House signs off on USD 1 bn in SME financing from the World Bank — and it’s working on an SME bill that rivals cabinet’s
LEGISLATION WATCH- House signs off on USD 1 bn in SME financing from World Bank: The House of Representatives signed off yesterday on a USD 1 bn loan offer from the World Bank last year to support the next phase of economic reform, according to Al Mal. The facility is earmarked to support development of Egypt’s private sector and encourage entrepreneurship and SME development. The facility came with its own set of conditions, similar to those of the IMF’s USD 12 bn extended fund facility: improve the business climate, support SMEs and entrepreneurship, curb energy subsidies, and come up with a strategy for debt control.
Meanwhile, the House is coming up with its own SMEs Act to rival one backed by cabinet: The House of Representatives has in mind a law on incentives for small and medium-sized enterprises that’s substantially different than that of the Madbouly government. That’s our reading of remarks by Rep. Hala Aboul Saad, who drafted the bill, in a conversation with Al Mal. While the newspaper gives very little in the way of details, the bill appears very much focused on the independent authority that will be charged with SME policy. The authority would be headed by President Abdel Fattah El Sisi. The bill also proposes that land be given to SMEs at a sharp discount and on very favorable payment terms, while also making it mandatory for banks to set aside 10% of their loan portfolio for licensed SME finance organizations.
How does this differ from the government’s law? The government’s bill is substantially more sensible: Its starting point is that there are untold numbers of SMEs in the parallel economy that need to be given incentives to go legit. The House bill does use the CBE’s definition of SMEs, but that’s basically where the similarities end. For a more detailed look at how the government’s SMEs Act aims to integrate the informal and formal economies, check out past details revealed to us exclusively here.
Conflict resolution: When the government introduces its SMEs Act, the House will likely discuss both bills with a view to coming up with a single, unified bill, Aboul Saad noted.