, clients, and employees of consumer finance companies.
In December, the Financial Regulatory Authority announced that the Anti-Fraud Committee at the Consumer Finance Federation had completed the preparation of the first central, unified database of entities and individuals involved in harmful practices such as the cash liquidation of consumer finance and fraud operations.
Commenting on the Authority’s decisions, Malek Adly explains that issues such as money laundering are not contained through domestic laws alone, but are linked to a wider international framework for combating these crimes, considering that what is happening in Egypt is a mixing of violent capitalist economic policies with the retreat of the state’s social role, which has exacerbated crises instead of solving them.
He explains that the state previously played a major role in financing small, medium and micro enterprises, through official bodies and major banks, within a disciplined legal framework that guaranteed a degree of sustainability for those enterprises as tools for combating poverty. However, this role, according to Adly, has been gradually hollowed out in favour of profit-making companies that do not share the same social goals.
He considers that turning the financing of the poor and of small enterprises into a purely investment activity undermines the social purpose of financing, stressing that leaving this field to companies that target profit alone has led to “confusing the economic and social scene, and opening the door to consumer finance with no real value, limited to meeting daily consumption needs, instead of supporting real and sustainable production”.
In this context, the rapid expansion of consumer finance does not appear isolated from living realities so much as it reflects households’ attempt to adapt to accumulated economic pressures by deferring the cost of consumption to the future. While official indicators show a decline in the real purchasing power of wages, rising poverty rates and growing reliance on borrowing to cover basic needs, the consumer finance market is witnessing accelerating growth that is officially presented as an achievement on the path of financial inclusion.
In an attempt to confront some of the risks of consumer finance, the Financial Regulatory Authority has taken a series of measures, most notably raising the maximum advance cash finance per client to EGP 50,000, obliging the Consumer Finance Federation to prepare ban lists of the entities and persons involved in liquidating finance, as well as revoking the licences of hundreds of violating associations in microfinance activity, and establishing a central database to combat fraud.
However, rights advocates and economic experts believe that the current legislative framework does not provide sufficient protection for citizens, and that excessive consumer finance reflects the retreat of the state’s social role and the transformation of the financing of the weakest groups into a purely profit-making activity that often ends in imprisonment or the seizure of property.
The boom in consumer finance figures reveals a fundamental paradox: a market growing rapidly, and households resorting to borrowing at an unprecedented pace. While official bodies see this growth as an indicator of financial inclusion, experts and economists see it as an expression of a deeper crisis, whose headline is the erosion of income, the absence of production and the deferral of poverty to the future through instalments and debts. Meanwhile, the question remains: will consumer finance become a tool for temporarily cushioning living shocks, or a social and economic time bomb?
