The Small and Medium Enterprises Development Authority (SMEDA) will prioritise financing labour-intensive and medium enterprises in the coming period, according to its CEO, Nevine Gamea.
In an interview with Daily News Egypt, Gamea said the SMEDA injected EGP 4.1bn to finance micro and small projects since it was inaugurated in April 2017 through the end of January 2018, adding that, in the same period, the SMEDA financed 206,315 projects, of which 12,557 are small projects, while 193,758 are microenterprises.
According to Gamea, the authority deals with 12 banks, five companies, and 131 local NGOs, and deals with about 30 international bodies, including the European Union, the World Bank, the Khalifa Fund, the Arab Fund, and the French Development Agency.
She pointed out that a micro, small, and medium enterprises law is currently being reviewed by the cabinet in preparation to be presented to parliament. She noted that the law includes many incentives to encourage the owners of these projects and those working in the informal sector to merge into the formal sector.
Below is the transcript of the interview, lightly edited for clarity.
Tell us about the SMEDA, its establishment, and the role assigned to it.
The SMEDA was established by prime ministerial decision 947 on 24 April 2017. The aim was to establish a national programme for the development of projects and to create the necessary atmosphere for encouraging them, as well as stimulating citizens to enter the labour market through such ventures, promoting and encouraging the culture of entrepreneurship, research, creativity, and innovation, and coordinating the efforts of all concerned parties in this field.
The role of the SMEDA is based on coordination, being the legal father for the development of the SME sector, through coordination between all the acting bodies, including ministries, government agencies, initiatives, and NGOs, in the field of SMEs.
The second role is to provide financing programmes equipped with non-financial services. This role is different from the role of the other funding agencies because the purpose is not only funding, but the establishment of a project and its continuity and the creation of employment opportunities, especially industrial projects that contribute to increasing exports and reducing the volume of imports.
What is the difference between the SMEDA and the Social Fund for Development? Which is better?
There is a big difference between the Social Fund for Development and the SMEDA. The Social Fund was concerned with providing jobs and establishing projects, while the SMEDA is tasked with much more than that.
The SMEDA is the body entrusted with the development of the SME sector, through coordination with all agencies, ministries, and entities working in the field of projects. It is also working on medium-sized projects.
The current status of the authority is certainly better. It has a more comprehensive and important role, in terms of the coordinating aspect, next to its executive role in cooperation with development partners, to implement the state strategy to promote the SME sector.
What was the value of funding offered by the SMEDA since its inauguration? And to how many projects?
Since its establishment in April 2017 through end of January 2018, it has pumped EGP 4.1bn to finance small and microenterprises, of which EGP 2.1bn was funnelled to small projects and EGP 2bn to microenterprises.
The number of projects funded during this period amounted to 206,315, of which 12,557 were small projects and 193,758 were microprojects.
How many jobs have been provided by the projects financed by the SMEDA? How much funding was injected directly by it compared to indirect funding through development partners?
The number of jobs provided by the projects financed by the authority from April 2017 until the end of January 2018 amounted to 288,023 jobs, of which 48,395 jobs are in small enterprises and 239,628 jobs in microenterprises.
In the same period, the SMEDA injected EGP 641.1m in direct lending, as well as about EGP 3.45bn through development partners such as banks and civil associations.
How many development partners are currently dealing with the SMEDA? How would you classify them?
The authority currently deals with about 12 banks, five companies, and 131 civil society organisations working in financing small and microenterprises.
What are the international bodies that the authority deals with?
It deals with about 30 international bodies, including the European Union, the World Bank, the Khalifa Fund for Enterprise Development, the Arab Fund for Economic and Social Development, and the French Development Agency.
What is the role of the authority in support of women and youth? Does support stop at funding or do you offer further services?
The role of the authority in supporting women and youth is not limited to funding only, but it provides more advanced training services that develop the capabilities of business leaders and enable them to manage their small projects successfully, thus helping them to participate in the development of society. This also brings them financial return that helps improve their living standards.
The SMEDA has prepared a law on small and medium enterprises; what are the main features of this law?
Yes, the SMEDA has already prepared a law for micro, small, and medium enterprises, in cooperation with the legal adviser to the minister of commerce and industry. The law is currently being reviewed by the council of ministers in preparation for submission to parliament for approval.
This law includes a unified definition of SMEs, to suit economic variables, as well as the establishment of incentives and facilitation of procedures for the informal sector, with a view to encourage it to adjust its situation and absorb it into the formal sector.
What is the difference between the definitions of small, medium, and microenterprises mentioned in this law and the definitions of the Central Bank of Egypt?
The authority has coordinated with the Central Bank of Egypt to match both definitions.
What are the most important incentives provided by this law to the owners of these projects?
The draft SMEs law adopts a wide range of incentives, which will guide the entrepreneurs and encourage the owners of existing projects in the informal sector to enter the formal sector system.
This includes some tax incentives, as well as a combination of incentives associated with technical training, streamlining of constituent procedures, and other incentives to ensure that those wishing to set up projects have high chances of success for their projects.
Will the new law allow the SMEDA to finance medium projects?
The new law will allow the SMEDA to finance medium-sized projects since the old law (141 of 2004) does not include medium-sized enterprises but only micro and small enterprises.
What is the authority’s plan during the coming period, and on which sectors will you focus on financing?
In the coming period, the authority will focus on funding medium projects, financing labour-intensive sectors, increasing the growth of the industrial sector, taking care of innovative projects, as well as training.
We launched an initiative to train 10,000 young men and women to refine their skills and help them establish small or medium projects and manage them successfully, with the help of the International Labour Organisation (ILO) and in cooperation with various governmental and non-governmental organisations.
The SMEDA also pays great attention to launching an interactive electronic platform for micro, small, and medium enterprises, and will contain all the data available to any citizen who wants a project.