IFC loans AAIB bank $100 million to support Egypt SMEs, energy projects
The International Finance Corporation (IFC), a member of the World Bank Group, has provided a $100 million loan to Egypt’s Arab African International Bank (AAIB).
The loan aims to help the Egyptian bank scale up its lending operations to small and medium-sized enterprises and build its sustainable energy finance portfolio in response to increased energy bills for many companies and SMEs.
About $50 million will be earmarked for SMEs to support the bank’s strategy to significantly increase its lending to smaller businesses. The remaining $50 million will be earmarked for introducing credit lines that support energy efficiency, helping businesses that need to make capital investments to refurbish or renovate existing operations to reduce energy costs, IFC said in a statement on Monday.
“Small and medium enterprises are at the heart of driving economic growth so we are delighted to be able to continue to expand our lending to these businesses.” Hassan Abdalla, chief executive of AAIB said.
The SME sector accounts for approximately 25 percent of Egypt’s GDP and about 75 percent of total private sector employment. Despite this, a significant number of SMEs remain outside formal channels, with SMEs loans representing only around 5-10 percent of total lending.
“This loan will help a strong bank increase its reach to smaller businesses and encourage other financial institutions to follow suit, while also helping to boost energy efficiency in Egypt,” said Mouayed Makhlouf, IFC regional director for the Middle East and North Africa.
He added that micro, small, and medium enterprises (MSMEs) continue to play a dominant and continuously increasing role in creating jobs in Egypt; however, access to finance remains a significant challenge for many.
