KfW to pro­vide new loans for SMEDA

The Daily News Egypt - - Front Page - By Hagar Om­ran

KfW Devel­op­ment Bank is in fi­nal dis­cus­sions to pro­vide the Small and Medium En­ter­prise Devel­op­ment Au­thor­ity (SMEDA) a mi­cro loans and tech­ni­cal as­sis­tance, said Burkhard Hinz, di­rec­tor of the KfW of­fice in Cairo.

“This pro­ject com­ple­ments the pro­vi­sion of funds to banks like the Na­tional Bank of Egypt which then lend to small and mid-sized com­pa­nies pre­dom­i­nantly out­side the Greater Cairo re­gion,” Hinz told Daily News Egypt.

“We ap­proach the pri­vate sec­tor from two sides: from the top by sup­port­ing banks to fi­nance in­creas­ingly smaller clients and from the bot­tom by in­creas­ing the fi­nan­cial reach of mi­cro clients who then will grow into the for­mal sec­tor,” said Hinz.

Al­most 150,000 loans have been granted to medium and small en­ter­prises in North Africa and the Mid­dle East through in­ter­me­di­aries—in­clud­ing in Egypt through the SANAD Fund for MSME, added Hinz.

A cu­mu­la­tive of more than $400m in loans was fa­cil­i­tated since SANAD’s in­cep­tion in 2011, with an av­er­age loan value of roughly $3,000, Hinz said, adding that the fund pro­vides tech­ni­cal as­sis­tance to end-bor­row­ers as well as fi­nan­cial in­sti­tu­tions.

The SANAD Fund for MSME pro­vides fund­ing and tech­ni­cal as­sis­tance to in­ter­me­di­ary fi­nan­cial in­sti­tu­tions, like banks, mi­cro­fi­nance in­sti­tu­tions, or leas­ing com­pa­nies, which then lend smaller loans to end-bor­row­ers, who are mostly small en­ter­prise own­ers.

“Re­cently I had the chance to visit one of SANAD’s bor­row­ers. Al­though he hadn’t re­ceived train­ing be­fore, he took out a loan with his brother and started a car­pen­try busi­ness in Sakkara, Giza, which now em­ploys about 30 em­ploy­ees and pro­vides fur­ni­ture to well­known com­pa­nies,” Hinz said.

“With a world­wide mi­cro­fi­nance port­fo­lio of €1.7bn, KfW Devel­op­ment Bank is one of the big­gest and most ex­pe­ri­enced play­ers in the busi­ness of fa­cil­i­tat­ing ac­cess to fi­nance for small and mi­cro en­ter­prises,” he added.

Small firms of­ten face dif­fi­cul­ties co­op­er­at­ing with reg­u­lar banks; there­fore, KfW’s mis­sion is to in­clude them in the for­mal mar­ket, lead­ing to em­ploy­ment, safer work­ing en­vi­ron­ments, and higher tax rev­enues, Hinz said.

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