A new wave of Egyptian financial support for SMEs
Egyptian banks will offer a lot more support to small and medium-sized enterprises (SMEs) thanks to an initiative led by the Central Bank of Egypt (CBE).
On 28 February, the CBE made an amendment to the definition of SMEs and micro-projects. SMEs were formerly described as companies with sales of less than EGP1m and with fewer than ten employees. New micro companies, on the other hand, are those with a capital of less than EGP50,000 and with fewer than ten employees.
According to the new definition, the sales of small companies—with less than 200 employees—range between EGP1m and EGP50m, while the capital of new SMEs ranges between EGP50,000 and EGP5m for industrial facilities and less than EGP 1m for non-industrial ones. Employment in small companies, according to the new definition, is less than 200 individuals.
Existing SMEs are those whose sales range between EGP 50m and EGP 200m and which have fewer than 200 employees. The capital for new medium-sized companies ranges between EGP5m and EGP15m for industrial facilities and EGP 3m to EGP 5m for non-industrial ones. Their workforce size is also less than 200 employees.
Central Bank of Egypt
Tarek Amer, Governor of the CBE, revealed that the size of the granted finances from banks to SMEs was worth EGP 101bn. The CBE upgraded the public sector banks, Agricultural Bank of Egypt, the Export Development Bank of Egypt (EXPA), and the Credit Guarantee Company.
Nermin El-Tahiri, Deputy Governor of the CBE for the development of the banking sector, revealed that banks have injected EGP28bn for SME in 2017 so far. She noted that the SME financing portfolios at the banks are being reviewed after the CBE amended its definition.
She said that banks are committed to increasing loan sizes granted to SMEs to 20 per cent of the total of loan portfolio over four years—specified by the CBE initiative, which will end in 2019. She emphasised that the CBE is continually following up on the performance of banks in this regard.
Housing and Development Bank
Fathi Sebaey, CEO at the Housing and Development Bank (HDB), said that the total value of the SME portfolio of the bank registered EGP1.2bn. Sebaey added that these projects account for 12 per cent of the total portfolio of the bank, which targets to reach 20 per cent, in line with the CBE initiative.
Ashraf Elkady, chairperson of the United Bank, said the size of the SME portfolio at the bank is EGP1.2bn as of March.
He added that SMEs represent 14 per cent of the total credit portfolio worth EGP9bn. He added that the bank targets to expand the financing of these projects to reach the 20 per cent specified by the CBE initiative for the four years ending in 2019.
The United Bank has signed an agreement with the Social Fund for Development last week, through which the bank will obtain EGP120m, to be injected to finance SMEs. The purpose of the finance is for purchasing machinery and financing working capital and the project equipment.
Banque du Caire
Suha Suleiman, Vice President of Banque du Caire, said that the administration of the bank is currently conducting internal restructuring to activate the role of the bank to support small and medium-sized enterprises and microenterprises. She added that the bank targets to re-evaluate the SME portfolio during the coming period.
Suleiman said that the bank is using 43 per cent of the deposits in loans, which allows it to expand its financing of these projects.
According to Suleiman, the financing portfolio of SMEs currently stands at EGP1.5bn, while the portfolio of micro projects is roughly EGP1.3bn. She noted that the bank injected funds to micro projects worth EGP500m over the past two months.
She added that the bank targets to increase the financing portfolio of micro projects to EGP2bn by the end of this year and targets to reach 20 per cent of the credit portfolio by the end of 2019, compared to the current 6 per cent, in line with the CBE initiative.
National Bank of Egypt
Hazem Hegazy, National Bank of Egypt’s CEO of retail banking and SMEs, injected EGP8.5bn within the CBE initiative at an interest rate of 5 per cent.
He said that the total value of the portfolio with the bank is currently EGP31bn, with the bank hoping to reach EGP33bn by the end of June 2017. He added that the bank injected EGP1bn per month to finance SME projects within the CBE initiative.
These funds are awarded to 1,500 customers per month, and he stressed that the NBE is ahead of all other banks in lending to these projects, Hegazy stated.
The modified definition of these projects by the CBE is expected to attract new customers and expand the beneficiaries’ base of this initiative.