September 15, 2011 - The World Bank is supporting increasing access to finance for Egyptian micro and small enterprises that play a vital role is the creation of employment opportunities and improving the conditions of the most vulnerable citizens.
The Enhancing Access to Micro and Small Enterprises Project is the first World Bank-funded operation to support the MSE sector, which has, in the wake of the January 25th Revolution, become an even greater priority for the Government of Egypt in the coming period.
The sector is estimated to account for over 99 percent of Egyptian enterprises, 85 percent of non-agricultural private-sector employment, and, correspondingly, almost 40 percent of total employment. This makes it a critical path to building a more inclusive system able to cater to less privileged segments in the society.
“MSEs have enormous potential to create much-needed employment opportunities for Egypt's growing young population. Thus, sustainable and inclusive access to finance will help alleviate poverty and boost economic growth for the most vulnerable citizens which were all popular demands in the Egyptian revolution,” said A. David Craig, Country Director for Egypt, Yemen and Djibouti.
The Enhancing Access to Finance for Micro and Small Enterprises (MSE) Project aims to increase MSEs' credit sustainability and broaden the outreach of finance through innovative delivery mechanism and financial products. It provides a line of credit channeled through the Social Fund for Development (SFD), the apex institution for micro and small enterprise finance in Egypt, which then on-lends it to eligible Banks and microfinance NGOs which in turn on-lend it to micro and small enterprises.
In addition to the line of credit provided by the operation, the project’s implementing agent, SFD, supports the provision of a number of non-financial services to MSEs such as basic training in marketing and finance. SFD also help support existing and start-up MSEs with their one-stop-shops which aid in the preparation of business plans, loan applications as well as licensing.
A key feature of the operation is its focus on women. The operation mainstreams gender through its main components, as well as through directly targeting women through a number of innovative subcomponents.
“A number of studies have shown that an increase in a woman’s income tends to correlate with greater expenditure on family welfare and children, because women, more so than men, spend a greater share of their income on their children’s nutrition, health care, and education,” said Sahar Nasr, Lead Financial Economist and Task Team Leader. “Providing finance for female owned and managed enterprises empower the women, not only economically but socially as well”.
Since April 2011, SFD has signed contracts with four large banks as well as one of the largest microfinance NGOs operating in Egypt. In line with the disbursement schedule for the five-year project, 30% of the funding has been withdrawn by SFD from the line of credit and approximately 1,300 micro loans and 3,000 small enterprise loans, amounting to LE 168 million, have been granted to MSEs. On average, 25 percent of the beneficiaries have been woman.
Women Beneficiaries of Micro and Small loans
In post-revolution Egypt, micro and small loans are creating job opportunities and providing Egypt’s youth and women with income-earning activities to support their families especially at a time when unemployment is rising.
Small loans range from 25,000 to 2 million Egyptian pounds and many are going to women. For instance, Soha Nabeh is using the loan to expand her and her husband’s cement warehouse in this village in Southern Egypt.
"Many here in our village and surrounding villages are benefiting from the warehouse, we have six full time workers, and sometimes as many as ten during our busy seasons. We also have three drivers working at the warehouse. Many people have benefited!” she said.
Owning a business is also helping 26-year-old Marwa Esaam during her families' economic difficulties since her tour-guide husband depended on income from the hard hit tourism industry. Marwa opened her business- a convenience store- in the city of Qena with EGP 100,000 loan.
“We have three kids and since the drop in tourism there is no income, so we opened this store and now we have income which is steady, until tourism returns,” she said.
As for micro loans, Naema Basyouni used the loan to turn her small sewing studio into a major source of income. She used the money to pay for material, which she sews into ready-made garments, and sells in Alexandria Egypt where she lives. “Without my business I would not have been able to educate my four children.”
And Suraya Mustapha is using EGP 3000 loan to expand the tiny handicrafts business she operates out of the two room apartment she shares with her husband and two daughters. “I am able to work while the kids are with me. I can’t leave them alone when they are so small.”