The new government entity dedicated to small- and medium-sized enterprises (SME), recently announced by Minister of Trade and Industry Tarek Kabil, will act an umbrella for the current entities regulating SMEs in order to centralise the government’s efforts to facilitate the establishment and funding of SMEs.
During the SMEs session at the Euromoney conference on Tuesday, panelists were asked about their opinions on the matter.
Hany Al-Sonbaty, the director of the Middle East and Africa for Euromoney conferences, said: “we have to wait and see the final details of the initiative before forming an opinion.” Al-Sonbaty said that, based on his expertise, it is not about planning the growth of a sector, but rather it is about providing an equal playing field for all players rather than creating a top-down approach.
On the other hand, Hanaa El-Hilaly, the managing director and board member of Amwal Financial Investments, said that SMEs are the backbone of the economy, and that the new body will act as a regulator or coordinator. El-Hilaly said there must be some sort of reporting mechanism on the matter in order to monitor where we are heading.
Reem El-Saady, the principal manager of the European Bank for Reconstruction and Development, said that it’s not clear what the role of the new entity will be and that the government needs to consult with SMEs to see what they really need before making any decisions.
Shehab Marzban, the deputy minister of economic affairs in Egypt’s Ministry of International Cooperation, added that having all the entities under one roof will facilitate the process of establishing and funding SMEs. There is $200m allocated for SMEs financing, said Marzban, which allows us to take bigger risks.
When asked what’s the main issue facing SMEs in Egypt, El-Hilaly answered that 700,000 recent graduates join the workforce annually and neither the public nor private sectors are unable to cater to such numbers. We need to promote start-ups, said El-Hilaly, and teach them to take risks, and the media should play a bigger role in such a process by promoting success stories.
Moreover, El-Saady explained that the lack of data is one of the main issues; we currently don’t know how many SMEs are currently operating in Egypt, and how much they contribute to the GDP. We need to have a bench mark to be able to measure KPI’s, El-Saady said.
In regards to microfinancing, Marzban said that most start-ups need to diversify their financial portfolio. While Gamal Khalifa, head of microfinance at the Egyptian Financial Supervisory Authority (EFSA), said that since 2014 microfinancing has formally taken shape in the form of small loans at a maximum size of EGP 10,000 and that by the end of June the size of non-banking microfinance reached EGP 4bn, which was received by 1.8m borrowers.
Alan McIver, the commercial manager of Accelerate SMEs at the Thomson Reuters foundation, said that they have created a platform that can educate any individual who is interested in starting a business. These individuals will receive help from their specialised teams from marketing, legal, and even accounting activities.