Central Bank of Egypt mulls amendments to the SMEs initiative

The Central Bank of Egypt (CBE) is looking to make amendments to the initiative that involves funding small and medium-sized enterprises (SMEs), according to a prominent banker.

The CBE launched an initiative in January 2016 and allocated 200 billion Egyptian pounds to finance these projects, instructing banks to allocate at least 20 percent of its total loan portfolio for these projects within four years since the initiative’s launching date.

The Federation of Egyptian Banks (FEB) holds regular meetings attended by representatives of the CBE, bank leaders, and heads of all sectors specialised in financing SMEs to look into the problems facing banks in implementing the initiative and discuss suggestions that can facilitate dealing with these projects.

The source added that during the last meeting held in this context, some banks made suggestions to amend the initiative in order to double the liquidity to be injected into these projects—especially after the pound flotation, where what could be bought for 1 million pounds before the flotation cannot be bought for the same price now.

One of the most prominent proposals made by banks is doubling the maximum limits of the sales of small projects stipulated by the initiative to be less than 20 million pounds, especially that a large number of companies in the segment had doubled sales after the flotation due to the increase of foreign currency prices against the pound.

“During the successive meetings of banks, there were complaints from the unavailability of adequate information about the projects. Banks have addressed many agencies, including the Ministry of Industry, to overcome this problem,” the source said.

He pointed out that there is great cooperation between banks and the Social Fund for Development affiliated to the CBE to overcome this problem, as these two institutions have lots of data about the projects.

Tarek Fayed, deputy governor of the CBE, had revealed earlier that the CBE is studying amending the unified definition of SMEs, which it set in December 2015, taking into account the new situation after the pound flotation.

Source: Daily News Egypt