The United Bank of Egypt (UBE) signed two new contracts with the Social Fund for Development (SFD) worth EGP 150m to finance small and medium-sized enterprises (SMEs).
The first contract stipulates that the SFD will provide EGP 100m for the United Bank to finance new and existing small enterprises nationwide.
The second contract, worth EGP 50m, was allocated to finance small projects according to different funding formulas compliant with Sharia law, in the framework of an agreement signed between the SFD and the Islamic Development Bank (IDB).
Soha Soliman, secretary-general of the SFD, and UBE chairperson Ashraf Elkady signed both deals in the attendance of the UBE’s deputy chairperson and managing director Faraj Abdul Hamid, Head of Corporate Banking at the UBE Yehia Rashed, and Head of the Central Sector for Small Enterprise Finance at the SFD Nevine Gamea.
According to Soliman, the signing of these contracts comes in the framework of the cooperation between the SFD and the UBE over the last four years. It also confirms the fund’s interest in diversifying financing products offered to customers, especially Sharia-compliant products.
Soliman added that the two contracts will finance approximately 600 small projects, which will provide about 6,000 permanent and temporary job opportunities for small-business owners and their employees.
According to Elkady, the UBE’s strategy is based on the expansion of financing SMEs in all governorates, and supporting state plans for sustainable development.
He added that the new contracts will finance the purchase of new machinery, local or imported used equipment, the working capital, buildings and equipment for all new and existing small projects on the condition of technical and economic feasibility and compliance with environmental obligations.
Elkady said the UBE has allocated funding of approximately EGP 900m to small projects, the rehabilitation of human resources, and adopting a plan to expand in all governorates to support this sector.
He added that the bank also put forward a new financing system for the SMEs, which will provide funds for SMEs and assist in the management and marketing of the project until it succeeds. Then, the bank will exit from the project in a phased manner.
Since 2012, the UBE and SFD have signed five contracts totaling EGP 275m for financing SMEs through Sharia-compliant systems.
More than 1,000 small projects have been financed through those contracts, which have provided approximately 5,400 permanent and temporary jobs.