Circular dated July 12, 2017 regarding financing small enterprises operating in the agricultural field, agricultural processing, fish, poultry and animal wealth.

Cairo on: 12 July 2017

Dear Sir / Chairman of the Board

Bank

Greetings,

With reference to the initiative of the Central Bank of Egypt issued on 11 January 2016, which aims to encourage banks to finance small, medium and micro enterprises by granting credit facilities to small enterprises and establishments at a low interest rate of 5% (declining simple interest), in addition to obliging banks to allocate 20% of their credit portfolio to finance small, medium and micro enterprises within 4 years from the date of issuance of those instructions.

I would also like to refer to the initiative issued on 5 March 2017, under which the definition of small, medium and micro enterprises was amended by merging the categories of small and very small enterprises and establishments under the name "small enterprises and establishments" and amending the limits regarding the size of business (annual sales/revenues) for the small categories to become from 1 million pounds to less than 50 million pounds (instead of 1 million pounds to less than 20 million pounds), while maintaining the definition of micro-enterprises as is, with a business size (annual sales/revenues) of less than 1 million pounds.

Finally, the microfinance initiative was issued on 23 May 2017, through which microfinance granted directly to individuals, companies and establishments or through associations, civil institutions and microfinance companies was added to the aforementioned 20%.

Given the Egyptian economy and the state's tendency to support its role, and the importance of the agricultural sector for the desired field of achieving sustainable development, since the vast majority of companies operating in the agricultural, agricultural processing, dairy, feed, fish, poultry and animal sectors (whether fattening, breeding or milk/egg production) have a business size of less than 1 million pounds, and therefore banks cannot finance them under the umbrella of the initiative at a low interest rate of 5%, the Central Bank of Egypt has deemed it necessary to support this sector by contributing to reducing the cost of financing for these projects so that the sector can keep pace with the current requirements to support the state's agricultural policy and serve the national economy.

In light of the above, the Board of Directors of the Central Bank of Egypt, in its meeting held on 12 July 2017, decided to reduce the minimum threshold for the size of business (annual sales/revenues) for small enterprises operating in the agricultural, agricultural processing, dairy, feed, fish, poultry and animal sectors (whether fattening, breeding or milk/egg production) to become from 250,000 pounds (instead of 1 million pounds) and up to less than 50 million pounds, to be granted credit facilities at a low interest rate of 5% (declining simple interest) under the umbrella of the initiative issued on 11 January 2016.

Please accept the highest respect,
Gamal Naguib