The Federation of Egyptian Banks (FEB) will hold meetings with the Egyptian Union of Construction & Building Contractors (EUC) in July to look into the financing of small and medium-sized companies, according to union member Daker Abdellah.
Abdellah told Daily News Egypt that the union will hold workshops with the companies in order to look into financing methods the upcoming period, adding that the banks’ provision of financing will push contracting activities by more than 80% throughout fiscal year (FY) 2015/2016.
According to Abdellah, small and medium-sized contracting companies represent approximately 80% of total number of companies operating in the activity.
The workshops will be followed by a trilateral meeting between the Ministry of Finance, represented by the General Authority for Governmental Services, as well as the FEB and EUC, according to Abdellah.
“The number of companies acquiring all contracting activities in Egypt is 100, of a total of 16,000 companies” said Abdellah, pointing out that this is a small percentage.
He explained that some companies receive projects by direct orders due to the absence of competition.
The contracting activity in FY 2014/2015 is estimated at EGP 28bn, with Egyptian companies representing nearly 25%, said Abdellah.
Abdellah has no worries regarding foreign companies’ acquisition of contracting work throughout the upcoming period, adding that in the case of the availability of bank financing for merged companies, the problem will be resolved.
The Head of EUC told Daily News Egypt in a press statement that the absence of bank financing for small and medium-sized contracting companies led to the exit of 50% of contracting companies.
The construction sector, according to Abdellah, is considered one of the fastest growing sectors of the economy, even during the past four years. He added that growth rates in the sector during FY 2014/2015 are approaching 60%.
Abdellah expects that the contracting activity in Egypt will witness great saleability next year, with the launch of lands and projects implemented as announced by the government in the Economic Summit in Sharm El-Sheikh last March.
The Ministry of Housing announced its willingness to implement the project of the administrative capital at the beginning of FY 2015/2016.