Econostrum | Economic News in the Mediterranean

Egypt – Better access to banks for top SMEs

Written by Laeticia Moreni on Monday, October 5th 2015 à 10:39 | Read 739 times

The report entitled "Business and SMEs' access to financing: is there a link?" drawn up by Hala El-Said, Mahmoud Al-Said and Shahir Zaki underlines that, despite the banking reforms initiated in Egypt in 2004, SMEs' access to sufficient and appropriate financing remains limited. This represents a handicap for them in international markets, with only 6% of SMEs exporting their products or services.

Those businesses with access to bank services are 1.8 times more likely to export. F Dubessy
Those businesses with access to bank services are 1.8 times more likely to export. F Dubessy

The report, being presented at the workshop organised by FEMISE, AMSE and the GDRI on 6th October in Aix-en-Provence, looks at the correlation between the internationalisation of small and middle-sized enterprises (SME) and access to financing. In it, the authors demonstrate that an SMEs chances of exporting is highly dependent on the arrangements they have with the banks and the bank services used.


Those businesses with access to bank services are 1.8 times more likely to export. For those that use a credit organisation, this ratio climbs to 5 to 1.


The study also takes into account other factors such as the business's maturity, its geographic location and its capital. "Only 1.8% of SMEs with a capital of less than EGP250,000 (US$30,000) export"; the greater the capital, the more export activity rises. Size also appears to be a crucial factor. The report points out that, in Egypt, "an SME employs fewer than 10 people on average, whereas most exporters employ more than 50".



To grow and begin exporting, SME's face a number of financing problems due to a lack of trust and endless red tape. The researchers therefore recommend a simplification of both administrative procedures and the access to financial information.


The stakes are high, since efficient and accessible financial services would allow Egyptian companies to make inroads into international markets and provide an outlet for Egyptian goods and services.


Hala El-Said, Mahmoud Al-Said and Shahir Zaki are campaigning for more Egyptian SMEs to be included in the multinationals' supply chains to allow them to benefit from more efficient technologies and business models, thus enhancing their international competitiveness.


Find out more on the "Firms and Globalisation" workshop.



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