“The EGB’s portfolio for Small- and Medium-sized Enterprises (SMEs) is worth EGP 600m”
“We have provided EGP 100 million finances during this year.”
“EGB’s default rate does not exceed 1%”
By Mahmoud Hammad
Reda’ Mohammad, the Credit Manager at Egyptian Gulf Bank, said, “The Bank is working on implementing the Central Bank of Egypt (CBE) initiative to support financing SMEs through granting loans to small-sized enterprises with an interest rate of 5% and medium-sized enterprises with a declining rate of 7%. He stated in an interview with MEO that EGB’s portfolio for SMEs is worth EGP 600 million and it is one of the most promising small-sizes enterprise portfolios in Egypt. We have granted EGP 100 million finance to SME
Would you tell us about the EGB’s efforts to support financing SMEs?
The EGB is active in more than one sector and we divide SMEs into small-sized enterprises with a turnover of EGP 1-20 million and medium-sized enterprises with a turnover of EGP 20-100 million.
What about your participation in the Central Bank of Egypt initiative to support financing SMEs?
We are currently working on implementing the CBE initiative to support financing SMEs through providing loans to small-sized enterprises with an interest rate of 5% and medium-sized enterprises with a declining rate of 7%, which will create 4 million job opportunities for young people over the upcoming period according to labour market requirements and needs.
Do you provide awareness to those who aspire to embark on a business before granting them loans?
Yes, we provide awareness to young graduates and those who aspire to embark on a business. We also provide them with continuous guidance on businesses that will attract investment and meet the needs of the market. We also complete the documents required to obtain appropriate financing.
Does the EGB take certain safeguards before granting SMEs loans?
Yes, granting of credit depends on two factors, which are loan purpose and repayment method. Being responsible for depositors’ funds, the EGB must fulfill these two conditions and must ensure that the client meet them.
Moreover, we take certain safeguards that will enable the bank to take measures against the client in case of any problem or delay in payment so that the circuit of capital can be completed in order to achieve both lender’s and borrower’s intended success.
What steps will you take to avoid loan default and what are EGB’s default rates?
We strive to help the young people to avoid loan default before granting the loans through providing guidance and awareness on financing channels. The EGB’s default rate does not exceed 1% on the back of EGB’s continuous awareness and guidance provided to borrowers at the time the loans are granted, serving as a guarantee to both the bank and clients.
What are sectors in which the EGB is active?
We divide sectors into industrial, commercial, service sectors. The industrial sector include plastics, furniture, wood, food, and auto feeding and auto industries. We take good steps to support financing SMEs and to provide guidance to the borrowers mainly.
What is the value of EGB’s portfolio for SMEs?
The EGB’s portfolio for SMEs is worth EGP 600 million and it is considered as one of the most promising small-sizes enterprise portfolios in Egypt. We have granted EGP 100 million finance to SMEs during this year.
Why have many young people complained that the banks did not implement the Central Bank of Egypt (CBE) initiative to support financing SMEs?
The initiative has already been launched but it is subject to certain fair conditions that young people should be fully aware of. The EGB has provided finance to small-sized enterprises with a turnover of EGP one million and we use financial analysis and studies to evaluate credit worthiness of enterprises that the bank will grant loans.
The young people who aspire to embark on a small business must explore every possible avenue to find funding and leave no room for despair. Some banks grant loans to star-ups that depend on feasibility study to move to the next step while other local banks have managed to meet most of Egypt’s borrowing needs.