The Central Bank of Egypt (CBE) is considering launching an initiative to support micro-enterprises to overcome issues and provide the necessary funding at low interest rates to contribute to their development.
The CBE launched an initiative in January 2016 to support small- and medium-sized enterprises (SME) and micro-enterprises.
According to the CBE’s definition of micro-enterprises issued in December 2015, they include projects whose annual business, of both sales and revenues, does not exceed EGP 1m with a workforce of no less than 10 people, and a capital of no less than EGP 50,000.
The CBE is currently working on a new initiative to support these projects, as was the case for the SMEs, general manager of the Microfinance Federation at Egyptian Financial Supervisory Authority (EFSA) Hassan Ibrahim said.
He added that the details of the initiative have not yet been definitively determined as the CBE is currently studying this initiative with a number of stakeholders, such as the Ministry of Finance, Ministry of Local Development, Social Fund for Development, the Ministry of Social Solidarity, the Egyptian Tax Authority, Insurance Authority, and officials from Egyptian governorates, as well as the Microfinance Federation.
Several meetings are to be held with the CBE to determine the main features of this initiative, especially with regard to the funding interest rate, Ibrahim said.
Ibrahim urged the CBE to include a special mechanism in the initiative to help the lending institutions obtain the required funding at an acceptable cost, so as to provide loans to customers at an acceptable price as well.
A senior banker said the microfinance sector is vast and requires a great deal of effort from banks, which has discouraged many banks from financing such projects in the past.
He added that there are many companies, institutions and NGOs that have better succeeded at financing these projects than the banks, owing to their ability to communicate with this type of customer.
The nature of micro-enterprises owners requires a qualified staff to deal them well, as well as an expansion of banks’ branches so that the bank can reach clients everywhere.