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    Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

    Egypt’s food industries contribute 24.5% of GDP

    Egypt’s food industries contribute 24.5% of GDP

    $36mln contract for construction of Duqm fisheries complex

    $36mln contract for construction of Duqm fisheries complex

    Ministry signs agreement to support Oman’s honey industry

    Ministry signs agreement to support Oman’s honey industry

    Local, Italian companies partner up to establish food retail chain in Egypt

    Local, Italian companies partner up to establish food retail chain in Egypt

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      Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

      Egypt’s food industries contribute 24.5% of GDP

      Egypt’s food industries contribute 24.5% of GDP

      Profits at top Saudi banks jump 17.6% in Q1

      Profits at top Saudi banks jump 17.6% in Q1

      GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

      GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      New study reveals that UAE is most competitive economy in the Arab world

      New study reveals that UAE is most competitive economy in the Arab world

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      • CES 2017
      • Election Results
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      Oman Construction Equipment Industry to 2028

      Oman Construction Equipment Industry to 2028

      $36mln contract for construction of Duqm fisheries complex

      $36mln contract for construction of Duqm fisheries complex

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

      Madayn working on major Oman industrial city projects

      Madayn working on major Oman industrial city projects

      Foundation stone laid for new 700-bed hospital is Salalah, Oman

      Foundation stone laid for new 700-bed hospital is Salalah, Oman

      Iraq set to award new Faw Port deals

      Iraq set to award new Faw Port deals

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        Suez Canal expects US$3.5 billion in revenues in H1

        Suez Canal expects US$3.5 billion in revenues in H1

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        UAE and Egypt’s consortium to buy African renewables firm Lekela Power

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Fitch revises Saudi Aramco’s outlook to positive from stable

        Investments in renewables in Egypt reach LE6 bn: Official

        Investments in renewables in Egypt reach LE6 bn: Official

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

        Egypt signs 8 gas exploration contracts worth $934mn over 15 months

        JGC lands $3.7bn Iraq refinery upgradation project deal

        JGC lands $3.7bn Iraq refinery upgradation project deal

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        • Hospitality

          Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

          Saudi to be among world’s big leisure tourism hubs by 2030

          Saudi to be among world’s big leisure tourism hubs by 2030

          Qatar’s hospitality sector peaks despite turbulent 2020

          Qatar’s hospitality sector peaks despite turbulent 2020

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

          Staycations to stimulate Qatar’s hospitality sector

          Staycations to stimulate Qatar’s hospitality sector

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        • Agrofood
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          • Agriculture
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          Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Pacts worth over OMR 33 million signed to establish agricultural, fisheries projects

          Egypt’s food industries contribute 24.5% of GDP

          Egypt’s food industries contribute 24.5% of GDP

          $36mln contract for construction of Duqm fisheries complex

          $36mln contract for construction of Duqm fisheries complex

          Ministry signs agreement to support Oman’s honey industry

          Ministry signs agreement to support Oman’s honey industry

          Local, Italian companies partner up to establish food retail chain in Egypt

          Local, Italian companies partner up to establish food retail chain in Egypt

          Trending Tags

          • Business & Economy
            • All
            • Business
            • Economy
            • Finance
            • Industry
            • Technology
            • Trade
            • Transport & Logistics

            Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

            Egypt’s food industries contribute 24.5% of GDP

            Egypt’s food industries contribute 24.5% of GDP

            Profits at top Saudi banks jump 17.6% in Q1

            Profits at top Saudi banks jump 17.6% in Q1

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            GCC can create 600,000 tech jobs and add US$255 billion to GDP by 2030

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            New study reveals that UAE is most competitive economy in the Arab world

            New study reveals that UAE is most competitive economy in the Arab world

            Trending Tags

            • CES 2017
            • Election Results
            • eSports
          • Construction
            • All
            • Infrastructure
            • Real Estate
            Oman Construction Equipment Industry to 2028

            Oman Construction Equipment Industry to 2028

            $36mln contract for construction of Duqm fisheries complex

            $36mln contract for construction of Duqm fisheries complex

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            What will Qatar do with its World Cup infrastructure after FIFA 2022 ends?

            Madayn working on major Oman industrial city projects

            Madayn working on major Oman industrial city projects

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Foundation stone laid for new 700-bed hospital is Salalah, Oman

            Iraq set to award new Faw Port deals

            Iraq set to award new Faw Port deals

            Trending Tags

            • Energy
              • All
              • Oil & Gas
              • Power & Electricity
              • Renewable Energy
              Suez Canal expects US$3.5 billion in revenues in H1

              Suez Canal expects US$3.5 billion in revenues in H1

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              UAE and Egypt’s consortium to buy African renewables firm Lekela Power

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Fitch revises Saudi Aramco’s outlook to positive from stable

              Investments in renewables in Egypt reach LE6 bn: Official

              Investments in renewables in Egypt reach LE6 bn: Official

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              Egypt signs 8 gas exploration contracts worth $934mn over 15 months

              JGC lands $3.7bn Iraq refinery upgradation project deal

              JGC lands $3.7bn Iraq refinery upgradation project deal

              Trending Tags

              • Hospitality

                Food Africa and pacprocess MEA attract over 25,000 trade visitors to the trade fair duo in Egypt

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Qatar has ‘solid’ line-up of infrastructure, hospitality projects to prepare for large influx of visitors in 2022: OBG

                Saudi to be among world’s big leisure tourism hubs by 2030

                Saudi to be among world’s big leisure tourism hubs by 2030

                Qatar’s hospitality sector peaks despite turbulent 2020

                Qatar’s hospitality sector peaks despite turbulent 2020

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Accor inks deal to manage first Swissôtel-branded hotel and residential project in Qatar

                Staycations to stimulate Qatar’s hospitality sector

                Staycations to stimulate Qatar’s hospitality sector

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              SME financing ramps up in Egypt

              Oxford Business Group

              July 12, 2016
              in Economy
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              In a bid to help improve inclusive growth and employment, Egypt’s central bank has taken aggressive steps to help expand commercial lending to the country’s small and medium-sized enterprises (SMEs).

              SMEs are already a mainstay of the Egyptian economy, accounting for 80% of GDP and employing a majority of the country’s workforce.

              New targets

              In January the Central Bank of Egypt (CBE) announced that credit to SMEs must account for at least 20% of any commercial bank’s loan book by 2020. This stimulus package could amount to an injection of $25bn, according to figures from Wamda Research Lab (WRL), an organisation focusing on entrepreneurship in MENA.

              Under the new lending guidelines, companies with revenue of between $130,000 and $255,000 can access loans at highly attractive rates of less than 5%, which is significantly lower than the CBE’s main credit rate of 11.25%.

              Currently, approximately 5% of bank loans in Egypt are provided to SMEs, which is below the MENA average of 8%, and much less than the 18% rate seen in middle-income countries, according to Jonas Feller, a research analyst at WRL.

              The new initiative follows on a steady campaign by the authorities to expand bank involvement in the SME segment. In 2012 the CBE allowed lenders to write off an amount equivalent in size to their SME credit facilities from the 14% required reserve ratio (RRR), whilst also reducing the RRR from 14% to 12% – in effect freeing up liquidity to be directed to the SME sector.

              Furthermore, the arrival of new mini-branches to previously under-banked areas of the country – thanks to the CBE’s 2014 regulation, which established a range of capital requirements depending on a branch’s location – is also seen as an important facet of the government’s wider efforts to support SME growth.

              Downside risks

              While public sector banks are making moves to increase SME lending, the CBE’s reforms are not without their critics, with concerns being raised from the more risk-averse private sector.

              Although the country’s credit bureau I-Score has deepened coverage of the SME segment through the launch of Tasnif, a subsidiary which focuses exclusively on small and medium-sized companies, international credit rating agencies have said that pushing banks towards SME lending at rates below their deposit rates could damage balance sheets and increase credit risk.

              “Recent regulations are credit-positive for the country but credit-negative for the banks,” Moody’s said in a statement earlier this year, in response to the new regulations.

              Accessing finance

              However, the reforms will certainly be welcomed. As in many emerging and frontier markets in the region, SMEs make up the majority of enterprises in Egypt and account for three-quarters of total employment; but they often find it challenging to access finance.

              Feller cites reasons such as poor credit information and financial reporting, as well as weak creditor rights for this shortfall, with industry stakeholders highlighting the importance of being able to adequately assess a company’s financial soundness.

              “SMEs are the backbone of the economy. Despite the economic problems facing the country, they have momentum and they are the solution for Egypt’s economic recovery,” Omar Adel El Maghawry, CEO of FEP Capital, an SME-focused Egyptian private equity firm, told OBG.

              “The double booking practice performed by most SMEs is still a huge block – it makes it difficult for us to assess a company’s potential, and very difficult for us to invest in these companies as a regulated private equity firm looking for post-acquisition leverage and potential listing,” Maghawry told OBG.

               

              Promising signs from small-cap exchange

              Although bank lending has been the traditional route for many SMEs looking for outside financing, the Nile Exchange (NILEX), an alternative board launched in 2010 with lighter disclosure and listing requirements, is another option for smaller businesses.

              While it had a slow start at the outset, the past few years have seen interest pick up speed, with a steady rise in trading, a turnover ratio that exceeds that of the main board and the launch of a new SME index to track performance. The board has 32 companies currently listed, with two companies joining the market in the first couple months of the year, and the trend does not appear to be slowing: MB Engineering’s IPO, for example, was oversubscribed by more than 29 times when it ended on April 5.

              Despite the rising activity, companies have still pointed out that the necessary paperwork makes listing a drawn-out process, with Maghawry noting that not only does the listing process need to be accelerated, but financial disclosure by listed companies is also in need of improvement.
              Oxford Business Group
              12 July

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