Last week, the Social Fund for Development's (SFD) board of directors, headed by interim Prime Minister Hazem Al-Beblawi, approved the organisation's budget for 2014, estimated at LE3 billion. The budget is provided though loans and grants from Arab and foreign countries. According to a statement from the cabinet, this budget will be directed at financing the development of small and micro-sized enterprises. A portion will also be directed at funding labour-intensive projects. Azmi Mustafa, the former head of the SFD's Technical Department, told Al-Ahram Weekly that the new budget was larger than last year's, which came in at LE2.2 billion. “There is always room to increase the value of the budget, as the SFD has the ability to manage up to LE10 billion annually,” Mustafa said. Earlier in December, the European Union (EU) contributed a grant of 70 million Euros towards financing the SFD's Emergency Labour-Intensive Investment Project. This aims at creating temporary employment opportunities to semi-skilled labour and at setting up labour-intensive projects in the different governorates. Deputy Prime Minister Ziad Bahaaeddin, EU Ambassador to Egypt James Moran, and SFD Managing Director Ghada Wali oversaw the signing of the agreement. The Arab contribution to the SFD budget has also increased over the past few years, according to Mustafa. The United Arab Emirates (UAE) recently signed an agreement with the SFD that guarantees the provision of $200 million via the Khalifa Fund for Enterprise Development in order to catalyse the start-up of small and micro-sized enterprises. Through the development of such enterprises in the 780 economic activities included in the SFD's programmes, the fund helps create 200,000 to 250,000 job opportunities annually. In 2013, the SFD provided total financial assistance of LE1.8 billion to 145,000 micro-sized and 14,000 small-sized enterprises. LE400 million was also directed to women and childhood projects, according to Mustafa. While projects targeting women have received a good portion of SFD funding, other categories of the population have sometimes not had the same chances, however. Farmers, for example, cannot get loans directly from the SFD but have to deal with the Principal Bank for Development and Agricultural Credit (PBDAC) instead. However, one SFD programme aims to provide annual financing of LE200-300 million to the PBDAC, which will then be directed towards farmers in the form of loans and agricultural infrastructure projects. In 2013, the SFD also helped project managers market their products by holding 41 exhibitions in the different governorates, with overall sales totalling LE39.4 million as a result. The SFD acquires loans at low interest rates ranging between two and four per cent with long growth periods that extend up to five years. Loans are repaid on annual instalments running over 20 years. This system makes it easier for the SFD to repay its loans from the profits it makes from its different projects. According to Mustafa, the SFD has so far succeeded in achieving its goals, proven by the fact that its current assets stand at LE5 billion, compared to zero when it was established in 1991. However, the beneficiaries of the fund's financing are not all happy. Fouad Thabet, chairman of the Federation of Small Enterprises Association, said that the SFD had become too bureaucratic. “Young people suffer by having to go through a whole set of complicated procedures when dealing with the SFD,” Thabet said. The SFD had created a Cooperative Insurance Association that works as a mediator between enterprise owners and banks, he said. While this guarantees 80 per cent of a loan's value, it also ups the interest rate on the loans by one per cent, adding an extra burden to project owners. Another problem was that when the SFD was established, it used to provide technical as well as financial assistance to projects, but this was no longer the case, Thabet said. However, Thabet said that the SFD had made a positive move when it decided to outline a comprehensive strategy to promote Egypt's small enterprises in cooperation with the US Agency for International Development (USAID). Representatives from both agencies have held meetings with the owners of small and micro-enterprises in the different governorates to listen to their problems and help find solutions to them. The SFD was established in 1991 to combat unemployment, alleviate poverty, improve living conditions and assist in socio-economic development. Its board of directors includes Egypt's ministers of planning, international cooperation, industry and foreign trade, finance and local development.
