The international Finance Corporation (IFC) has released a $100 million loan to the Arab African International Bank (AAIB) in Egypt, in support of small and medium enterprises (SMEs).
A press release from the organisation explained that the loan is to aid the bank scale-up its lending operations to SMEs and build its sustainable energy finance portfolio in response to increased energy bills for many companies and SMEs.
Splitting the funds
About $50 million will be earmarked for SMEs to support the bank’s strategy to significantly increase its lending to smaller businesses. Read more…
While the remaining $50 million will be earmarked for introducing credit lines that support energy efficiency, helping businesses that need to make capital investments to refurbish or renovate existing operations to reduce energy costs.
CEO and Vice Chairman of AAIB, Hassan Abdalla, commented: “Small and medium enterprises are at the heart of driving economic growth so we are delighted to be able to continue to expand our lending to these businesses.”
“We are also looking forward to expand our services by offering new SEF products to help our clients reduce energy costs, improve their competitiveness, and help mitigate climate change,” Abdalla added.
IFC targets to grow SMEs
According to the IFC, the SME sector accounts for approximately 25% of Egypt’s GDP and about 75% of total private sector employment.
Despite this, a significant number of SMEs remain outside formal channels, with SMEs loans representing only around 5-10% of total lending. Read more…
“While micro, small and medium enterprises (MSMEs) continue to play a dominant and increasing role in creating jobs in Egypt , access to finance remains a significant challenge for many,” IFC regional director for the Middle East and North Africa, Mouayed Makhlouf, said.
Makhlouf also noted: “This loan will help a strong bank increase its reach to smaller businesses and encourage other financial institutions to follow suit, while also helping to boost energy efficiency in Egypt.”
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