Unlocking Egypt's SME potential will take time

Subject

Nurturing SME growth in Egypt.

Significance

Financing and supporting small and medium-sized enterprises (SMEs) has emerged as a key priority for Egyptian policymakers. With the sector accounting for 80% of both GDP and formal jobs, a number of government institutions are reinforcing their support through financing and focus. External players, from development institutions to venture capital and private equity, are also looking to play a role. However, the sector faces numerous operational constraints that, if left unaddressed, threaten to inhibit its growth and its potential for job creation, reduce fiscal pressures and stimulate private sector growth.

Impacts

• Easing constraints on bank lending will help tackle SMEs' financing problems.
• SME growth could provide a much-needed improvement in the sourcing of fiscal revenues.
• SME financing is often targeted at rural areas and disenfranchised populations such as women, helping the fight against poverty.
• SME growth will be a key component of the broader economic recovery the government is seeking to shore up political stability.