May Abulnaga, Sub Governor of the Central Bank of Egypt (CBE), has said that the bank gives special priority to supporting entrepreneurship as well as micro, small, and medium enterprises (MSMEs).
Abulnaga also noted that there is coordination and cooperation between the CBE, banks, state bodies and institutions, universities, and relevant external bodies. This is with the aim of enabling millions of financially excluded people and their families to participate in the financial system, and benefit from reform and economic development programmes.
The Sub Governor’s remarks came during the graduation ceremony of a batch of startups from the Nile Pioneers Academy of the Nile Pioneers Initiative funded by the CBE.
She said that the CBE is one of the first supporters of entrepreneurship, innovation, and digitisation in Egypt, as an objective to enhance financial inclusion.
This is also aimed at supporting and developing small- and medium-sized enterprises (SMEs) to achieve economic development, along with a commitment to promoting and facilitating access to finance for all social segments.
Abulnaga added that to achieve this goal, the CBE is implementing a package of measures and initiatives to enhance financial inclusion in general, and support SMEs in particular.
In 2015, the CBE issued a unified definition of MSMEs within the banking sector, which was later applied as a unified national definition for state agencies. This came in accordance with the Enterprise Development Law issued in 2020.
She pointed out that the CBE, in implementation of the presidential initiative to finance MSMEs, obliged banks in 2016 to increase the portfolio of loans and credit facilities directed to these projects. This would ensure that the portfolio reached a percentage of no less than 20% of the bank’s total credit facilities portfolio, which was increased in February 2021 to 25%.
This came with a stipulation that the percentage directed to micro projects should not be less than 10%.
Abulnaga pointed out that the CBE has facilitated the procedures for granting financing by allowing banks to finance micro and small projects with a maximum sales volume of less than EGP 20m without obtaining approved financial statements.
This comes with the possibility of using alternative data to evaluate customers through digital evaluation models based on customer behaviours and their social data.
It was also allowed to add banks’ contributions to the capital of investment funds and companies targeted to invest in the capital of these companies within the prescribed mandatory percentage.
She noted that the CBE also issued a guarantee of EGP 2bn to the credit risk guarantee company, in return for issuing its guarantees to banks to cover part of the risks associated with financing SMEs.
In terms of building the capacity of bank employees, Abulnaga indicated that the certificate of “Small and Medium Enterprises Finance Expert” was designed through the Egyptian Banking Institute (EBI). The certificate has been approved by the Frankfurt School of Finance and Management Academy.
This is in addition to designing a training certificate for non-financial service providers for these projects under the title “Business Development Specialist”, in cooperation with the International Labor Organization (ILO) and the Institute of Financial Services (IFS).
Abulnaga said that the “Nile Pioneers” initiative was launched, among other initiatives launched by the CBE, in partnership with Nile University and other Egyptian universities. The initiative was launched in cooperation with banks working in the local market, the Micro, Small, and Medium Enterprises Development Agency (MSMEDA), and a number of local and international agencies.
The Nile Pioneers initiative aims to support and create an entrepreneurial environment and provide a comprehensive and effective infrastructure to support entrepreneurs.
She added that the Nile Pioneers initiative helped incubate more than 160 companies and entrepreneurs in various fields, whilst also providing technical support to about 140 projects in the prototype and product design.
This was in addition to providing growth support services and qualifications for export and integration into value-added chains for more than 240 companies, and training for about 9,000 entrepreneurs in entrepreneurship and innovation.
Abulnaga said that many non-financial support and guidance services have also been provided to more than 20,000 entrepreneurs and small companies through 27 business development service centres in 16 governorates.