CBE discusses ways to increase MSMEs’ funding with banks

Hossam Mounir
4 Min Read
CBE Sub-Governor at the Banking Supervision Unit Tarek Fayed.

Throughout the upcoming days, the Central Bank of Egypt (CBE) will hold meetings with banks operating in Egypt in order to discuss ways to increase funding directed to the micro, small and medium enterprises (MSMEs), according to the CBE Sub-Governor at the Banking Supervision Unit Tarek Fayed.

Fayed’s statements came on the sidelines of the Financing and Investment Forum, which was held by the Union of Arab Banks (UAB) in Sharm El-Sheikh on Thursday.

Fayed explained that banks are currently preparing the infrastructure required to implement the CBE initiative aiming to increase funds directed to MSMEs to EGP 200bn over the next four years.

The infrastructure preparations include the establishment of a department specialised in financing MSME projects, in addition to departments for risk calculation, marketing and debt collection from the owners of these projects, Fayed added.

“A number of major banks had previously initiated financing for MSMEs, on top of which come public banks, which have a huge loans portfolios for these projects”, Fayed said.

“Some banks have recently begun financing these projects, while other banks are currently preparing to inaugurate financing”, he added.

He clarified that the CBE obligated banks to direct 20% or more of their loan portfolios to MSMEs, highlighting that many banks have achieved this share and more.

Regarding further initiatives that may be launched by the CBE to support other economic sectors, Fayed said the bank is studying a number of proposals for many sectors but he refused to reveal more details.

Fayed said the CBE is always moving forward to boost economic growth, adding that it will support any economic sector in need of help.

The CBE aims to diversify the loans portfolio at banks operating in the Egyptian market, to prevent the concentration of funding to a single sector at the expense of others, Fayed said. He added that the CBE had launched previous initiatives to activate retail banking, and is currently supporting MSMEs, it addition to funding large-scale projects.

The CBE has launched a number of initiatives in recent years, aiming to activate the tourism, industry, mortgage and MSMEs sectors.

The CBE is holding continuous meetings with governmental bodies and businessmen, aiming to overcome difficulties regarding the implementation of the MSMEs financing initiative, according to Fayed.

Regarding mortgage finance initiative, which was launched by the CBE two years ago, Fayed explained that there are approximately 13 banks contributing towards implementing this initiative.

The CBE had previously ordered the direction of EGP 10bn towards financing housing for low and median incomes, with an interest ranging between 7% and 8% per annum.

Regarding whether or not the EGP 10bn has been put to use yet, Fayed said that to date, the amount has not been entirely used, however refusing to reveal the exact amount that has been used.

On the other hand, Fayed said the size of the Egyptian banking sector exceeded EGP 2tn at the end of 2015.

Over the past three years, banks operating in Egypt have achieved strong growth rates, marking an average of 35%.

“The CBE played a large role in achieving financial inclusion, through issuing the Suez Canal investment certificates, which attracted a new segment of customers that was not dealing with the banking sector before,” Fayed said.

He added that the CBE is also realising financial inclusion through the launch of the mortgage initiative, allowing banks to inaugurate mini branches, in addition to helping banks to offer internet banking and mobile payment services.

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