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EU, GIZ support CBE to establish comprehensive database for financial inclusion
‘We offer European expertise to MCIT for further elaboration of e-commerce Law,' says Surkoš
Published in Daily News Egypt on 09 - 09 - 2019

The European Union (EU) delegation to Egypt is cooperating with the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ) to support the efforts of the Central Bank of Egypt (CBE) to establish a comprehensive nationally-owned financial inclusion database. This is to measure the levels, trends, and challenges facing financial inclusion, by conducting a full-fledged demand and supply side mapping exercise, covering both households and micro, small and medium enterprises (MSMEs), Head of the EU delegation to Egypt, ambassador Ivan Surkoš, said.
“We are in close discussions with our long-term partner the European Bank for Reconstruction and Development (EBRD) for the preparation of a new programme to open up further economic opportunities for underserved social groups such as young people, women, and populations in remote areas,” Surkoš added.
Daily News Egypt interviewed Surkoš to discuss the EU's current programmes to support Egypt's young entrepreneurs and female-owned startups, in addition to learning more about the EU's future plans to support this sector.
Initially, how do you assess Egypt's entrepreneurship eco-system?
I would like to start by praising recent efforts by the Egyptian government to build and streamline business related regulations by placing key institutions as the Micro, Small, and Medium Enterprises Development Agency (MSMEDA) and the Egyptian Regulatory Reform and Development Activity (ERRADA) under the Prime Minister's Cabinet.
Yet Egypt is ranked 120th out of 190 countries in the World Bank's (WB) Ease of Doing Business Index of 2019. This is a low ranking, compared to countries such as Morocco (60) or Turkey (43). The regulatory framework still needs improvement, and access to finance remains a major constraint for private sector development. Other factors such as ‘unpredictability' (vague regulations, civil servants unaware of recent simplifications), may be affecting the low-level investment rates of the private sector.
For any entrepreneur, in Egypt or in other part of the world, there are four key factors that can help a business fully thrive: better regulations and information, better skills, better access to finance, and better access to innovation.
I am happy to say that we are active in Egypt in each of these areas. We have EU-funded programmes aiming at reinforcing national institutional capacities and service delivery quality in the areas of entrepreneurship and technical and vocational education and training (TVET). We also have a number of programmes where EU grants are blended with loans provided by European financial institutions to offer small and medium-sized enterprises (SMEs) access to affordable direct loans and/or guarantee schemes with local partner banks thereby reducing investment risks.
What about the EU delegation cooperation with Egypt's Ministry of Communications and Information Technology?
We recently offered the ministry expertise supporting further elaboration of the e-commerce Law and it is our common ambition to intensify our policy dialogue and cooperation in the near future.
On promoting innovation, we have grants schemes for SMEs and dedicated research and innovation programmes such as H2020 that are open to Egyptian participation. But we also know that we should do more on technology and digitisation which can dramatically reduce costs and allow entrepreneurs to develop profitable low-value, big-volume business models.
Can you please elaborate on the EU's current support for Egyptian start-ups? How many programmes? Their impact? The amount of funds?
As technology advances, we are now witnessing the rapid emergence of innovative entrepreneurships: the ‘start-ups'. That's why we have integrated in the latest programmes the support to venture capitals and business accelerators to allow early-stage innovative companies to access the expertise of local and/or international advisors. This is in addition to promoting knowledge-sharing between early-stage technology companies and international best practices.
This type of cooperation is still quite new in Egypt, and it is too early to provide you with figures. It is important to note that Egyptian start-ups were very active in an open debate hosted by the Commissioner for European Neighbourhood Policy, Johannes Hahn, last May to discuss the challenges and opportunities for investment and entrepreneurship in the EU southern neighbourhood.
It came at the right time to feed the voice and ideas of young entrepreneurs into a new EU policy cycle. The discussions concluded in a set of 12 recommendations for policy makers both at the EU and in the region on how to continue supporting entrepreneurs and facilitating investment.
We are also tackling this issue through the EU-Egypt programme TVET EGYPT (worth €50m). One of the components of this programme is about improving the employability of Egyptian youth and workers and strengthening the capacity of the TVET system to develop appropriate skills to meet labour market demand, particularly selected key economic sectors, notably tourism. A grants scheme worth €6m is funding eligible NGOs to improve the skills of the existing workforce, enhance entrepreneurship and self-employment among Egyptian youth, and build the capacity of job seekers through training on vocational and basic life skills to meet the labour market needs. This helps reduce the poverty within society, and is in line with the Sustainable Development Goals (SDGs).
Will the EU delegation announce new programmes for supporting Egyptian start-ups? Expected funds?
Over the years, we have seen how essential entrepreneurship is in creating employment, value, and innovation while delivering products and services that people need around the world. As Europeans, we believe that SMEs are the backbone of successful economies.
We will launch in the fall of 2019 the preparations for the programming of the EU support to Egypt for the next cycle, covering the years 2021-2027. Achieving a sustainable growth of SMEs in Egypt will continue to be a key part of our economic agenda. Let me add here that we are in close discussions with our long-term partner, the EBRD, for the preparation of a new programme to open up further economic opportunities for underserved social groups such as young people, women, and populations in remote areas.
How do you assess Egypt's efforts toward financial inclusion?
Without any doubt, financial inclusion is a global challenge. I am pleased that Egypt, notably the CBE (and its Financial Inclusion Department established in 2016), is one of the entities which started laying the groundwork for creating an environment conducive to financial inclusion.
This is necessary to create the conditions for Egyptians, particularly those who are underserved by the financial system, and especially women and youth, to be able to safely save and build up resilience against financial shocks. It is also important for Micro, Small and Medium enterprises (MSMEs) to be able to access formal finance services and products, invest, grow, and generate more employment opportunities.
It is very much recognisable how a rapid development and extension of digital platforms can reach financially excluded and underserved populations quickly, securely, transparently and in a cost-efficient way. That's why important steps and regulatory measures have been taken by the CBE to enhance financial inclusion through digital services and financial technology.
I believe that these efforts have led to substantial improvements in the past years as demonstrated by the WB Global Index Database, which revealed that the proportion of adults with a bank account in Egypt grew from 10% in 2011 to 33% in 2017. This is still low compared to European countries or similar regional countries and further efforts are needed to expand easy access to financial services for the entire population.
Through a project under implementation with the GIZ the EU is supporting the efforts of the CBE to establish a comprehensive nationally-owned database to measure the levels, trends, and challenges of financial inclusion, by conducting a full-fledged demand and supply side mapping exercise, which will cover both households and MSMEs.
How does the EU support women to start small businesses?
I am very proud that together with the ambassador of Sweden to Egypt, Jan Thesleff, we have been appointed by the EU member states in Egypt as the EU Senior Gender Champion at country level. The EU is committed to put gender equality and women's empowerment at the heart of EU-funded programmes. In the framework of the joint commitment between the EU and EU member states in Egypt, one of the main pillars of the EU Gender Action Plan is to support women's economic empowerment.
This support includes women's access to finance and improved business, technical and vocational skills, as well as the needed skills to start and run a small business. This is why some EU-funded programmes have exclusively targeted women's economic empowerment, and some others included women as important and the main beneficiary segment.
Let me give you some examples. Under the EU-funded project ‘Advice for Small Businesses (ABS) in Egypt', which is being implemented by our partner, the EBRD, 20% of the supported SMEs were either women-led or women-owned businesses.
Moreover, under the ‘Securing the Rights and livelihood of Egyptian Women', the EU supported the model of ‘Village Savings and Loans Associations' through which 20,000 women were extended support, including through access to finance, business development services, and skills development. Technical skills and grants to run women-led businesses are also supported under the EU-Egypt TVET II flagship programme which supports a large number of women, particularly young women.
I believe that all efforts need to be intensified to allow more women to set up their own businesses. The impact will not only be sensed on the lives of these women, but the added value would be felt through increased women's participation in the economy and the expected outcomes at the GDP level.

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