Regulatory Alerts2017-01-02
Circular dated December 29, 2016 amending the second clause of the circular issued on January 11, 2016 regarding the Small and Medium Enterprises Initiative.
Here is the English translation of the mentioned Arabic statement, which explains a number of points related to SME financing in Egypt: .1 The Central Bank of Egypt (CBE) has already begun applying the new guidelines for financing small and medium-sized enterprises that were announced on December 20, 2008. However, new credit guarantees will be provided starting from January 2021, as per a decision by the board of the Central Bank of Egypt. .2 The Central Bank of Egypt has decided to establish and operate special financing units within commercial banks dedicated specifically for financing small and medium-sized enterprises (SMEs). These units will have the necessary qualifications and resources needed to handle and support SMEs and improve their overall capabilities. .3 All commercial banks are now required to set up specialized departments or branches that focus solely on financing SMEs, provide training programs for those involved in managing these enterprises, and enhance their understanding of how to work effectively with banks. .4 The Central Bank of Egypt has emphasized the importance of the role of the Egyptian Small Finance Corporation and the affiliated institutions under the Ministry of Trade and Industry, as well as the need for all state training initiatives in this sector. In addition, the Arabian Federation of Industries should prepare specialized programs to help managers of SMEs manage their projects effectively, and also develop more specialised programs for those working in this field with commercial banks. .5 The Central Bank of Egypt will continue to work on implementing a decision made by its board regarding the supervision and regulation of commercial banks within a specific time frame. This is necessary because it affects how banks comply with the bank's decisions, particularly with regard to providing credit facilities to SMEs. In order to follow up on the implementation of this decision, commercial banks will need to ensure that they maintain their compliance with the supervisory and regulatory requirements set by the Central Bank of Egypt within a specific time frame, preferably by February next year. To summarize, these steps involve providing incentives for banks to finance SMEs, setting up special financing units within commercial banks dedicated to SMEs, establishing specialized departments or branches that focus solely on SMEs, and improving overall capabilities of those involved in managing these enterprises through training programs. It is also important to work closely with the Egyptian Small Finance Corporation and the affiliated institutions under the Ministry of Trade and Industry, as well as the Arabian Federation of Industries to develop specialized training programs that help managers of SMEs manage their projects effectively.