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IFC Pioneers Credit Scoring and Management Training for Small Businesses in Egypt


In Washington:
Ahmed Badawi-Malik

Phone: +1 (202) 458-7148

Fax:      +1 (202) 974-4384

Email:
Abadawi@ifc.org

In Cairo:

Ghada Teima

Phone:  + 20 2 579 5912

Fax:      + 20 2 579 6447

Email:
Gteima@ifc.org


WASHINGTON, D.C./CAIRO, July 1, 2004 — North Africa Enterprise Development (NAED), a technical assistance program managed by the International Finance Corporation, today signed two advisory services agreement to implement a credit scoring model and a management training program for the Alexandria Businessmen Association (ABA), Egypt, to serve its micro-finance and small business operations.

The first advisory mandate of IFC, the private sector arm of the World Bank Group, aims to help ABA manage growth by improving its risk management framework, leveraging its customer knowledge, and enhancing the operational efficiency of ABA. The implementation of credit scoring will allow ABA to streamline its loan appraisal process, increase the application acceptance rate, and monitor its loans portfolio better.


Lisim, based in Bogotá, Colombia, has been selected by ABA – with advice from NAED - to develop the credit-scoring model. Lisim specializes in credit scoring with a strong focus on microfinance institutions, and it has extensive experience in this field throughout Latin America.


Under the second advisory mandate, IFC will provide ABA with its range of management training products ‘Business Edge’, which are designed for training entrepreneurs of small and medium business in various management skills. These include marketing, finance and accounting, human resource management, and labor productivity.


Nabil El Shami, Executive Director of ABA, said, “To our knowledge, and with IFC’s assistance, ABA will be the first NGO in the region to introduce microfinance credit scoring to its operations. This will help us to extend more loans but still maintain our excellent portfolio quality.” Sami Haddad, IFC Director for the Middle East and North Africa, added, “I am very pleased that through IFC’s global network NAED can transfer knowledge and best practices in microfinance from Latin America to Egypt.”


ABA is the leading microfinance institution in Egypt. It has operated since 1990, and currently has 27 branches throughout the country, and 600 field staff. ABA operates in five governorates: Alexandria, Masra-Matrouh, Menoufa, Kafr El Sheikh, and Behira. ABA serves 26,000 enterprises, each employing between 1 to 15 workers. It provides these – mainly urban -businesses with individual lending products, with loans averaging the Egyptian Pound equivalent of $350. ABA’s current loan portfolio in the first quarter of 2004 stood at the local currency equivalent of $10 million , serving 23,000 active micro and small business clients.


NAEDis 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, cofunded by IFC and donor countries, including Belgium, France, Italy, and Switzerland. NAED’s key objective is to foster job creation in Egypt, Algeria, and Morocco by supporting the development of small businesses -- the bedrock of all those countries’ economies. Increasing the access of micro, small and medium enterprises to finance by helping local financial institutions implement the right products and methodologies to meet this need is a main area of activity of NAED.

The mission of IFC 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.