12,000 SMEs facing problems in construction sector

Menna Samir
4 Min Read
The China Development Bank (CDB) will provide Egyptian banks with credit to finance projects in small and medium-sized enterprises (SMEs). (Photo courtesy of Ministry of Industry, Foreign Trade and Investment\File)
Funding projects is the main obstacle they are facing, says Daker Abdellah  (Photo courtesy of Ministry of Industry, Foreign Trade and Investment)
Funding projects is the main obstacle they are facing, says Daker Abdellah
(Photo courtesy of Ministry of Industry, Foreign Trade and Investment)

Nearly 12,000 out of 15,000 small and medium-sized construction companies that are registered in the Egyptian Federation for Construction and Building Contractors (EFCBC) are facing problems; said Daker Abdellah, member of EFCBC in a statement Tuesday.

Funding the projects of those companies is a main obstacle that they are facing, he highlighted, calling on the EFCBC to develop national companies that can serve the construction sector and the Egyptian economy as a whole.

Abdellah added that banks claim that they aren’t convinced enough to finance the projects of the SMEs in the construction sector due to the absence of feasibility studies for the projects.

Furthermore banks find that the owners of those companies lack the financial and administrative awareness that would make them capable of handling and managing their projects, in addition to the absence of budget calculations.

From the viewpoint of construction SMEs’ owners, other obstacles are present, including the ambiguity when it comes to the requirement standards made by the Central Bank of Egypt (CBE) that all banks providing financial aids to SMEs should follow, unlike the clear set standards when it comes to financing large projects.  

According to Abdellah, owners find that banks which provide aide to SMEs lack the presence of “cadres” who can actually determine whether or not the projects are feasible, with owners suggesting that banks should additionally rely on the accredited consultants at the CBE or members from EFCBC to make such decisions.

He also reflected that owners believe that it is possible that the lack of a “clear financial policy” for funding is the main reason why, banks aren’t convinced of financing them.

Abdellah suggested that a committee should be formed to provide SMEs’ owners with credit training and to teach them how to deal with banks. He further noted that management should be separated from ownership, and that banks can acquire a share of the projects as a means for protecting them and the money of the depositors that are used for financing the projects.

Financing means shouldn’t be limited to banking institutions as it is possible to find funding portfolios within various types of institutions, Abdellah added, further calling on the EFCBC to have a role in training SMEs’ company owners in the first phase of registration within the federation as contractors.

He further noted that training should cover the rules of management and how the company can become one of the pioneers in that business area, as well as learning the preparation of feasibility studies.

He further stressed that the federation’s role should not only be limited to providing services as it also should have a supervisory role to follow up on contracting companies’ work progress and the management of their projects.

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