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Thursday, 21 February 2019

Central Bank of Egypt studies licenses for SME-focused lenders

CBE studies licenses for SME-focused lenders: The Central Bank of Egypt (CBE) is mulling issuing licenses for new institutions specialized in SME financing, Governor Tarek Amer announced, according to CNBC Arabia. The institutions, known as “tier 2” lenders, are non-banking financial service providers. Amer’s announcement came days after the IMF released a research paper (pdf) on bringing SMEs into the formal banking system in the Middle East and Central Asia. IMF director for the area Jihad Azour stressed during a seminar at the American University in Cairo last week that startups and SMEs account for 50% of the area’s labor force yet attract just 7% of overall banking sector lending.

There is potential for such a drive to do much more for SMEs if licensing the new lenders eventually leads to a legislative framework to accommodate new tools, the European Bank for Reconstruction and Development’s Regional Principal Manager for SMEs Reem El Saady said, according to CNBC. Tools like crowdfunding or peer-to-peer lending could be introduced through unified e-platforms, and eventually culminate in the creation of a central coordinating agency for national SME development programs, akin to SME Corp Malaysia, El Saady added.

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