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Promotion of Access to Financial Services for Small and Medium Enterprises

Promotion of Access to Financial Services for Small and Medium Enterprises

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  • Client

    German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Union (EU)

  • Country
  • Political sponsors

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  • Runtime

    2016 to 2024

  • Products and expertise

    Economic development and employment

Context

Despite their substantial economic value, Egypt’s SMEs face many challenges, including legal and regulatory issues, slow technology adoption, an insufficiently skilled workforce and poor financing options. The lack of access to suitable financial products is hindering SME growth and expansion. Only about half of all SMEs have a banking relationship and only one in five has access to credit. Securing formal financing often requires SMEs to undergo long and tedious procedures.

Despite their considerable potential, SMEs have virtually no interaction with non-bank financial institutions (NBFIs) that offer services such as leasing, factoring, equity finance or insurance.  

Following the global financial crisis and the sharp decline in conventional lending that went with it, many governments around the world now recognise the opportunities for innovation and growth afforded by financial services outside the traditional spectrum. Building on this, PAFSME focuses on promoting non-bank financial institutions and their services for SMEs in Egypt.

In collaboration with the Central bank of Egypt, a strategy to improve banking supervision and regulation as well as financial stability and inclusion is being developed.

Objective

SMEs in Egypt are benefiting from the improved access to services by non-bank financial institutions (NBFIs) that promote financial inclusion and improve stability.

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Approach

The project consists of five main areas of intervention:

  1. Improving the institutional framework for financial sector stability and financial inclusion.
  2. Expanding credit guarantee schemes to make providing financial services to SMEs more attractive by supporting the institutional and human capabilities of the Credit Guarantee Company (CGC).
  3. Developing the capabilities of selected NBFIs by providing technical support to help improve services to SMEs.
  4. Improving access to finance for young enterprises (startups).
  5. Promoting insurance for SMEs and their employees by supporting the development of new insurance products and distribution channels.

Last update: October 2023