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Egypt has been striving to tap into its economic potential and create opportunities for sustainable growth. Egypt's economic landscape is characterized by the significant contribution of by micro, small, and medium-sized enterprises (MSMEs) to its economic performance. However, these entities have faced challenges in accessing financing from traditional banking institutions, inhibiting their growth potential. Despite an increase in the overall volume of loans to the private sector, the Central Bank of Egypt (CBE) notes that the pace hasn't kept up with the overall economic growth. To overcome this hurdle, the Egyptian government's strategic framework, "Egypt Vision 2030" highlights the pivotal role of MSMEs in driving economic growth.
As part of its commitment to catalyze economic development, AFC is involved in four distinctive projects that aim to bolster the financial sector and agribusiness in Egypt. These initiatives not only align with the country's strategic vision for 2030 but also address critical challenges faced MSMEs and the agricultural sector.
Empowering MSMEs through Microfinance
Funded by KfW, we are collaborating with the Micro Small Medium Enterprise Development Agency (MSME-DA) to conduct a feasibility study for a microfinance credit line. With a focus on disadvantaged regions and specific thematic windows— female entrepreneurship and green microfinance projects— our team analyzes the microfinance sector's viability and proposes a project design. Through market analysis, champion identification, capacity assessment, this initiative aims to provide a comprehensive solution that enables MSMEs to access vital microfinance services.
Another KfW project on MSME financing “Innovation, Startups, and Microfinance in Egypt” which we just completed in cooperation with MSME-DA, was perceived quite successful by KfW. “[…] I would like to extend the gratitude of the team at KfW for your excellent work and good cooperation. It has always been very insightful hearing from you on the project’s progress and on the changes in the environment of the project”, comments Alexander Haug, KfW Portfolio Manager, Financial Systems, Education, Governance - North Africa.
Enhancing Financial Inclusion through Risk Management Instruments
Also financed by KfW, AFC is working in partnership with the Credit Guarantee Company Egypt (CGC-Egypt) to prepare a financial cooperation project that aims to develop risk management instruments, including credit guarantee mechanisms, for MSMEs. By offering guarantees to financial institutions, this initiative ensures secure lending practices to MSMEs, promoting their access to finance. Our feasibility study for these risk management instruments will encompass comprehensive analyses of the financial inclusion framework, due diligence of CGC-Egypt, project design, and suggest accompanying technical assistance components. Ultimately, the goal is to increase financial inclusion for MSMEs and young entrepreneurs, propelling Egypt's economic growth.
Value Chain Financing for SMEs
In partnership with GIZ, we are facilitating the "Private Sector Development and Innovation: Value Chain Financing in Egypt" project. The aim is to improve SMEs' access to finance by enhancing their understanding of value chain finance (VCF). Through tailored training, technical assistance, and master classes, we are equipping Egyptian financial institutions, SMEs, and Business Development Service providers with the knowledge needed to engage effectively in VCF. By strengthening both the supply and demand sides of value chain financing, this project is poised to empower SMEs across various sectors and contribute to Egypt's economic prosperity.
Cultivating Agribusiness Innovation
In the backdrop of Egypt's crucial agricultural sector, we are implementing the "Start-Ups in Agribusiness: Ideation, management, funding" project, also commissioned by GIZ. This initiative recognizes the need to strengthen agricultural value chains and foster agribusiness growth to ensure food security and resilience. By sensitizing startups and early-stage businesses to the potential of the agribusiness sector, offering targeted training in business development and management, and providing access-to-finance support, this project aims to drive innovation and growth in the sector. This not only enhances agribusiness efficiency but also contributes to Egypt's economic stability.
By addressing challenges in the financial sector and agribusiness, we are aiming to contribute to Egypt's economic growth and sustainability. Whether it's by enhancing financial inclusion for MSMEs, enabling access to value chain finance, empowering microfinance for underserved segments, or fostering agribusiness innovation, each project has a unique role to play in Egypt's transformative journey. Through collaboration, innovation, and strategic alignment with national goals, we are committed to unlocking Egypt's economic prosperity.
For further information please contact Mareike.Decker [at] afci.de or Vladislav.Nimerenco [at] afci.de.