(Abdelazim Saafan/DNE Photo)
Clients and factories must first have their affairs in order before being able to benefit from the initiative launched by the Central Bank of Egypt (CBE) on Thursday, Chairman and Managing Director-Executive of the Industrial Developmental and Workers Bank of Egypt, El-Sayed El-Kosayer said Monday.
El-Kosayer linked the benefit of faltering factories from the CBE initiative to three factors. The first is the seriousness of the faltering client or factory. The second is the necessity of resolving the problems that led to it faltering. Finally, there must not be problems between the faltering client and other bodies, such as outstanding taxes or insurance, according to El-Kosayer.
El-Kosayer further noted that the industrial sector acquires 70% of the bank’s loans portfolio, refusing to disclose the total value of these loans.
The CBE launched an initiative on Thursday to ease the terms of creditworthiness for faltering clients or factories that can be saved. The initiative allows the banks to allocate an amount for the new loans granted to the clients who do not pay their debts on a regular basis, with 5% of the value of the fund.
According to CBE governor Hisham Ramez, the loan portfolio for small and medium projects over the past two years amounted to EGP 500m, expecting them to reach EGP 1bn by the end of 2015. Mohamed El-Swedy, President of the Federation of Egyptian Industries (FEI) believes that the CBE’s response to FEI’s request for support to faltering plants will contribute to the growth of industrial activity.
“Faltering companies should present a serious plan to the bank with which they deal to benefit from the CBE’s initiative,” said El-Swedy.
Placing the faltering companies on the banks’ black list is one of the problems the companies face, according to El-Swedy. He explained that mitigation of such measure will contribute to the growth of industry, especially as business has suffered tough conditions over the past four years.
There are no statistics on the number of struggling plants, according to the FEI president, who said that “there are faltering plants in every sector, and none of the high-energy consuming plants are currently struggling”.
El-Swedy attributed this to the expansion in dense importing operations over the last period, which he described as unjustified, and which led to reduction in the plants’ share of the local market.
