2024-04-08 | CBE10.2Added · Updated
The Central Bank of Egypt regulates financing initiatives for the private industrial, agricultural, and contracting sectors, including a 2015 initiative for SMEs with a 5% margin cap and a 2019 initiative offering 8% interest rates with a 100 billion EGP limit. A 2024 amendment adjusted credit limits to 150 billion EGP and extended the initiative's scope to cover raw materials and salaries. Additionally, a guarantee initiative by Takaful Misr provides a 7 billion EGP commitment to cover risk weights for large enterprise financing, requiring banks to submit periodic data to the CBE.
In light of the importance of the industrial sector as a driver of economic growth and a key pillar of the national economy, and given the need to support this sector and provide financing facilities to enable it to keep pace with development and compete with other sectors, and based on the foregoing, the Board of Directors of the Central Bank of Egypt issued a decision at its meeting held on June 2, 2015, containing the provisions of this initiative, which consists of mandatory provisions that banks must study each case for and take the appropriate decision based on the following:
The initiative is limited to SME customers. An SME is defined as a private industrial enterprise whose total assets do not exceed EGP 300 million as of December 31, 2012, and whose annual sales do not exceed EGP 150 million. The initiative also covers industrial enterprises that have been established for less than three years, provided their total assets do not exceed EGP 100 million and their annual sales do not exceed EGP 50 million.
Banks may deem it feasible to float the margin - provided that the margin does not exceed 5% - and the difference between the cost of funds and the lending rate shall be added to the profit margin. Banks shall not impose any additional fees or charges on the customer.
The margin shall be fixed at the time of granting the facility and shall not be changed during the facility's life.
Banks may grant the facility in Egyptian pounds or foreign currency, provided that the facility is granted in the currency of the customer's exports, if any.
In the event that banks apply any of the above, they must observe the following:
a. The customer's total assets shall not exceed EGP 300 million as of December 31, 2012, and their annual sales shall not exceed EGP 150 million.
b. Conduct a sensitivity analysis (Sensitivity Analysis) to determine the impact of changes in interest rates, exchange rates, and other variables.
c. The margin shall not exceed 5% of the facility amount, and the difference between the cost of funds and the lending rate shall be added to the profit margin.
d. The facility shall be granted in Egyptian pounds or foreign currency, provided that the facility is granted in the currency of the customer's exports, if any.
It is noted that the mandatory provisions mentioned above may be suspended after the date of issuance of this decision.
Continuing the efforts of the Central Bank of Egypt to support the industrial, agricultural, and contracting sectors, and in light of the need to provide financing facilities to these sectors at favorable interest rates to enable them to keep pace with development and compete with other sectors, and based on the foregoing, the Board of Directors of the Central Bank of Egypt issued a decision at its meeting held on December 12, 2019, containing the provisions of this initiative, which consists of mandatory provisions that banks must study each case for and take the appropriate decision based on the following:
Financing up to 100 billion EGP shall be granted within the framework of the initiative at an interest rate of 8% (excluding fees) to support industrial enterprises and provide financing for the agricultural sector, with a limit of 50 billion EGP.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The margin shall be fixed at the time of granting the facility and shall not be changed during the facility's life.
The margin shall not exceed 8% of the facility amount.
The facility shall be granted in Egyptian pounds or foreign currency, provided that the facility is granted in the currency of the customer's exports, if any.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The facility shall be granted to industrial enterprises that have been established for at least three years.
The facility shall be granted to industrial enterprises that have been established for at least three years.
Furthermore, the Board of Directors of the Central Bank of Egypt decided at its meeting held on February 21, 2021, the following:
Allocating a facility of 1.2 billion EGP at an interest rate of 8% to finance the first tranche through dealing banks for enterprises operating in the ceramics and porcelain sector, which have been granted a deferral of natural gas bills, in accordance with the following provisions:
In coordination with the decision of the Prime Minister, Dr. Mostafa Madbouly, No. 4151 for the year 2022, issued on November 19, 2022 (attached), which includes the work mechanism for industrial initiatives only (under which banks are compensated for the difference between the interest rate on funds and the applied interest rate), and the periodic compensation mechanism, the suspension of the implementation of the Industrial, Agricultural, and Contracting Private Sector Initiative is addressed.
The suspension applies to granting new financing or facilities under the Industrial, Agricultural, and Contracting Private Sector Initiative at an interest rate of 8% on the outstanding balances of the initiative gradually according to the granted maturities.
Furthermore, the Board of Directors of the Central Bank of Egypt decided at its meeting held on October 20, 2022, the following:
The Cabinet, at its meeting No. 225, approved the issuance of an initiative to finance enterprises and establishments of the private sector operating in industrial and agricultural zones for productive sectors at a reduced interest rate of 11% in accordance with the provisions of the Ministry of Finance, as follows:
The facility shall be granted to enterprises and establishments with total assets not exceeding 150 billion EGP for industrial enterprises and 140 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 10 billion EGP for industrial enterprises and 10 billion EGP for agricultural enterprises.
The facility shall be granted for a period of up to 5 years, including a grace period.
The facility shall be granted for a period of up to 5 years, including a grace period.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
The facility shall be granted to enterprises and establishments with total assets not exceeding 75 billion EGP for industrial enterprises and 75 billion EGP for agricultural enterprises.
Furthermore, the Cabinet approved at its meeting No. 284 held on April 3, 2024, to amend some provisions of the aforementioned initiative effective from April 4, 2024, as follows:
The credit limit for industrial enterprises shall be increased from 15 billion EGP to 150 billion EGP, and for agricultural enterprises from 11 billion EGP to 140 billion EGP, within the third quarter of 2024.
The credit limit for industrial enterprises shall be increased from 75 billion EGP to 150 billion EGP, and for agricultural enterprises from 75 billion EGP to 140 billion EGP, provided that the total credit limit for industrial and agricultural enterprises does not exceed 150 billion EGP.
The initiative shall be extended to cover industrial and agricultural enterprises that have been established for at least three years, with a credit limit of 11 billion EGP for industrial enterprises and 11 billion EGP for agricultural enterprises, provided that the total credit limit for industrial and agricultural enterprises does not exceed 150 billion EGP.
Takaful Misr expanded its scope of work to include coverage of large enterprises in addition to covering micro, small, and medium-sized projects. The Central Bank of Egypt Board of Directors decided at its meeting held on May 19, 2020, the following:
Launching an initiative under which the Central Bank issues a commitment worth 7 billion EGP - on a pro-rata basis - in favor of Takaful Misr to cover the risk weights of guarantees issued by the company to banks to cover the risk weight of financing large enterprises, in accordance with the following:
The initiative shall be launched by Takaful Misr to cover the risk weights of guarantees issued to banks to cover the risk weight of financing large enterprises.
The initiative shall be launched by Takaful Misr to cover the risk weights of guarantees issued to banks to cover the risk weight of financing large enterprises.
The initiative shall be launched by Takaful Misr to cover the risk weights of guarantees issued to banks to cover the risk weight of financing large enterprises.
The initiative shall be launched by Takaful Misr to cover the risk weights of guarantees issued to banks to cover the risk weight of financing large enterprises.
The initiative shall be launched by Takaful Misr to cover the risk weights of guarantees issued to banks to cover the risk weight of financing large enterprises.
Banks are required to comply with the following:
Use the granted facilities with the above-mentioned commitment to settle existing facilities and ensure the use of the facility for the purpose for which it was granted.
Use the aforementioned commitment to guarantee facilities for new customers or increase existing facilities.
Periodically report data on large enterprises guaranteed by Takaful Misr to the Supervisory Authority and confirm it through the forms to be provided by the banks to the CBE.
Provide Takaful Misr with data on enterprises subject to the initiative in a timely manner in accordance with its requirements.
More like this from CBE
CBE published 2 documents in the last 30 days. We email you each new one the day it's published.