Egypt’s central bank has called on banks to increase financing of small and medium-sized enterprises nationwide, key contributors to the state’s investment and production sectors.
In a release issued on Monday on the bank’s website, the bank said it would require lenders to apportion 20 percent of their total loaning portfolio for SMEs, with interest rates below 5 percent imposed on firms generating between LE1 and LE20 million a year in revenue.
The banks participating in the four-year programme will be able to deduct the loans from their required reserves at the central bank, according to the statement.
The bank's new SME financing programme was announced as part of an ambitious plan by President Abdel-Fattah El-Sisi on Saturday to assist smaller businesses.
El-Sisi said that the loans, which will total an estimated LE200 billion, could benefit up to 350,000 projects, providing jobs to over four million employees.
Egypt’s 2015/16 GDP growth rate is expected to register 5.5 percent compared to 4.2 percent recorded in the 2014/15 fiscal year, according to the planning minister.
The most populous Arab nation has been suffering from an ailing economy since the toppling of president Hosni Mubarak in 2011, which spooked investors and tourists.
Small enterprises employing less than 10 workers account for 97 percent of Egypt’s businesses, according to a 2012/13 census published last year by state-run statistics body CAPMAS, while medium-size businesses account for 2.7 percent, and large firms with over 50 employees account for 0.4 percent.