The National Bank of Egypt (NBE) is currently in talks with international lenders to receive soft loans and then lend them to local banks to finance small and medium enterprises (SMEs), setting a precedent in the country. The Social Fund for Development (SFD) is assigned to manage this process, as per the law no. 141 of 2004. Sources said the bank is still in preliminary negotiations with the lenders as the values and the interest rates of the loans have not determined yet. Some financiers have given initial approvals to offer loans in different currencies, but the repayment will be in the Egyptian pound or the U.S. dollar. Therefore, the hedge costs will be considered in calculating the interest rates. NBE is in talks with a number of international financiers that lend SMEs such as African Development Bank, French Development Agency, China Development Bank (CDB), Spain's Institute De credit official and Italian lenders. NBE offered loans of about EGP 890 million to 3,000 customers in SMEs sector in the last three months. NBE targets to increase the value of SME finance to EGP 4 billion by the end of FY 2012/2013.
