Gov­ern­ment, bank­ing sec­tor stress sup­port for SMEs

NILEX IS ONE OF THE MOST EF­FEC­TIVE FAC­TORS IN FI­NANC­ING THESE PROJECTS: SHARKAWY

The Daily News Egypt - - Front Page - By Hos­sam Mounir

EGP 7BN LOAN PORT­FO­LIO FOR SMES FROM BANQUE MISR: EL ETREBY

BANKS HAVE OF­FERED NEW LOANS WORTH EGP 49BN TO THESE PROJECTS WITHIN A YEAR AND A HALF: FAYED

Min­is­ter of Pub­lic Sec­tor Af­fairs Ashraf El Sharkawy said that the gov­ern­ment pays great at­ten­tion to small and medium-sized en­ter­prises (SMEs) be­ing the en­gine of de­vel­op­ment in any coun­try in the world, not­ing that there are laws that are be­ing amended to give ad­van­tage to these projects, in­clud­ing the bid­ding law.

El Sharkawy added, dur­ing his speech in the fi­nanc­ing and SMEs ses­sion at the fourth Akhbar Al Youm eco­nomic con­fer­ence, that NILEX is one of the most ef­fec­tive fac­tors in the fi­nanc­ing of SMEs, be­cause the com­pa­nies listed in it gain the ad­van­tage of hav­ing ap­proved fi­nan­cial lists that banks can trust on grant­ing fi­nanc­ing.

Ac­cord­ing to El Sharkawy, fi­nan­cial leas­ing is one of the sources of fi­nanc­ing SMEs. He pointed out that in­sur­ance com­pa­nies af­fil­i­ated with the state also work on sup­port­ing these projects through the is­suance of in­sur­ance doc­u­ments of their own, most im­por­tantly, doc­u­ments against business dis­rup­tion known as “loss of rev­enue in­sur­ance”.

Tarek Fayed, the chair­per­son of Banque du Caire and the for­mer Deputy Gov­er­nor of the Cen­tral Bank of Egypt (CBE), said that the bank­ing sec­tor has of­fered fi­nanc­ing to SMEs dur­ing the past year and a half worth nearly EGP 49bn within an ini­tia­tive launched by the CBE to sup­port and fi­nance these projects.

He added that the pro­ce­dures taken by the CBE in November 2016 had a great im­pact on ad­vanc­ing SMEs, not­ing that the Egyp­tian bank­ing sec­tor is char­ac­terised by great liq­uid­ity that al­lows it to fund many sec­tors across the coun­try, such as in­fra­struc­ture and SMEs.

Ac­cord­ing to Fayed, the CBE has es­tab­lished a spe­cialised man­age­ment to solve the is­sues fac­ing the bank­ing sec­tor in terms of fi­nanc­ing, in co­or­di­na­tion with gov­ern­ment agen­cies. He pointed out that there will be spe­cialised de­vel­op­ment cen­tres in gov­er­norates to fi­nance these projects.

He added that the CBE aims to ex­pand the scale of deal­ing with the bank­ing sec­tor, not­ing that it is cur­rently pre­par­ing fund­ing bun­dles and pack­ages for SMEs, es­pe­cially en­tre­pre­neur­ial projects.

Ac­cord­ing to Mo­hamed El Etreby, the chair­per­son of Banque Misr, en­cour­ag­ing SMEs fa­cil­i­tates merg­ing the in­for­mal sec­tor into the Egyp­tian for­mal econ­omy.

He added that the CBE has obliged banks to al­lo­cate 20% of their port­fo­lios to SMEs dur­ing the next four years, not­ing that each bank has sent its plan to the CBE which car­ries out a re­view ev­ery three months.

El Etreby re­vealed that his bank’s port­fo­lio for SMEs has jumped from EGP 2.8bn be­fore launch­ing the CBE ini­tia­tive in 2016, to nearly EGP 7bn by the end of Oc­to­ber 2017.The amount was of­fered to nearly 72,000 clients.

He added that the bank also of­fered fund­ing worth EGP 1.9bn to fund 42,000 clients in 27 gov­er­norates through the ini­tia­tive of “Mashrouak” (Your Project), launched by the Min­istry of Lo­cal De­vel­op­ment.

El Etreby noted that there is co­op­er­a­tion with the International Fi­nance Cor­po­ra­tion (IFC) in or­der to ob­tain fund­ing to be al­lo­cated for women, not­ing that women-re­lated prod­ucts are ex­pected to be launched over the up­com­ing pe­riod.

El Etreby stressed the im­por­tance of sup­port­ing own­ers of SMEs, re­veal­ing the bank’s plan to es­tab­lish an academy soon to train young peo­ple.

For his part, Hany Emad ElDin Mo­hamed, deputy gen­eral man­ager and head of the credit sec­tor at the Small, Medium and Mi­cro En­ter­prises De­vel­op­ment Agency, said that his agency is cur­rently pre­par­ing a special strat­egy to de­velop the SME sec­tor.

He ex­plained that the strat­egy is based on five main axes, with leg­is­la­tion be­ing the most im­por­tant, in ad­di­tion to a group of in­cen­tives to en­cour­age the in­for­mal econ­omy to join the sys­tem, be­sides an en­trepreneur­ship axis, and an­other to of­fer fi­nan­cial and non-fi­nan­cial ser­vices.

For his part, Alaa El Sokati, head of the Small and Medium En­ter­prises Union said that the suc­cess of SMEs re­quires the state to un­der­stand what it wants from them, not­ing that it is nec­es­sary to re­place im­ported prod­ucts with lo­cally man­u­fac­tured ones.

El Sokati added that the im­por­tant mis­sion of sup­port­ing SMEs is train­ing those who plan to start a project or ob­tain fund­ing.

He ex­plained that the union has con­ducted a sur­vey of 1,000 prod­ucts im­ported by Egypt and started co­op­er­at­ing with China to im­port the ma­chines that man­u­fac­ture these prod­ucts. Soon, the first com­plex for small projects to pro­duce these prod­ucts will be an­nounced. It will in­clude 200 fac­to­ries with about 50 ser­vice units.

Ac­cord­ing to El Sokati, Egypt im­ports the worst prod­ucts the world pro­duces, even though it has the abil­ity to man­u­fac­ture prod­ucts of a much higher qual­ity. “We lack knowl­edge and or­gan­i­sa­tion to sup­port small projects,” El Sokati added.

For his part, Mo­hamed Ash­mawy, the ex­ec­u­tive pres­i­dent of the Tahya Misr Fund, said that CBE was a pioneer in cre­at­ing op­por­tu­ni­ties for SMEs.

He added that the fund co­op­er­ates with all par­ties of the state to cre­ate a mar­ket for SMEs, not­ing that there is co­op­er­a­tion with Banque Misr, the National Bank of Egypt (NBE), Tahya Misr In­vest­ment Hold­ing Com­pany, Egypt Cap­i­tal Risk Com­pany, and oth­ers.

Ash­mawy ex­plained that the fund has en­tered into a part­ner­ship with the pri­vate and pub­lic sec­tors to es­tab­lish a phar­ma­ceu­ti­cals com­pany to pro­duce 144 drugs that could re­place im­ported ones, in ad­di­tion to an­other com­pany to pack­age and ex­port dates.

Speech dur­ing the fi­nanc­ing and SMEs ses­sion at the fourth Akhbar Al Youm eco­nomic con­fer­ence

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