During the Builders of Egypt Forum held last week, a number of representatives of the contracting sector protested what they described as the lack of funding directed towards the contracting sector. Banking officials have denied this purported lack of funding.
Deputy Chairman of the National Bank of Egypt (NBE) Mahmoud Montasser said the contracting sector is the base of development in Egypt, and receives commensurate focus from all national sectors, including the banking sector.
Montasser qualified his claims by saying that the loans directed to the contracting sector at the NBE alone amounted to approximately EGP 34bn, equivalent to approximately 15% of the bank’s total loans portfolio. He further noted that this was compounded by a 66% growth in the size of loans directed to this sector over the past year.
The bank deals with approximately 50 major companies in the contracting sector, along with 2,300 small and medium enterprises (SME).
Montasser conceded that if there was a decline in the sector’s business over the past period, this was due to the circumstances nationwide, and the lack of proposed projects, rather than reluctance of the bank.
He pointed to a boom in state-led infrastructure projects throughout the current and upcoming period, which will increase business with the sector. This is in addition to the initiative launched by the Central Bank of Egypt (CBE) to SMEs.
Meanwhile, Deputy Managing Director of Emirates NBD Egypt Sahar El-Damati rebuked those who accused the banking sector. She said the banking sector has supported numerous companies operating in the contracting sector, as well as other economic sectors, despite the numerous setbacks and obstacles they have faced since the 25 January Revolution.
“It is inconceivable that banks should be accused of neglecting the financing of the contracting sector, after all this,” she said.
El-Damati moreover contended that the contracting sector acquires the largest portion of the loans portfolio at Emirates NBD Egypt, noting that approximately 30% of the bank’s loans portfolio is directed to the SME sector, a large share of which is directed to the contracting sector.
She asserted that the bank finances all projects and sectors. However, it also must take into consideration their creditworthiness.
According to the head of the Credit Department at Banque Misr, Mohamed Younes, the volume of the loans directed to the contracting sector amounts to approximately 14% of the total loans portfolio of the bank.
He said Banque Misr’s performance has significantly improved, noting that its credit portfolio grew over six times in the past seven years.
Younes added that the bank expanded its financing of major companies by 450% during the same period. Moreover, the number of contracting companies that deal with the bank increased to 64.