Hassan Abdel Megid, CEO of Societe Arabe Internationale de Banque (SAIB), called on all concerned bodies to cooperate to set an integrated system to develop small and medium enterprises (SMEs) as they are the backbone of national economy. Abdel Megid suggested localizing the experiences of other countries who achieved great advancements by relying on SMEs.
Abdel Megid added in an interview with Amwal Al Ghad that the government shall bear the heavier burden regarding developing these enterprises by removing obstacles and forming industrial districts amid all governorates, in addition to offer lands with low costs to be discounted from the revenues afterwards.
How can we develop SMEs system in Egypt?
SMEs system shall be treated differently by all concerned bodies, governmental and private financial institutions, as these enterprises lack managerial and financial competencies. These enterprises are mostly family businesses; therefore, they shall be treated with different standards.
Large companies have an important role in developing SMEs as done in all countries that witnessed high advancements in this sector.
What are the mechanisms government should adopt?
The government has to bear the heavier burden in developing SMEs by laying down an integrated system. The government shall work on removing the obstacles facing SMEs, forming industrial regions in all governorates across Egypt in which every region will be specialized in a certain industry and offering lands with low costs which will be discounted from the revenues afterwards, in addition to providing them with the basic structures to allow banks study and finance these enterprises. Advancements in this sector will benefit the national economy.
What is the role of Social Fund for Development?
Social Fund for Development’s role shall be further boosted through adopting new ideas and localizing experiences of other countries that made advancements in this sector such as Malaysia, Brazil and Argentine. The banks who borrowed from the Social Fund to finance SMEs are currently setting regulations to guarantee the repayment of these finances that limited expanding in these finances.
Do banks have qualified staff and administrations to expand in offering credit to SMEs?
There is no lack of qualified staff, as Egyptian banks have many experienced and qualified staff that enabled these banks to face and pass through crises relatively unscathed. SMEs sector needs continuous follow up to guarantee executing each phase on time. This follow up will guarantee achieving good returns to enable these enterprises repay finances installments.
Highlight main incentives for banks to finance SMEs?
There many factors encouraging banks to expand in financing SMEs. The first is boosting the national economy through supporting these enterprises which represent the backbone of the economies of developed countries. Banks also target diversifying their investment risks by providing credit to a large number of customers. Nevertheless, industrial investments acquire more than 50% of the portfolios of many banks as they need a larger capital. However, there shall be diversification of investments.
What is the value of loans offered to SMEs?
SAIB’s credit portfolio reached EGP 5 billion at the end of last April and the volume of finances offered to SMEs ranged from EGP 150 million to EGP 200 million. The Bank plans to expand in financing this sector; depending on the market’s situation.
Do SAIB eyes certain sector?
SAIB plans to finance the establishment of a region in Damietta for furniture industry to be equipped with all services such as industrial regions in Italy. The governor approved this project. The Bank will also offer administrative and financial assistance for this project.
How do you see the call for a specialized bank in financing this sector?
Specializing will make a difference as there will be experienced staff and the ability for risk management. However, specialized banks in Egypt did not prove a success adding that specializing in such sectors will reduce competitiveness among banks.
