Following the period of political instability brought on by the revolution in Egypt in 2011, the country has suffered a deterioration in its macroeconomic bases. Egypt is categorised as a lower-middle income country with a continuous steep increase in population, which in turn puts strain on the country’s infrastructure funding. In addition to this, Egypt’s informal economy plays a big role since almost half of the country’s labour force is currently employed by the informal sector, leading to a large gap in firm registration, taxes, and access to formal financial system which are common traits of the formal sector.

In order to restore Egypt’s macroeconomic stability, the country undertook a reform programme, supported by the International Monetary Fund (IMF), which has since allowed the country to progress towards restoring its macroeconomic stability. Despite the improvements to Egypt’s macroeconomic status, Egyptian Small and Medium-sized Enterprises (SMEs) continue to be largely excluded from the banking system thanks, in part, to weak demand and limited supply of loans. The majority of SMEs requiring loans, are discouraged from applying, which results in 80% of the SMEs requiring a loan being credit-constrained. This weak liaison between SMEs and the banking system contributes to the country’s volatility with regards to its macroeconomic development.

Thus, given the above situation, AETS was recently awarded a technical assistance project by the European Investment Bank (EIB) which aims to improve Egyptian SMEs access to finance and develop the country’s private sector and macroeconomy, through supporting the increase of sustainable lending to SMEs. In more specific terms, the project will:

  • Improve the existing lending practices aimed at SMEs by the Egyptian Gulf Bank (EGBANK) through the introduction of updated and high-level processes and procedures;
  • Develop and introduce a banking product aimed at early stage companies and young entrepreneurs;
  • Train and build the capacity of the EGBANK; and
  • Develop and implement a non-financial services package for final beneficiaries.

The project is expected to begin within the first quarter of 2019, with a kick-off meeting on site, and should last for approximately 10 months. AETS will be providing 3 key experts and 4 non-key experts.