Egypt: AfDB Approves US$ 88 Million Loan and Grant to Finance Micro and SMEs

Tunis, 11 October 2006 – The Board of Directors of the African Development Bank (AfDB), on Wednesday in Tunis, approved a loan and a grant amounting to US$ 88.04 million, to finance a project in support of micro and small enterprises in Egypt. The resources will be managed by a Social Development Fund (SDF).
The project will address constraints in the funding of Micro and Small Enterprises (MSEs) and development in Egypt through a holistic approach focusing on helping commercially viable micro and small enterprises gain better access to financial services for their working and investment capital needs. It is also geared to helping the SDF play a catalytic role in improving the business and regulatory environment for MSE growth and development by funding and organizing policy dialogue workshops. The third objective of the project is to provide capacity and institutional development support to SDF, and selected financial intermediaries, as well as strengthen business development services for start-up and existing MSEs, thereby helping them to improve performance.
The broader objective of the project is the promotion of rapid economic growth and poverty reduction, through the creation of sustainable jobs and higher income-generating opportunities for the economically active poor.
The project will have two components, a line of credit (LOC) and the provision of technical assistance. The LOC of US$87,150,000 is a long-term ADB loan to the Egyptian government for on-lending to SDF on the same terms and conditions of the loan agreement between the ADB and the government. The SDF will provide these resources to commercially viable micro and small enterprises for working and investment capital needs, either directly or through selected intermediaries. Under the technical assistance component, the Bank will provide assistance at three levels: (i) macro level, (ii) meso (institutional) level, and (iii) micro (enterprise) level.
The project will focus on the following strategic outputs:
· Support over 18,000 small enterprises and 60,000 micro enterprises as well as create over 100,000 jobs over the 5-year period;
· Develop the SDF and its partner intermediaries’ (Banks, NGOs, etc.) institutional capacity to support and sustain the activities of the MSE sector;
· Influence national policy formulation process for the creation of a simpler regulatory and operational environment that will enable the MSE sector to survive and continue to grow and expand.
The ADB Group began operations in Egypt in 1974. To date, the Bank’s commitments in the country amount to US$ 2.24 billion in 69 projects.
* 1UA = 1.47637 US$ = 8.50978EGP as at 11/10/2006