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.
