The National Bank of Egypt (NBE) is targeting to increase their loans portfolio in the sector of small and medium enterprises (SMEs) to approximately EGP 65bn by the end of 2020, according to NBE Deputy Chairman Mahmoud Montasser.
Montasser explained the size of these projects’ portfolio currently amounts to approximately EGP 19.5bn, about 9.5% of the bank’s total loans portfolio. The target is to raise the rate to 20% to meet the instructions of the Central Bank of Egypt (CBE) in regard to this issue.
In January 2016, CBE launched an initiative to finance very small, small, and medium enterprises and obliged banks to direct no less than 20% of their total loans portfolio to this sector over a period of four years starting from the launch date of this initiative.
CBE also obliged banks to set a full plan on how to achieve this goal and to inform its Banking Supervision Department of this plan by the end of February 2016. NBE has already finished setting this plan and has informed CBE of it as scheduled, according to Montasser.
The bank continues to support importers and provide their needs of foreign exchange and invested approximately $1.5bn between October 2015 and the end of February 2016 to support importers of basic commodities.
As for the $700m loan NBE signed with China Development Bank on 21 January 2016, the bank received the entire loan. The bank directed this loan to finance infrastructure projects especially in energy, telecommunications, transport, and agriculture fields in addition to the projects China contributes to.
Montasser explained after this loan, the amounts NBE obtained from the Chinese bank was $1bn. The $700m loan will be repaid over eight years, after a grace period of three years.
As for the dollar bonds NBE was intending to offer in external markets, Monstasser said the bank decided to postpone offering those bonds due to the difficult circumstances global financial markets face. Offering the bonds in such circumstances may lead to raising their cost, which the bank would not accept.
NBE is continuing negotiations with external financial institutions to obtain foreign exchange from them to aid the bank in meeting the local market’s requirements for this exchange, Montasser said.
In regards to “Belady” dollar certificates, the bank began offering them through its branches Tuesday abroad and on its website. However, the results of their subscriptions have not yet been revealed.
It is still too early to evaluate since the certificates were offered just a few days ago. Moreover efforts were taken by Minister of Immigration and Egyptian Expatriate Affairs Nabila Makram Ebeid, in cooperation with the three banks which issued the certificate, to promote it abroad. The results of these efforts are expected to be revealed soon.
Montasser expected high demand on Al-Masri (The Egyptian) dollar certificate from Egyptians working abroad for two reasons: its high return compared to any other investment in dollar and the keenness of the Egyptians working abroad to support their country.