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Small and medium-sized enterprises (SMEs) are a key sector of Egypt’s local economy. Records show that over 90 percent of all businesses in the country are small businesses, employing more than half of Egypt’s workforce.
This key segment of the local economy has been greatly affected by the coronavirus (COVID-19) pandemic, as SMEs have witnessed a low turnout in activities and profit generated, due to restrictions and lockdown.
In a bid to cushion the effect of the virus, the Egyptian government approved the MSMEs law which seeks to facilitate the inclusion of the informal sector with the formal sector and includes facilitating financial provision and pushing for more direct and indirect financial incentives to the sector, allowing businesses to keep their employees instead of laying them off.
In line with the government’s provision, the European Bank for Reconstruction and Development (EBRD) announced its support for the real economy in Egypt with a $200 million financing package to Banque Misr for trade and an on-lending initiative to SMEs and private businesses.
In view of the liquidity strains faced by business owners , EBRD will provide a $100 million loan to enable Banque Misr to provide short-term financing to private SMEs and corporates.
Also, EBRD is increasing an existing trade finance limit to Banque Misr by $100 million under the EBRD’s Trade Facilitation Programme (TFP), to help meet the increased demand for import and export transactions.
The EBRD’s coronavirus Solidarity Package was created to meet immediate short-term financing needs to private businesses through existing EBRD partner banks and is focused on combating the economic impact of the COVID-19 crisis and stands ready to provide support worth €21 billion over the 2020-21 period, in order to help the 38 emerging economies where it invests.
EBRD was founded by Egypt in 2012 and has invested close to €7 billion in 120 projects in the country.
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