The Central Bank of Egypt (CBE) has demanded from banks working in the local market to expand their funding offers and credit facilities to the agricultural sector, with a special focus on developing irrigation methods and water lines.
The CBE’s board of directors, headed by Governor Tarek Amer, has decided in its last meeting to allow banks to fund cooperatives, whether for farmers, or with the aim of transformation toward more advanced irrigation methods, in view of the small companies and enterprises initiative, with an interest rate discount of 5%.
In its directives to banks, the CBE explained that this move is due to the avidity to provide more support to the agricultural sector, including extending the funding for farmers in order to develop irrigation methods and water line extensions.
Amer stressed the importance of widening the circle of beneficiaries of small enterprises so as to include this important sector, given its positive impact on increasing growth rates as well as improving the performance of the national economy.
The agricultural sector suffers from negligence from banks, except for the Agricultural Bank of Egypt, which is specialised in funding this sector.
The agricultural sector accounts for only 1% of the total volume of loans in banks.
Analysts expect the CBE directives to contribute toward rendering banks to support the sector and increase the funding provided to it, especially in light of the state’s attention toward the sector and to small projects, most prominently, the 1.5 million Feddan project.