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Banking intermediation credit to private sector at 32% until 15 September The overall share of funds to SMEs in the loans portfolios of banks operating in Egypt is 5%, says Dcode report
The overall share of funds to small and medium enterprises (SMEs) in the loans portfolios of banks operating in Egypt is 5%, compared to 24% in Morocco and 0.50% in Qatar, according to Dcode report Tuesday. The report said that banking intermediation credit, excluding the Central Bank of Egypt (CBE), to SMEs in the private sector amounted to 32% until 15 September 2015, while the banking intermediation credit to the government and the purchase of government securities reached 58%. Banking intermediation credit refers to the guarantees that banks ensure for SMEs in various sectors. The CBE announced a new programme on 11 January to improve SMEs' access to credit, which aims to avail EGP 200bn of bank credit over the next four years with competitive rates (5% simple declining rate) to finance 350,000 SMEs. The programme also aims to increase SMEs' lending share of the total banks' portfolio to 20% over the next four years. The regulations issued by the CBE oblige all banks to establish SMEs units and to increase their SMEs lending to 20% of their total loans portfolios over the next four years, while capping the charged interest rate at 5%. The new regulations allow banks to assign lower company-specific risk weight when evaluating risk-adjusted capital adequacy indicators for SMEs at a risk weight of 75%. The CBE defined micro enterprises as those that have annual turnover of less than EGP 1m, while very small enterprises have turnover between EGP 1m-10m, small enterprises between EGP 10m-20m, and medium enterprises between EGP 20m-100m.
