Financing for small and medium-sized enterprises (SMEs) in Egypt has ramped up to reach EGP 8.5 billion at the end of March 2018, compared to EGP 4.9 billion in 2017; a rise of 91.5 percent. The country's Financial Regulatory Authority said that financing for SMEs increased following a decision by the Central Bank of Egypt (CBE) to incentivise banks to finance the booming sector in 2016 in order to create job opportunities and combat poverty. In 2016, the Central Bank of Egypt explained its plan to motivate banks to participate in a “comprehensive programme” to help finance SMEs to create jobs and support the economy. The programme involves offering interest rates that do not exceed 5 percent on loans for SMEs. The SME programme aimed to finance 350,000 companies and create 4 million new job opportunities over a period of four years, according to the CBE. The loan balances of the SMEs rose to EGP 3.3 billion at the end of the first quarter of 2018, up from EGP 1.2 billion in the same period last year; a rise of 96.7 percent. The number of enterprise clients also experienced a hike, increasing to 643,000 clients at the end of the first quarter of 2018 from 339,000 at the end of the first quarter of 2017. The ‘Category A' loans granted to the enterprises jumped to EGP 4 billion by the end of March 2018, up from EGP 2.8 billion at end of March 2017. Category ‘B' loans rose to EGP 572 million in end March 2018, from EGP 438 million last year. According to Al-Ahram, the Egyptian Microfinance Federation expects that financing for SMEs will continue its fast pace in 2018 and 2019, with predictions that the financing in the enterprises will reach EGP 16 billion at a minimum with 4 million clients. The announcement by the Egyptian Financial Regulatory Authority comes a few weeks after President Abdel-Fattah El-Sisi promised a five-year tax exemption for SMEs that register their business in the formal economy. El-Sisi stressed that the informal economy has helped many Egyptians sustain their basic needs. In 2016, El-Sisi introduced an initiative to provide EGP 200 billion in loans for SMEs through the central bank over four years. The Egyptian cabinet, headed by Prime Minister Sherif Ismail, has been discussing legislation focused on offering tax incentives upon registration with the state's tax system.
