WB’s IFC lends Arab African Bank $100 m for SMEs in Egypt

CAIRO - 27 March 2017: The International Finance Corporation (IFC), a member of World Bank Group, lent the Arab African International Bank (AAIB) $100 million to increase the bank’s lending operations in Egypt, said the IFC in a statement on Monday.

Fifty percent of the loan has been allocated to enhance the bank’s lending operations for small and medium enterprises (SMEs), while the other $50 million was set for the bank’s sustainable energy finance portfolio to help businesses that have high electricity bills, the statement added.

“Small and medium enterprises are at the heart of driving economic growth, so we are delighted to continue expanding our lending to these businesses. ... We are also looking forward to expand our services to help our clients reduce energy costs, improve their competitiveness, and help mitigate climate change,” CEO and Vice Chairman of AAIB Hassan Abdulla said in the statement.

The SME sector accounts for approximately 25 percent of Egypt’s GDP and about 75 percent of total private sector employment. However, a significant number of SMEs is informal and SMEs loans represent only around 5-10 percent of total lending operations, according to the statement.

“Access to finance remains a significant challenge for many micro, small and medium enterprises (MSMEs) despite their increasing role in creating jobs in Egypt,” said IFC Regional Director for the Middle East and North Africa Mouayed Makhlouf. “This loan will help a strong bank increase its reach to smaller businesses and encourage other financial institutions to follow suit, while also helping to boost energy efficiency in Egypt.”

The IFC invested $1.5 billion in Egypt between fiscal years 2011 and 2016, including financing mobilized from other investors.

In December 2016, the corporation announced that it pledged up to $2 billion for the private sector in Egypt over the coming three years,

Al-Ahram newspaper reported

. In the same month, IFC’s CEO Philippe Le Houerou paid Egypt a four-day visit where he met with a group of Egyptian ministers to discuss a number of projects, said the Egyptian Ministry of Investment and International Cooperation in a

statement

.