New SMEs Fund Worth EGP 500 Million

Small and medium-sized enterprises (SMEs) in Egypt will enjoy better access to finance after an EGP 500 million-fund has been launched.

The fund contains contributions from the Industrial Modernization Center (IMC) and the Arab African International Bank (AAIB). This was announced in a conference attended by the Minister of Investment, Dr. Mahmoud Mohieldin; the Minister of Trade and Industry, Rachid Mohamed Rachid; and Chairmen of the AAIB and IMC, Hassan Abdullah and Adham Nadim.

This step reflect the government's continuous efforts to support SMEs, as the basis of the Egyptian economy.

"Launching the fund at this time highlights the importance of backing SMEs, given the increasing number of companies, to be covered by the fund", Dr. Mohieldin told the conference. In fact, 40,000 out of 67,000 companies in Egypt are eligible to benefit from the fund's services.

"It is vital to provide finance to SMEs since access to finance is a major hindrance to expansions of these companies", Dr. Mohieldin added.

He urged cooperation among different bodies to support SMEs, noting that the fund is employing this approach through cooperation between the Ministry of Trade and Industry, represented by the IMC and AAIB, and the Social Fund for Development (SFD).

Dr. Mohieldin called for providing other services to support SMEs, including insurance coverage on equipment and activities through insurance companies in Egypt.

An ambitious program exists for developing the Egyptian bond market, which would help financial institutions and companies gain access to finance by issuing domestic market bonds, Dr. Mohieldin stated.

The Cabinet is currently considering some amendments to the financial leasing law to allow companies to get equipment at a lower cost. The legislation on microfinance would be considered as well, added Dr. Mohieldin. As a part of its efforts to provide support and finance to SMEs, the Ministry of Investment has set up the Nile Exchange for SMEs (Nilex), which provides more flexible listing rules with regard to minimum capital requirements and the number of shareholders. Dr. Mohieldin said.

He added that Nilex assists and qualifies companies for the restructuring, listing and offering of shares. Nilex is developing an existing set of mechanisms for investments in SMEs.

Dr. Mohieldin cited other initiatives to assist SMEs, including an EGP one billion fund being established by the General Authority for Investment (GAFI) to finance SMEs, in addition to Egypt's contribution to a USD $2 billion fund announced during the Arab Summit in Kuwait.

Such initiatives, Dr. Mohieldin remarked, would stimulate the growth and development of SMEs, helping them to expand and create more jobs.