CAIRO/WASHINGTON D.C., April 4, 2004—
The North Africa Enterprise Development (NAED), a regional small and medium
enterprise business development facility program managed by the International
Finance Corporation, convened a one day conference today in Cairo, “Making
SME Banking Profitable”. IFC, the private sector arm of the World Bank
Group, held the conference in partnership with the Egyptian Banking Institute
of the Central Bank of Egypt. Some 250 commercial bankers, government officials,
and representatives of Egypt’s donors attended the conference, held under
the patronage of H.E Farouk Abd El Baky El Okdah, governor of the Central
Bank of Egypt.
The conference focused on raising awareness of profitable SME banking practices
among Egyptian banks, and included the key findings of a market research
study on SME banking, carried out by NAED. The conference also addressed
topics such as international benchmarking in SME banking, policies and
practices that contribute to sound risk management, and the importance
of credit bureaus as a source of SME financing.
The conference highlighted ways to increase the profitability of SME lending
and featured best practices that have allowed banks in other developing
countries to target the small business market more effectively. Most Egyptian
banks have traditionally focused on corporate banking. As corporate banking
has become increasingly competitive, though, and margins have shrunk, some
of those banks have successfully diversified into the retail market. But
the middle market, straddling the corporate and the retail banking markets,
namely small businesses, remains underserved. Most commercial banks view
small business lending as unprofitable, owing to distortions stemming from
government and donor-subsidized financing schemes and from the perception
of the market as a high-risk, high-cost business.
NAED (www.ifc.org/sme)
is the first small business development facility in the Middle East and
North Africa region and is managed from IFC’s headquarters in Cairo, with
IFC offices in Algiers and Rabat as well. It is a five-year $20 million
technical assistance program for small businesses, co-funded by IFC and
donor countries, including Belgium, France, Italy, and Switzerland. NAED’s
key objective is to foster job creation by supporting the development of
small businesses in Egypt, Algeria, and Morocco - the bedrock of all those
countries’ economies. Helping financial institution put in place the right
products and practices to encourage greater access to credit for SMEs is
the main focus of NAED. In September 2003, NAED began providing technical
assistance to Commercial International Bank (CIB), Egypt’s largest private
sector bank, which included help with improving the quality of the banks’
business operations
The Egyptian Banking Institute undertakes a wide range of awareness raising
activities, aimed at member banks, academics, researchers, and government
officials. EBI awareness-raising activities include annual conferences,
seminars, lectures and monthly forums. These are organized on a wide range
of banking and financial related subjects exploring topics related to banking
in particular, and the financial sector generally.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people's lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC's worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.
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