Egypt’s central bank issued Sunday guidelines on how it will incentivise banks to participate in a “comprehensive programme” to help finance small- and medium-sized enterprises in the latest move to try and create jobs and support its battered economy.
This comes after President Abdel Fattah al-Sisi announced the SME initiative on Saturday, saying that Egypt’s banks would inject 200 billion Egyptian pounds ($25 billion) into supporting businesses over the next four years.
The central bank said on Sunday that under the new programme interest rates on loans offered to SMEs would not exceed 5 percent.
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 SME programme aims to finance 350,000 companies and create 4 million new job opportunities over a period of four years, Reuters reported citing the central bank statement.
It aims to push the percentage of loans awarded to SMEs in the Egyptian economy up to at least 20 percent, the statement added.