Egypt: US$300 Million Loan Is Creating over 70,000 Jobs

“The sewing machine is my main source of income,” said Nai’ma Bassuni, a widow with four children. Bassuni received a micro- loan through the Social Fund for Development (SFD) to upgrade her small sewing studio and buy the materials necessary for her project. “I was able to raise and educate my children,” Bassuni added.

In 2014, the World Bank approved a US$300 million loan to Egypt to expand access to finance for micro- and small enterprises (MSEs) using innovative financing mechanisms, with a special focus on women and youth, as well as under-served regions.
By the end of 2015, about 70% of the loan has been disbursed and more than 70,000 jobs created. The project is set to reach more than 130,000 micro- and small enterprises, 37% of which are owned by women.

The SFD is an Egyptian entity responsible for channeling the loan to financial intermediaries—such as banks, microfinance institutions, venture capital companies, and financial leasing companies—that would ultimately reach the beneficiaries, namely MSEs.

The project, Promoting Innovation for Inclusive Financial Access, helps the SFD with the setting up of the full infrastructure to activate the venture capital component. This included creating a Venture Capital Department at SFD for the very first time, providing capacity building for the staff, and putting an investment policy and investment committee in place. Roundtable discussions, events and meetings are held regularly to introduce this to the whole microfinance ecosystem in Egypt, including new, potential beneficiaries.

Opening the doors to entrepreneurs

The multi-million US dollar loan opens doors for women, youth and other marginalized groups to start and grow their MSEs by using innovative financing tools to expand their access to credit. It aims at increasing access to finance for micro- and small enterprises on a sustainable, commercial basis, promoting growth, job creation and an inclusive financial system.

“Despite the many challenges facing the majority of start-ups, including the marketing and insufficient number of skilled staff, I advise all unemployed youth to become would-be entrepreneurs, “said Maha Amer, who embarked on a private furnishing business with a group of women to plug a gap in their governorate of Alexandria.

In Egypt, small, young enterprises are the main source of new jobs. They account for more than 98% of businesses, generate more than 85% of employment in the non-agriculture private sector, and 40% of total employment. “The project created over 70,000 jobs, of which more than 30, 000 are through small enterprises and more than 40,000 through micro-enterprises, “said Laila Abdelkader, the Banks’ project team leader.

While stimulating growth and generating employment, the project has also been successful at reaching people and communities that previously lacked much access to finance.

“Women represent over 30% of total beneficiaries, while youth represent 40%. Moreover, almost 70% of the loan caters to previously under-served governorates and poor villages, with a focus on Upper Egypt,” Abdelkader added.