The North Africa Enterprise Development (NAED), a regional small and medium enterprise business development facility program managed by the International Finance Corporation (IFC), recently 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 the governor of the Central Bank of Egypt, Farouk Abd El Baky El Okdah.
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 is the first small business development facility in the Middle East and North Africa (MENA) 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. — (menareport.com)
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