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OPEC lends Egypt $95m to finance small projects Principal of loan to be paid in US dollars or other freely convertible currency approved by fund management, with repayment to begin immediately after grace period
The Presidential Decision No 454 of 2020, published in the Thursday edition of the Official Gazette, has announced the approval of a $95m loan agreement between the Egyptian Government and the OPEC Fund for International Development. The financing will go towards the project for developing micro, small, and medium enterprises (MSMEs), which was signed on 22 June 2020. The details of the loan include that the borrower is the Ministry of International Cooperation for the benefit of the Micro, Small and Medium Enterprises Development Agency (MSMEDA), with an annual interest of 2.5% on the principal amount of the loan withdrawn. The Egyptian Government also pays a service fee of 1% annually on the principal amount of the loan withdrawn that has not yet been paid. Interest and service fees are paid semi-annually on 15 January and 15 July of each year for the account of the OPEC Fund for International Development. The principal of the loan is to be paid in US dollars or in any other freely convertible currency approved by the fund management, with the repayment to begin immediately after the end of the grace period. The repayment will be made in 28 semi-annual instalments over a period of 14 years in the amounts and on the dates specified in the loan amortisation schedule. This means that the last instalment will be paid in 2036. The loan amount includes allocating $14.250m to finance micro-enterprises, and $80.750m to finance small- and medium-sized enterprises (SMEs). The MSMEDA aims to improve the rates of social and economic development for the Egyptian population by boosting job opportunities. It also aims to provide better opportunities to obtain financing for income-generating activities for the poor, especially women and youth. The agency plans to use the proposed loan amount for continuous lending through intermediaries, including banks, non-governmental organisations, and non-bank financial institutions, and through direct lending to the final beneficiaries. The project includes granting loans to small projects at an amount ranging between EGP 10,000 and EGP 150,000, with a maximum repayment period of five years. It also includes granting loans to small projects with a value ranging between EGP 150,000 and EGP 5m. The exceptions to this are renewable energy projects, which will receive a maximum of EGP 10m, provided that the loan period for small companies does not exceed seven years.
