Tarek El-Kholy, Deputy Governor of the Central Bank of Egypt (CBE), announced that bank financing directed to small enterprises has reached around EGP 301bn. Additionally, bank and non-bank financing for microenterprises has exceeded EGP 107bn. El-Kholy emphasized that micro, small, and medium-sized enterprises (MSMEs) are a fundamental pillar of the Egyptian economy and a key driver of growth and employment.
MSMEs play a crucial role in driving employment and economic activity in Egypt. The country has around 3.858 million MSMEs, accounting for 99.3% of all enterprises and providing approximately 12.5 million jobs, equivalent to 82% of total employment. El-Kholy noted that microenterprises alone account for around 80% of all MSMEs, compared with 19% for small enterprises and 0.7% for medium-sized enterprises.
The CBE has taken measures to increase financing available to the MSME sector. In 2016, banks were required to allocate 20% of their credit portfolios to financing MSMEs, which was later raised to 25% in 2021, including a 10% allocation to small enterprises. El-Kholy stated that the CBE gave banks a grace period to adjust their positions and meet the required ratios before applying prescribed penalties to non-compliant banks.
Women's access to finance is an important aspect of the strategy to expand access to finance. El-Kholy reported that women-owned or women-managed businesses account for around 24% of MSMEs receiving financing from the banking sector. Women also account for around 53% of clients benefiting from non-bank microfinance providers, with extremely low default rates among women-managed enterprises.
The NilePreneurs initiative has played a significant role in providing financial and non-financial services to business owners. The initiative includes 140 business development centres across 25 governorates, which have provided around 1.3 million non-financial and advisory services to approximately 589,000 beneficiaries, 41% of whom are women. The centres have also helped facilitate financing worth nearly EGP 24bn.
The CBE's strategy aims to help informal businesses gradually transition into the formal economy and enable them to deal with financial institutions. El-Kholy stated that the CBE has developed mechanisms allowing businesses that do not initially have approved budgets or financial statements to access financing by assessing their business behaviour, activity, and repayment capacity.
Cooperation between the CBE, the Financial Regulatory Authority (FRA), and the Egyptian Federation for MSME Finance has contributed to the development of the market. El-Kholy noted that 36 associations operating in the sector had been upgraded from Category C to Category B through an institutional upgrading programme sponsored by the CBE between 2021 and 2026.
Key points
- Bank financing for small enterprises in Egypt has reached EGP 301bn.
- Microenterprise financing in Egypt exceeds EGP 107bn.
- MSMEs account for 99.3% of all enterprises in Egypt and provide approximately 82% of total employment.
