The World Bank member states agreed on Tuesday to grant Egypt a loan of $300 million in order to finance small and medium-sized enterprises, create new job opportunities and cut unemployment rate in the country, said Hartwig Schafer, WB Country Director for Egypt.
The US$300 million loan approved by the World Bank’s Board of Executive Directors will open doors for women, youth and marginalized groups to start and grow MSEs utilizing innovative financing tools to expand access to credit. The World Bank Group is committed to supporting the Egyptian people through inclusive growth and private sector jobs with the goal of reducing poverty and promoting shared economic prosperity.
WB executive directors consensually approved the loan, which is the first since June 30, to improve sustainable growth and access to financing resources by youth and women in need.
“An inclusive financial system can play a key role in creating jobs and unleashing the entrepreneurial potential of innovative young Egyptians,” said Hartwig Schafer, World Bank Country Director for Egypt, Yemen and Djibouti. “The project will enhance sustainable and inclusive access to finance and foster innovation.”
The Promoting Innovation for Inclusive Financial Access Project will expand financial inclusion amongst low-income communities and unlock the market for lending to micro and small enterprises. Over 5 years the project is set to reach over 130,000 micro and small enterprises, 37 percent of which owned by women. In Egypt, small and young enterprises are the main source of new job opportunities. They account for more than 98 percent of enterprises, generate more than 85 percent of employment in non-agriculture private sectors, and 40 percent of total employment.
“The project will reach out to remote, rural and underprivileged areas in Egypt,” said Sahar Nasr, World Bank Lead Economist and Project Team Leader. “It will unleash opportunities and provide income-generating activities to youth, women and entrepreneurs in marginalized areas. The project will provide people with economic opportunities and contribute to improving their lives at this critical transition period in Egypt.”
The project will improve incentives for the financial system to lend to micro and small enterprises. It will also incentivize and support the design of innovative financial products, such as venture capital, financial leasing and Islamic Sharia-compliant products.
The Promoting Innovation for Inclusive Financial Access Project is a collaborative effort between the World Bank and the International Finance Corporation (IFC)—the World Bank’s private sector arm. The project is part of a comprehensive package in partnership and coordination with all donors and international financial institutions active in MSEs development in Egypt, including the Arab Funds.