The World Bank's International Finance Corporation said on Tuesday it is keen to provide more than the pledged amount of $2 billion in financing to the Egyptian private sector by 2019, targeted primarily at entrepreneurship and small and medium-sized enterprises.
Mouayed Makhlouf, the IFC’s director for the Middle East and North Africa, told Ahram Online during a roundtable on the group’s Arab World Competitiveness Report 2018, that IFC is committed to providing the $2 billion financing to Egypt, and even more financing for the country’s small and medium-sized enterprises.
IFC’s CEO Philippe Le Houérou told Investment Minister Sahar Nasr in July of the group’s promised financing to 2019 for the private sector, as well as its provision of technical support on the execution of public-private partnerships in the field of renewable energy.
Makhlouf said the support from the group came due to reforms carried by Egypt in recent years.
“There are the kind of reforms that we want to see in the Arab world,” Makhlouf said, citing Egypt’s efforts through its 2014 embarked economic reform program and other reforms which helped it securing a $12 billion loan package from the International Monetary Fund.
“That’s where we want to put our money, in countries similar to Egypt,” he said, citing Egypt’s GDP of 5.2 percent and an anticipated 5.8 percent in the next fiscal year, as predicted by the IMF.
“There’s an interesting momentum in Egypt,” Mirek Dusek, the deputy head of geopolitical and regional affairs at the World Economic Reform said from Geneva during a conference call at the IFC’s headquarters in Cairo.
The IFC’s total investments in Egypt are worth $1.2 billion, according to a statement last week.
The investments have helped in creating job opportunities, improving infrastructure, and boosting economic growth, according to the IFC.
Egypt ranks 100th globally in the Global Competitiveness Index 2017-2018, out of 137 countries, and 11th out of 12 Arab countries, according to the IFC’s Arab World Competitiveness Report 2018, which was released on Tuesday.
UAE was ranked as the most competitive economy in the region, followed by Qatar and Saudi Arabia.
The ranking by the World Bank group’s IFC and the World Economic forum is based on 12 factors, including education and infrastructure, that are critical to productivity and economic growth.
It also focused on the importance of small and medium-sized enterprises in the countries’ economic performance and growth.
The report cites improvements which have taken place over the last decade in the fields of infrastructure development and technological advancement across the region, but warns that countries in the region are struggling to diversify their economies, to create more jobs and to build a competitive private sector.
The IFC added there were concentrated efforts by the Gulf Cooperation Council (GCC) and other Arab countries in providing crucial funding to start-ups, including the Central Bank of Egypt’s effort in pushing banks to gradually raise their financing for smaller businesses to 20 percent of their total credit portfolio by 2019.
According to Makhlouf, there were about 23 million small and medium-sized enterprises in the Middle Eastern and North African region, with two out of three smaller businesses not having access to credit.
“You don’t expect a bank to support start-ups; it’s a different mindset; but you expect them to support small and medium-sized enterprises,” Makhlouf said.
Egypt has been proceeding with efforts to support small and medium-sized enterprises, encouraging informal businesses to register with official structures.
In May, President Abdel-Fattah El-Sisi announced a five-year tax exemption for small and medium-sized businesses that register formally.
El-Sisi’s comments come nearly two years after he announced an initiative to provide EGP 200 billion in loans for small and medium-sized businesses through the central bank over four years.
In 2016, the Central Bank of Egypt explained its plan to incentivise banks to participate in a “comprehensive programme” to help finance smaller businesses to create jobs and support the economy.
The programme involves offering loans with interest at not more than 5 percent.
The programme aimed to finance 350,000 companies and create 4 million new job opportunities over a period of four years, according to the central bank.
Financing for small and medium-sized enterprises Egypt had ramped up to reach EGP 8.5 billion at the end of March 2018, compared to EGP 4.9 billion in 2017, a rise of 91.5 percent, according to the country’s Financial Regulatory Authority in May.