KfW Development Bank is in final discussions to provide the Small and Medium Enterprise Development Authority (SMEDA) a micro loans and technical assistance, said Burkhard Hinz, director of the KfW office in Cairo.
“This project complements the provision of funds to banks like the National Bank of Egypt which then lend to small and mid-sized companies predominantly outside the Greater Cairo region,” Hinz told Daily News Egypt.
“We approach the private sector from two sides: from the top by supporting banks to finance increasingly smaller clients and from the bottom by increasing the financial reach of micro clients who then will grow into the formal sector,” said Hinz.
Almost 150,000 loans have been granted to medium and small enterprises in North Africa and the Middle East through intermediaries—including in Egypt through the SANAD Fund for MSME, added Hinz.
A cumulative of more than $400m in loans was facilitated since SANAD’s inception in 2011, with an average loan value of roughly $3,000, Hinz said, adding that the fund provides technical assistance to end-borrowers as well as financial institutions.
The SANAD Fund for MSME provides funding and technical assistance to intermediary financial institutions, like banks, microfinance institutions, or leasing companies, which then lend smaller loans to end-borrowers, who are mostly small enterprise owners.
“Recently I had the chance to visit one of SANAD’s borrowers. Although he hadn’t received training before, he took out a loan with his brother and started a carpentry business in Sakkara, Giza, which now employs about 30 employees and provides furniture to well-known companies,” Hinz said.
“With a worldwide microfinance portfolio of €1.7bn, KfW Development Bank is one of the biggest and most experienced players in the business of facilitating access to finance for small and micro enterprises,” he added.
Small firms often face difficulties cooperating with regular banks; therefore, KfW’s mission is to include them in the formal market, leading to employment, safer working environments, and higher tax revenues, Hinz said.