Back to the complete issue
Wednesday, 30 January 2019

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.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.