Access of SMEs to Finance in Egypt

Assignment Description: The Government of Egypt has made access to finance for SMEs a top priority: access to finance for SMEs has been identified as one of the pillars for the second phase of banking reform led by the Central Bank of Egypt and is an area which can provide the next wave of growth in commercial banks' lending. Access to credit for SMEs appears very limited and access to banking services by the large relatively poor population appears low by international standards. Currently, SME lending is underrepresented in total banking assets accounting for not more than 6% of all lending despite some banks having established, or are in the process of establishing SME finance as a separate business line. Out of an estimated 2.5 million SMEs in Egypt, around 40% are registered and less than 10% are 'bankable'. The rate of development of the sector will depend on greater market acceptance of SME clients by a broader range of large local banks and on their adoption of new methodologies and appropriate credit procedures which would make lending to SMEs profitable. The European Bank for Reconstruction and Development (the "EBRD" or the "Bank") would like to designate a consultant (the "Consultant") to work with the EBRD project team, the Egyptian Banking Institute (EBI) and commercial banks to develop a curriculum for the proposed one-day 'Access of SMEs to Finance' workshop and conduct a series of workshops. It is envisaged that up to six commercial banks will participate in the programme and up to five workshops conducted with branches of each of participating banks. The workshops will be tailor-made for each bank on the basis of their current segmentation / lending requirements to SMEs with Consultant undertaking a gap analysis between commercial banks  requirements in terms of their existing lending policies and procedures and the availability of information, skills and expertise on the SMEs side. The geographic location of the workshops will be agreed with individual banks on a case by case basis but it is anticipated that they will have a reasonable geographic spread. On the SME side, workshops will be targeting Chief Financial Officers and other executive and management staff. On the banks' side, sales and underwriting departments will be among the target group and also participate as speakers on selected topics. The Consultant will structure the agenda of the workshops, prepare necessary materials, present particular topics, and facilitate workshop discussions. A draft agenda for a typical workshop may look as follows   and should be fine-tuned for each individual event or bank, as appropriate: a) Introductory remarks (host bank, EBRD representatives, EBI, Consultant) b) EBRD presentation on Small Business Support Programme c) Host bank presentation: bank organisation, SME strategy, target groups, products and loan criteria.  The presentation may cover some of the practical aspects of loan application process, such as what type of business formation and accounts documentation might be required, bank's security/collateral requirements, other lender s and regulatory requirements etc, loan appraisal process, agreements to be formed at loan issuance stage and documents required, process timelines, etc.; d) Discussion session: SMEs to ask questions on preparing loan proposals, loan assessment criteria, where to seek additional information, etc. e) Finance mini-seminar for SMEs, which may include the following subjects (in consultation with the host bank): Business strategy Creating a business plan Developing a sales and marketing strategy Improving operational and financial management Budgeting, financial controlling and anticipating financial needs: Creating budgets and cash flow projections; Follow up on deviations from the planned budgets; Choosing the right financial products to solve temporary or permanent financing needs Outlining practical differences between working capital, trade finance, term lending and other products, etc.; Calculating the financial benefit of the investment (NPV, IRR); Discussion session Conclusion.   In preparation for workshops, the Consultant will also discuss with banks their environmental and social policies (internal organisation, lending risk-management perspective, target groups (gender aspect to be specifically explored), guide banks to EBRD resources as may be necessary and subsequently summarise the findings for EBRD. Respective subjects may also be addressed during workshops subject to interest of participants. Training materials and reports will be prepared in English and the workshops will be conducted in English.