The Central Bank of Egypt (CBE) has allocated EGP 10bn to be injected through banks in the form of short-term credit facilitations to finance the working capital of medium-sized companies that work in the industrial, agricultural, and new and renewable energy sectors.
The CBE said in a report that banks will provide this financing at a 12% return rate, where the price difference will be compensated through the bank. It stressed that priority of financing will be given to companies working in the field of exporting or those that produce goods that replace imported goods.
The CBE has modified its definition—originally issued at the end of 2015—for small and medium enterprises (SMEs), micro enterprises, and very small enterprises. It has also modified the initiative it launched in 2016 to support the sector.
Daily News Egypt published on 26 February the news about the CBE making modifications to the initiative in order to meet the demands by many banks working in the Egyptian market.
The CBE published on Sunday a report stating that the initiative will be modified. The report came after several meetings held with banks throughout the previous period with the goal of consulting with them to overcome the difficulties faced in the implementation of the initiative.
According to the CBE, existing micro companies are those with sales of less than EGP 1m, and less than 10 employees. New micro companies are the ones with capital less than EGP 50,000.
The CBE added that existing small enterprises are those with sales starting at EGP 50m, and with less than 200 labourers, while new small enterprises are those whose capital ranges from EGP 50,000 to less than EGP 5m for industrial facilities and less than EGP 1m for non-industrial facilities with less than 200 working individuals.
The CBE defined medium-sized companies as those whose sales range from EGP 50m to EGP 200m, with less than 200 workers. New medium-sized companies are those with capital ranging from EGP 5m to EGP 15m for industrial facilities and from EGP 3m to EGP 5m for non-industrial facilities and also less than 200 employees.
According to the CBE, the classification of very small companies whose sales in the old definition ranged from EGP 1m to less than EGP 10m for existing companies was eliminated.
The CBE stressed that, in the case of new companies, paid up capital can be used instead of the business volume, but only for one year since beginning the activity until the data of business volume is available.
The CBE has allowed banks to finance very small and micro companies and projects whose sales are of a maximum of EGP 10m without obtaining financial lists certified by auditors for two years, where the majority of these companies are working in the non-official sector. This will help them have enough time to be gradually qualified for the preparation of data and certified financial lists.
The CBE has added the sector of new and renewable energy to the sectors that can benefit from the initiative it launched on 22 February 2016, in addition to the industrial and agricultural sectors.
