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Will CBE's initiative solve funding concerns for IT companies? - Daily News Egypt

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Will CBE’s initiative solve funding concerns for IT companies?

Egyptian banks, however, are seeking to make their loans more competitive with other funding sources to increase their funding share


Small- and medium-sized enterprises (SME) have varying degrees of access to quality funding sources. Some are turning away from commercial bank loans, opting instead for individual investors, whether domestic or foreign, as an alternative source.

Egyptian banks, however, are seeking to make their loans more competitive with other funding sources to increase their funding share.

The large base of start-ups seeking financing makes it difficult for them to obtain funding from individual investors, known as “angel investors”. Some companies have resorted to other untraditional means of financing, such as collective financing, also known as crowd-funding. Yet, the problem of funding diversity continues to create obstacles for companies.

Officials in the telecommunications and information technology sectors believe the Central Bank of Egypt’s (CBE) initiative is an effort to partially solve this funding issue. However, only the small businesses, including producers and manufacturers, can benefit from the initiative, while the small start-ups of the information technology sector will continue to suffer from a lack of adequate funding.

Officials attribute the funding issue to the unavailability of fixed assets in the information technology industry, which can be used as collateral for the financing process.

Additionally, the majority of the IT industry is associated with the software sector which uses complicated technical manufacturing for some of its products, preventing IT companies from benefiting from CBE’s initiative.

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