Egypt: Al Baraka Bank mobilizes $50 million to strengthen its SME loan portfolio

(Ecofin Agency) – Following the signing of a loan agreement with the IFC, Al Baraka Bank Egypt plans to increase its exposure to SMEs in the technology, transportation and health sectors. The initiative will help support these SMEs which face a financing gap of nearly $71 billion in Egypt.

The Islamic bank listed on the Egyptian stock exchange, Al Baraka Bank Egypt, concluded on Monday, December 4, 2023, a financing agreement for an amount of $50 million with the International Finance Corporation (IFC).

This credit line is slightly below the $55 million that the IFC had initially planned to invest in this Egyptian commercial bank. The financing will support the expansion of its lending portfolio to micro, small and medium enterprises (MSMEs) as well as women-led SMEs.

Al Baraka Bank Egypt, whose largest shareholder, with 73.68% of shares, is the Bahraini investment group Al Baraka Banking Group (ABG), intends to increase its exposure to companies in the technology, transport, communication and of health. At least 25% of the bank’s loans will be reserved for women-owned SMEs.

The establishment, which created in 2022 a specific division dedicated to financing SMEs, claims to have increased its financing portfolio for these companies by 51%, to reach 4.6 billion Egyptian pounds in 2022 compared to 3 billion Egyptian pounds in 2021.

In Egypt, the financing gap for MSMEs is estimated at $71 billion, according to data cited by the IFC. This situation hampers their growth, the contribution of which to the economic development of the country is significant.

“Through increased access to finance, MSMEs can grow their businesses and build stronger communities… By also supporting women-owned small businesses, we are investing in the future of the Egyptian economy,” said Cheick-Oumar Sylla, IFC regional director for North Africa and the Horn of Africa.

Please note that this financing agreement is the second concluded between the IFC and Al Baraka Bank Egypt this year. The international financial institution had already committed a few months ago to supporting the export trade financing activities of Al Baraka Bank Egypt’s clients.

Chamberlain Moko