Back to the complete issue
Monday, 27 May 2019

The Central Bank of Egypt wants to incentivize banks’ investments in equity for SMEs

Bank investments in SME-focused equity funds now count toward minimum small business loan requirement: The Central Bank of Egypt (CBE) agreed yesterday to allow banks to count their own equity investments in SME-focused funds as part of the mandatory minimum portion of their loan portfolios they are required to allocate to SMEs, according to a circular published yesterday (pdf). The measure is meant to give commercial banks incentives to back angel investors, venture capitalists, and private equity growth funding for SMEs.

Background: Under the CBE’s EGP 200 bn SME finance initiative, commercial banks are required to allocate 20% of their loan portfolios to SMEs at 5% interest. Yesterday’s decision will also set the relative risk of banks’ investments in these equity funds at 0%, provided the investments meet certain requirements.

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. © 2021 Enterprise Ventures LLC.