Promoting Access to Credit and Private Sector Growth
With funding from Overseas Private Investment Corporation (OPIC), Global Communities has established a $250 million loan guaranty facility to support lending to the enterprise sector in Egypt with a strong focus on the small- and medium-enterprise (SME) sector. The facility guarantees loans by local banks to enterprises with at least two of the following three characteristics: (i) not more than 300 employees, (ii) total assets not exceeding the Egyptian Pound Equivalent of $15,000,000, and (iii) annual revenues not exceeding the Egyptian Pound Equivalent of $15,000,000. Priority is given to loans with the highest job generation or retention potential. The facility can also be extended to guarantee bank loans to microfinance institutions. The program provides technical assistance and training programs on a demand-driven basis to officers and managers from partner banks.
According to a study by the International Finance Corporation and McKinsey, there are between 1.9 and 2.3 million formal SMEs in the Middle East and North Africa region, and although more than half of them maintain bank accounts, most do not have access to credit. The facility will target this shortage of SME credit availability in Egypt and remove an important impediment to private sector growth.