CAIRO: The Egyptian Junior Business Association (EJB) unveiled at a press conference on Wednesday their “Guide on Access to Finance , compiled to help small and medium enterprises (SMEs) in Egypt find funding.
The guide was put together by a team of finance specialists and consultants and includes an overview of different sources of finances for SMEs and the requirements and steps for accessing financial services. It describes in detail conditions that SMEs have to meet and documents that they have to submit in order to be eligible for funding.
In 2009, EJB conducted research on the business environment for the SMEs in Egypt. “Financing came up as the top priority and the biggest problem that SMEs in Egypt face, said Ashraf Ibrahim El-Gazayerli, chairman of EJB.
He explained that spreading knowledge of capital acquisition is an immediate solution to one of the the financial problems that burden SMEs.
“Interest rates are definitely a problem. The exchange rate is also a problem because our exports today are not getting their fair chances because we are holding the Egyptian pound, he said. “But start with this nugget and then talk about the rest.
“[SMEs] are not aware of the different modes of financing. They always talk about banks. Today leasing companies can help you start or have zero capital investments from computers to machinery. Who knows about that? he explained.
Nilex, the Egyptian Stock Exchange’s market for medium and small capital, is also suffering from small and medium entrepreneurs seeking only traditional sources of funds. Maged Shawky, the chairman of the Egyptian Stock Exchange, who also attended the event, said that though Nilex is developing slowly, this is what he expected.
“Why don’t we have a 100-percent working Nilex? Because they are still learning, said Mohamed Mohieldin, the head of the finance and banking committee at EJB. A lot of features in the SME sector, including financial services and reforms, are at the experimental stage, he clarified.
Unawareness of the variety of financial options is compounded by the lack of understanding of financial institutions’ lending standards among SMEs.
“We found a big gap between the financial institutions and the small and medium enterprises. [The SMEs] don’t understand the language of the institutions that want to lend them money and they don’t know how [to approach them], said El-Gazayerli, explaining that the manual was created to bridge this incompatibility gap.
The guide is first released in English, with the Arabic version coming out soon. The EJB is working on a developing an effective distribution network that will allow entrepreneurs throughout Egypt to buy it. “The challenge now is taking this manual, educating people going everywhere in Egypt and helping people understand the manual so that they become bankable, compatible to Nilex or to all the different modes of financing, said El Gazayerli.
After completing the current initiative, EJB plans to undertake development of startups. “Today if a startup business goes to the bank, they demand two balance sheets. This applies to all financial institutions, said El Gazayerli, pointing out that startups should be given more space and resources to develop.