Company part of LE 1.2 billion small-business financing program
CAIRO: A new company specializing in small-enterprise financing is scheduled to begin operating in H1 2007, Minister of Economic Development (MED) Othman Mohamed Othman said Sunday.
The company, called for by local businessman and international organizations such as the International Finance Corporation (IFC) of the World Bank, will target small businesses estimated to contribute as much as 40 percent to the Egyptian economy.
Most small businesses operate unofficially, and are therefore unaccounted for, said Othman. The new company will provide small businesses with much-needed financing, and the government with a tracking tool to help control the country s growing gray economy.
The financing company, which has yet to be named, is part of MED s LE 1.2 billion budget aimed at small-business lending. The company will also offer lending services for non-business services for low-income individuals, such as healthcare services and education, Othman said.
Despite drawing a record $6.1 billion in direct foreign investment in 2006, Nazif s economic cabinet was heavily criticized throughout the year for not doing enough to help local small and medium enterprises. In addition to the difficulty in obtaining credit, IFC cited the bureaucracy in obtaining property registration and work permits among the top reasons for deterring investments, both local and foreign.
Last month, MED released a study showing 70 percent of more than 1,000 small and medium enterprise owners surveyed said they regularly suffer from government neglect and complicated procedures.
The Ministry of Investment s General Authority for Free Zones and Investment (GAFI) launched its 1-stop business registration service in 2005, but it has done little to ease investor concerns regarding bureaucracy in other areas. GAFI s initiative has also done little to integrate the country s unofficial small and medium business sectors.
Despite local and international criticism, GAFI Chairman Ziad Bahaeddin says much has been accomplished to reduce bureaucracy and increase lending options, with plans for further improvement.
According to the Industrial Development Authority (IDA), a GAFI affiliate, business registration and licensing procedures, including property registration and acquisition of building permits, used to require an average of 277 days and six steps for completion. In the past year, IDA Chairman Amr Asal says the organization lowered the numbers to 135 days and four steps and is now working toward 45 days and three steps.