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The Central Bank Of Egypt Planning To Fund Egyptian SMEs With 200 Billion EGP

The Central Bank Of Egypt Planning To Fund Egyptian SMEs With 200 Billion EGP

The Central Bank of Egypt (CBE) obliged Egyptian banks to give out 20% of their total loans portfolio to small and medium enterprises (SMEs). This will provide 350,000 SMEs with EGP 200 billion in four years at 5% interest rate. The CBE’s statement included redefining SMEs to include companies that make EGP 50,000 in annual revenues.

The SME programme aims to finance 350,000 companies and create 4 million new job opportunities over a period of four years, a central bank statement said.

Also Read: Egypt launches one of the largest national projects: “Knowledge Bank”

The Egyptian Central Bank announcement would push ahead with implementing President Abdel Fattah al-Sisi’s plan to increase bank lending to small and medium-sized companies (SMEs) as part of efforts to boost growth and create private sector jobs.

THE CENTRAL BANK OF EGYPT PROVIDES A PLAN TO FUND EGYPTIAN SMES WITH EGP 200 BILLION

Egypt’s economy grew by about 4.2 percent in the last fiscal year and the government forecasts growth of around 5 percent in the current 2015/16 year. The consumer credit market has also grown, but business loans to private sector companies have lagged as banks have little incentive to offer what they perceive to be riskier loans and businesses balk at what they consider the high costs.

In return for issuing the loans, participating banks will be permitted to reduce their level of required reserves held at the central bank by an amount equivalent to what they lend.

The Egyptian government has long been accused of crowding the private sector out of the credit market, with a huge chunk of bank funds being invested in treasury bonds and bills at yields reaching more than 14 percent for seven-year debt.

Infographic source: egyptinnovate.com

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