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Wednesday, 16 June 2021

Switzerland commits $3.2m to help Egypt do business

The Swiss Secretariat for Economic Affairs (SECO) and IFC are undertaking a three year advisory programme to address three main business issues in Egypt: financial infrastructure, dispute resolution and SME access to finance

Ahmed Feteha, Sunday 21 Aug 2011
IFC
Stefano Toscano, deputy head of Swiss mission in Egypt (left) signs the agreement with Luke Haggarty, IFC advisory services head (right)
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Switzerland’s State Secretariat for Economic Affairs (SECO) has committed US$3.2 million to a three year advisory programme by the International Finance Corporation (IFC), a member of World Bank Group, to aid Egypt implement business friendly regulations to encourage growth and create jobs.

The IFC program aims to work with both the Egyptian government and the private sector to improve Egypt’s business environment in areas such as dispute resolution, business initiation and access to finance; with the ultimate goal of empowering Egypt's private sector and its ability to create jobs.  

“Youth unemployment is a major challenge to the region, so efforts to encourage job growth, entrepreneurship and new investment are now more important than ever,” says Luke Haggerty, IFC regional head of advisory services in the Middle East and North Africa.

Haggerty indicates that the programme will address three main business issues in Egypt: financial infrastructure, dispute resolution and SME access to finance.

“SME’s are often viewed by lenders as carrying more risk simply because access to credit information is very limited in Egypt” Haggerty told Ahram Online, going on to explain that the program will work with micro finance institutions to make better use of the current resources, as well as developing a proper credit bureau in Egypt.

Egyptian SME’s' struggle is part of a regional neglect of the sector in favour of bigger enterprises.

According to a study by the IFC and McKinsey, there are between 1.9 and 2.3 million formal SMEs in the MENA region, and although more than half of them maintain bank accounts, most do not have access to credit.

Haggerty explained that financing SMEs is not held back merely due to lack of information, but banks do not comprehend the difference in size, terms and market conditions while granting loans to SMEs. Therefore they have to go through tough assessment processes and legal requirements that small entrepreneurs do not have the ability nor the resources to handle.

He indicated that the IFC program will work with banks to facilitate SME credit acquiring processes, which the banks themselves need as they are getting squeezed in margins with their traditional, top tier, client base.

Dispute resolution is another bottleneck that the programme tackles. “Average complaint resolution turnaround time in Egypt reached 1000 days according to doing business report,” Haggerty told Ahram Online.  

IFC works together with the Cairo Regional Centre for International Commercial Arbitration (CRCICA) to train mediators in order to improve arbitration services and promote arbitration and other alternative dispute resolution (ADR) techniques.

“We are trying to instill a new culture of mediation in Egypt’s business environment” adds Stefano Toscano, deputy head of mission at the Swiss embassy in Egypt.

SECO has already funded an IFC-run ADR program in Egypt as well as other programs to simplify business start-ups. 

 

 

 

 

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