HDB Focuses On 4 Major SME Sectors

By klaireaustria

Dec 05, 2016 06:21 PM EST

The Housing and Development Bank (HDB) through its chairman Fathy El-Sebai focused on financing four major sectors of small- and medium-sized enterprises (SME), which include the medical, agriculture, food, and energy sectors.

Abou Hamed, HDB Vice-chairpersonsaid the bank has established criteria to select customers, giving it a clear vision and a complete picture of how to reach customers and SMEs everywhere. The bank funds microenterprises through companies and associations specialised in dealing with these kinds of projects, he said.

Abou Hamed noted that the cost to reach the owners of these projects is very high, as a large number of customers must be reached in the countryside, such as in small villages and hamlets.

The bank will focus on other economic sectors in the upcoming period, including the industrial sector, particularly medicine, food, and petrochemical industries, Abou Hamed said. Any other industries that direct a large part of its production for exports or industries that replace imports are also being considered.

Abou Hamed explained that, for the first time, the bank intends to finance agricultural activity in its various forms, the agricultural industry in particular, so as to serve the economy as a whole. It came during a press conference held by the leaders of HDB last week on the sidelines of the graduation ceremony of the first batch of the bank's employees who received a course in "credit and financing of SMEs" in collaboration with the FA Group company headed by former BE governor Mahmoud Abou Eloyon.

According to El-Sebai, the bank believes that SMEs form a huge sector, which includes millions of projects, but its financial coverage is very limited. Despite the sector's great role in Egypt's development, it has not attracted enough attention from government agencies which grant approvals, licensing, and trade records as well as other measures.

Fathy El-Sebai likewise stressed that the CBE initiative launched in January 2016 is very important in order to provide funds for this sector at a low cost, particularly after interest rates rose dramatically following the flotation of pound.

He said that the bank always seeks to benefit from the huge data base owned by the Social Fund for Development (SFD) and the Egyptian Banking Institute regarding the SME sector. It is also very important to convince the owners of these projects to enter into the formal market, because many of them still prefer to work outside this market.

El-Sebai revealed that the bank's mortgage portfolio amounted to EGP 3.2bn at the end of November.

He continued that the bank injected EGP 2bn under the CBE initiative to finance the housing projects for low- and middle-income individuals. About 24,000 people have benefited from this funding. The HDB also injected roughly EGP 1.2bn in other mortgage projects away from the CBE initiative.

Sebaey predicted the real estate sector will be affected by the flotation of the pound and the increase of interest rates at banks; however, this effect would be temporary until the market absorbs these increases in real estate prices.

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