The banks’ finances for small and medium-sizes projects (SMEs) are ‘inadequate’ compared to what given to corporations, said deputy governor of Egypt’s central bank, Tarek Fayed on Monday.
Hence, the central bank decided to intervene to support the SME sector by calling banks to raise their SME financing to 200 billion Egyptian pounds (US$ 25.5 billion) in the coming four years, he added in a keynote remarks at a SME conference in Cairo.
Earlier in January, Egypt’s central bank has called on banks to increase financing of small and medium-sized enterprises nationwide, key contributors to the state’s investment and production sectors.
The central bank said it would require lenders to apportion 20 percent of their total loaning portfolio for SMEs, with interest rates below 5 percent imposed on firms generating between 1 and 20 million pounds a year in revenue.
The banks participating in the four-year programme will be able to deduct the loans from their required reserves at the central bank.
The bank’s new SME financing programme was announced as part of an ambitious plan by President Abdel Fattah al-Sisi to assist smaller businesses.
Sisi said that the loans, which will total an estimated 200 billion poundsd, could benefit up to 350,000 projects, providing jobs to over four million employees.
