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The Industry Support Initiative increases the rates of economic growth and GDP to 7.5% annually: CBE’s Deputy Governor  - Daily News Egypt

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The Industry Support Initiative increases the rates of economic growth and GDP to 7.5% annually: CBE’s Deputy Governor 

The initiative will benefit about 96,000 factories that meet the conditions for the initiative: says deputy governor of the CBE

Deputy Governor of the Central Bank of Egypt (CBE) Gamal Negm announced that the government and the CBE initiative to support the industry, whose value is $100bn, will contribute to increasing economic growth rates and gross domestic product (GDP) to 7.5% annually, benefiting about 96,000 factories that meet the conditions of the initiative.

Negm said during a press conference held on Monday that the initiative, if completed after neutralising other economic sectors, would contribute to raising growth rates from 5.2% to 5.9%. He stressed that the numerous initiatives launched by the CBE to support the economy are in line with the directives of President Abdel Fattah Al-Sisi and the directions of the government, which had positive results on economic growth, society, and in the lives of individuals.

He added that the CBE has launched other initiatives over the past years to support industry, working capital, and purchase machinery and equipment at a value of $15bn, through which more than 865 factories have benefited. CBE also launched multiple real estate financing initiatives worth $20bn, benefiting more than 213,000 customers to purchase housing units.

He pointed out that the initiative to finance small and medium projects with a value of $200bn benefited 575,000 beneficiaries, and achieved funds worth $150bn from the total initiative.

The Deputy CBE Governor stressed that the new initiative, worth $100bn, aims to achieve sustainable growth, which is in line with the central belief that real growth will only come through the industrial sector, replacing imports with local products, and encouraging exports.

He pointed out that 80% of the exports of the largest 30 countries are industrial exports and studies show Egypt’s imports may reach $150bn by 2030 against $66bn last fiscal year.

“In light of the initiative, we aim to bring Egyptian exports to about $200bn by 2030, compared to only $29bn last year,” he added.

Negm stressed that the gap between imports and exports is always in favour of imports and bridging or reducing this gap will only come through encouraging local industry.

He pointed out that every $1bn in exports saves about $4bn to the state’s public treasury, as well as about 206,000 job opportunities.

According to Negm, the initiative aims to increase the contribution of the industrial sector to the GDP from 16.5% currently to 24.5% in the event the entire $100bn is spent.

The beneficiaries of that initiative are factories whose sales volume reached $1bn, Negm explained, adding that the initiative is directed only to finance working capital and the purchase of machinery and equipment, and will come with a declining 10% interest. The funding will not be used to pay existing or previous facilities, noting that the total loans of the industrial sector currently stand at $440bn.

He emphasised that the initiative aims to increase local production capacities and is totally directed towards the private sector only, where there are more than 96,000 factories that meet the conditions of the initiative.

He said that the initiative will include all banks operating in Egypt, provided that the CBE and the government will bear the interest difference, which amounts to EGP 4.75bn. The initiative will be launched before the end of the year after reviewing banks’ comments on it.

Regarding the middle-income housing initiative, Negm said that studies have shown there is a wide sector of youth who want to buy middle-income housing units, which prompted the CBE to launch an initiative to finance housing units for medium-income citizens worth $50bn with a 10% diminishing interest paid over 20 years.

On the terms of the initiative, Negm said that the financing is directed to fully finished units, which are not more than 150 square metres, only directed for individuals who have not benefited from any support from the initiatives of the CBE with a funding size of no more than EGP 2.25m.

He added that the CBE will bear the interest rate difference between the initiative and the cost price, which is the price of lending and discount in addition to 2%, indicating that the maximum income within the initiative is EGP 50,000 for the family, and EGP 40,000 per person. Customers must be Egyptian, and the down payment must be under 20% of the total value.

Negm expected that the number of beneficiaries of the initiative will reach between 50,000 to 60,000 beneficiaries, pointing to the possibility that the customer will handle the expedited payment after five years. The implementation of the initiative is planned to start as soon as the banks are notified, which is expected to be within days.

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