The Arab Banking Corporation (ABC) has allocated a portfolio of EGP200m for retail banking starting next year, said CEO Akram Tinawi.
The retail banking sector is a promising sector in the coming phase which requires the allocation of its own portfolio, according to Tinawi.
Tinawi requested that the Central Bank of Egypt (CBE) adopt policies requiring banks to direct a proportion of loans for SMEs, to increase economic growth in the coming phase.
The government is targeting a growth rate of 3.6% in the FY2014/2015, compared to 2.2% from the previous fiscal year.
Minister of Foreign Trade and Industry Mounir Fakhry Abdel Nour said in a press statement to Daily News Egypt that his ministry will integrate up to 30% of the informal economy into the formal economy. He projected the process will be completed within two years.
Tinawi said: “The informal economy is able to push economic growth in the coming phase, when banks offer it financial support.”
Loans directed at the trade, agriculture, industry, and service sector reached EGP346bn in July, a growth of 4.8% in comparison to the same period last year.
According to an official at a state-owned bank “loans directed for small to medium projects do not exceed 10% of the total loans allocated annually to the private sector.”
The official, who preferred to remain anonymous, said that loans to SMEs are not preferred by banks due to its high credit risk. The official added that higher administrative costs compared to large loans for large projects are also off-putting to banks.
The former head of the Anti-Tax Evasion Sector at the Ministry of Finance has said that integrating 30% of the informal economy into the formal one will provide the economy with taxes worth EGP30bn annually.