WASHINGTON, March 9, 2010 – The World Bank’s Board of Executive Directors today approved a $300 million loan to support access to finance for small and micro entrepreneurs whose role is vital in Egypt’s job creation and economic growth.
The Enhancing Access to Finance for Micro and Small Enterprises (MSE) Project will support the government's priority program to encourage the sustainable expansion of this sector. It 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.
“Micro and small businesses are a primary driver for job creation and economic growth in emerging economies,” said Dr. Shamshad Akhtar, World Bank Vice President for the Middle East and North Africa. “In several countries of this region they contribute to economic diversification and play an important r ole in private sector development. Through increasing access to finance for small business players, we aim at increasing productivity and employment as a development priority in our support to this region”.
Enhancing Access to Finance for Micro and Small Enterprises Project is the first World Bank-funded project to support of MSEs in the Middle East and North Africa (MENA) region. In Egypt the sector is led by the Social Fund for Development (SFD) which has provided significant support to MSE policy efforts in recent years.
“We are particularly pleased to have this solid partnership with the Egyptian Government and to be able support the ongoing development of the sector,” said A. David Craig, Country Director for Egypt, Yemen and Djibouti. “Sustainable and inclusive access to finance for will be a spur to employment opportunities, help alleviate poverty, and boost economic growth for the most vulnerable citizens,” he added.
Sahar Nasr, Team Leader, said the project was designed to encourage a successful institutional framework that could eventually be scaled up nationwide and be replicated in other countries in the MENA region. “This will enable MSEs to access a much broader range of financial services and better quality services. As a result, MSEs will be able to manage risk more effectively, secure lower risk sources of finance, and reduce transaction costs and payment delays,” she added.
The project is comprised of two main components: (i) a line of credit for microenterprises; and (ii) a line of credit for small enterprises. For the first component, the line of credit will be channeled through banks and NGOs (and potential MFIs). The second component of the small enterprise finance will be channeled through direct bank lending through branch networks, and bank linkages with NGOs and potential small enterprise finance companies set-up under a new microfinance regulation.