The National Bank of Egypt (NBE) has issued a report suggesting methods to deal with the small and medium-sized enterprises (SME’s) in the informal sector of the economy.
The document, put forward by NBE’s deputy head of the small and medium-sized enterprises division, Saad Mohyeldeen, included 10 main suggestions, the most important of which included creating a single entity responsible for overseeing all small and mid-sized projects.
The paper also called for the revision of tax accounting laws, tax pardons, amending legislation, proposing new bankruptcy laws and improving methods for granting licenses, all in an attempt to stimulate growth into the sector.
Mohyeldeen expected an increase in demand for the funding of small projects, especially considering that the government has encouraged support for the sector. He further emphasised the significance of supporting the industrial sector, as it is the locomotive that drives economic growth.
Mohyeldeen said: “The bank seeks to pump EGP 4bn during the current fiscal year into the small and mid-level projects with the aim of reaching EGP 12bn,” adding that NBE’s current portfolio for SMEs is worth EGP 8.6bn.
The bank added that 90% of all small and mid level projects lie in the informal sector, with the remaining 10% representing those for which banks would discuss increasing funding.
He added that small and mid-level projects in fact represented 98% of all projects in Egypt and make up between 75% to 80% of the country’s GDP. Therefore “it is necessary to support and stimulate the country’s local economy and small and mid-level projects to the same extent as large companies, who although make up only 2% of all projects in Egypt, represent 20% of its GDP.”