The Arab Investment Bank (AIB) aims to increase the volume of loans granted to small and medium enterprises (SMEs) to EGP 7bn within four years.
The bank recently launched seven financing programmes for these enterprises under the name “Programme of Partners”, according to AIB Chairman Hany Seif El-Nasr.
He told Daily News Egypt that the bank has prepared an integrated plan to achieve its goal of financing SMEs. The plan aligns with the initiative launched by the Central Bank of Egypt (CBE) in January 2016, which obliges banks to allocate 20% of their loan portfolios to finance SMEs.
AIB obtained the CBE’s approval to open 17 small branches in Cairo and other governorates to reach different segments of society and widen the bank’s customer base, Seif El-Nasr said.
He stressed that small businesses are the only way towards development and making more jobs available to enhance the national economy and increase growth effectively.
“The bank has allocated about EGP 500m for financing small projects within the main Suez Canal Area Development Project, while paying special attention to fish farming and small fishing ships, as well as industrial and service projects and energy projects,” Seif El-Nasr said.
In terms of the programme launched by the bank to finance SMEs, Seif El-Nasr explained that it is comprised of seven smaller financing programmes.
The first programme finances the working capital of clients with of a maximum value of EGP 2m, exempting projects in the industrial and renewable energy sectors, in addition to the agricultural production and manufacturing sectors, where the maximum limit for financing these projects is EGP 5m.
The second programme includes financing and preparing the headquarters for the activities. The financing provided for them by the bank constitutes 60% of the total value of preparations, with a limit of EGP 500,000, and a repayment period of three years, including a six-month grace period.
The third programme allocates its financing for the clients’ needs of computers, printers, fax machines, export machines, and display panels. The bank’s financing represents 60% of the total value of these machines, with a maximum of EGP 300,000, and a repayment period of three years.
The fourth programme includes financing the needs of medical services providers, including medical treatment centres, radiology centres, and medical laboratories. The financing represents 70% of the total value of medical equipment with a maximum of EGP 2m, and a repayment period of five years, including a 12-month grace period.
The fifth programme allocates its financing for pharmacies, with a maximum of EGP 750,000 and EGP 100,000 at minimum, and a repayment period of two years, including a three-month grace period.
The sixth programme will finance new machinery and used equipment. The financing represents 70% of the total value of new machinery with a maximum of EGP 5m, while it covers 50% of the total value of used equipment with a maximum of EGP 2m. The financing period of this programme lasts for five years, including a 12-month grace period.
The seventh programme will finance the transportation of personnel and goods. The financing will cover 70% of the total value of the car, with a maximum of EGP 2m, excluding the vehicles operating in the industrial sector, renewable energy and the agricultural production, with a maximum of EGP 5m. The financing period of this programme is five years, including a three-month grace period.
Seif El-Nasr revealed that his bank is cooperating with the Social Fund for Development (SFD) to finance most of these programmes. He explained that AIB will soon sign two contracts with the SFD worth EGP 200m. The first contract will finance franchise projects, and the second will be a fixed-price Islamic financing contract.
He added that the bank also joined the “Gamiety” initiative, to which it provided EGP 10m to finance commodity loans for young people, in cooperation with the SFD.
The initiative includes granting loans to young people ranging from EGP 50 to EGP 100,000 to establish food commodity outlets under the supervision of the Food Industries Holding Company. This initiative aims to provide job opportunities for young people and increase commodity and food outlets.