As part of Abu Dhabi Islamic Bank (ADIB) – Egypt’s (ADIB) plan to expand its financing of SMEs, it has allocated EGP 200 million to finance these projects throughout 2013, reaching EGP 400 million by the end of 2014.
Following ADIB’s launch of SMEs at the end of 2012, the first five months of this year saw the bank successfully extending financing facilities worth EGP 150 million with utilization rate exceeding 50%.
Nevine Loutfy, Managing Director and CEO of ADIB-Egypt, stated, “The bank’s decision to expand its financing of SMEs followed thorough studies and monitoring of the Egyptian market and its needs. The bank recognizes the growing role of this vital sector in boosting economic development and its role as a major player in job creation, accounting for more than 50% of GDP.”
Ashraf Abdel Fattah, Head of SMEs at ADIB-Egypt, stated, “The bank was committed to gain a deeper understanding of the financing needs of SMEs, therefore we are now starting adopting a new financing approach for both the short and long term, which meets the needs of project owners, using the best and fastest innovative approaches.”
ADIB’s financing of SMEs comes after numerous studies that confirmed that SMEs – represent 98% of Egyptian companies. SMEs sector face two major obstacles, lack of access to financing and the long duration required to grant financing. Geographically, SMEs are distributed as follows, Greater Cairo 65%, Delta and Alexandria 28% and Upper Egypt, Red Sea and Sinai 7%.
After a comprehensive monitoring of this sector, ADIB Egypt defined SMEs as companies with an annual turnover ranging from EGP 5 million up to EGP 50 million, targeting manufacturing, trade and select service industries. Therefore, the bank has developed a model for assessing SMEs and providing finance decision to clients in a short period of time not exceeding two weeks, following the completion of required documents, which is a considerably a short duration, compared to the rest of the market.