Small and Medium Enterprises in Egypt: New Facts from a New Dataset

Full text

Journal of Business and Economics, ISSN 2155-7950, USA
February 2014, Volume 5, No. 2, pp. 142-161
 Academic Star Publishing Company, 2014
http://www.academicstar.us
142
Small and Medium Enterprises Landscape in Egypt:
New Facts from a New Dataset*
Hala El-Said, Mahmoud Al-Said, Chahir Zaki

(Faculty of Economics and Political Science, Cairo University, Cairo, Egypt)
Abstract: Small and medium sized enterprises (SMEs) have usually been perceived as a dynamic force for
sustained economic growth and job creation in developing countries. In Egypt, despite banking reforms that have
been launched in 2004, the ability of SMEs to more easily access suitable and sufficient means of finance has
always been considered a major obstacle facing many SMEs. For this reason, and in order to be able to extend the
financial services provided to this segment and increase the benefits of the banking reform, the Central Bank of
Egypt launched in December 2008 an initiative, as an integral part of the Second Phase of the Banking Sector
Reform Program (2008-2011), to enhance SMEs access to finance and banking services. In this paper, we present
a descriptive analysis of the SMEs landscape in Egypt relying on this extensive census. The main findings of the
census show that there is a high concentration of SMEs at different levels. First, the geographical distribution of
SMEs is significantly skewed since almost half of them are concentrated in three governorates Sharkeya, Cairo
and Gharbeya. Second, they are chiefly operating in two economic activities, namely manufacturing and trade.
Third, a very few firms are exporting. Finally, financial services seem to be under-utilized by SMEs as only 50
percent are dealing with banks and benefiting from an improved access to finance.
Key words: SMEs; access to finance; Egypt
JEL codes: D2, G21, P42
1. Introduction
Micro, small and medium sized enterprises (SMEs) have usually been perceived as a dynamic force for
sustained economic growth and job creation in developing countries. From a social viewpoint, SMEs secure
livelihood for a large and ever expanding segment of the population. In Egypt, there are around 2.5 Million SMEs
representing 75% of the total employed workforce and 99% of non-agricultural private sector establishments.
Despite their importance, they are still facing several problems, in particular access to finance which a typical
challenge in developing countries. In fact, 70% of non-OECD countries report SME financing gap compared to 30%
in OECD ones. Therefore, reducing this SMEs financing gap in low-income countries should increase the
* An empirical version of this paper entitled “Access to Finance and Financial Problems of SMEs: Evidence from Egypt” in the
International Journal of Entrepreneurship and Small Business, Vol. 20, No. 3, pp. 286-309.
Hala El Said, Professor of Economics and Dean of the Faculty of Economics and Political Science, Cairo University; research
areas: financial sector, privatization and economic reform. E-mail: hala.elsaid@feps.edu.eg.
Mahmoud Al-Said, Associate Professor of Statistics, Cairo University; research areas: statistics and quality control. E-mail:
mamahmou@yahoo.com.
Chahir Zaki, Assistant Professor of Economics, Cairo University; research areas: international trade, modeling and
macroeconomics. E-mail: chahir.zaki@feps.edu.eg.

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
143
incentive of SMEs creation and consequently improve economic growth and increase job creation. In addition,
improving the access to finance of SMEs is significantly important in promoting entrepreneurship and innovation.
In Egypt, despite banking reforms that have been launched in 2004, the ability of SMEs to more easily access
suitable and sufficient means of finance has always been considered a major obstacle facing many SMEs (Egyptian
Banking Institute, 2009). It is worthy to mention that, from a supply point of view, the majority of banks are
becoming more risk averse towards SMEs, especially due to a wide spread notion that financing SMEs is risky and
that serving them requires high transaction costs which makes them less profitable than larger companies (El Said
et al., 2013).
For this reason, and in order to be able to extend the financial services provided to this segment and increase
the benefits of the banking reform, establishing a database for SMEs to serve bankers as well as policy makers
seems to be an important priority. Hence, the Central Bank of Egypt launched in December 2008 an initiative, as
an integral part of the Second Phase of the Banking Sector Reform Program (2008-2011), to enhance SMEs access
to finance and banking services. In this respect, and due to the importance of the availability of timely and
accurate information, the Central Bank of Egypt (CBE) and the Egyptian Banking Institute (EBI) commissioned
the Central Agency for Public Mobilization and Statistics (CAPMAS) to conduct an SME nation-wide census,
fully focusing on value added formal economic activities on a full census basis. The Center of Surveys and
Statistical Applications (CSSA) at the Faculty of Economics and Political Science, Cairo University undertook the
project on- site quality control. This survey includes quantitative and qualitative characteristics of each company
or unit. This includes identifying the number of employees, legal status, economic activity, level of exports, sales
turnover, invested capital and the problems facing each company in dealing with banks, etc.
The descriptive analysis of this paper is largely inspired from a companion paper (El-Said et al., 2013) in
which we conduct an empirical analysis of the determinants of access to finance of SMEs in Egypt. Yet, the
contribution of this paper is that it provides a much more detailed descriptive analysis at several fronts: access to
finance, exports, regional location, economic sectors and factors of production. The main findings of the census
show that there is a high concentration of SMEs at different levels. First, the geographical distribution of SMEs is
significantly skewed since almost half of them are concentrated in three governorates (Sharkeya, Cairo &
Gharbeya). Second, they are chiefly operating in two economic activities, namely manufacturing and trade. Third,
a very few firms are exporting. Finally, financial services seem to be under-utilized by those firms as only 50
percent are dealing with banks and benefiting from an improved access to finance. It is worthy to mention that
those financial services are also concentrated in the same governorates and the same economic activities that have
been mentioned above.
The paper is organized as follows: Section 2 presents some stylized facts regarding the banking sector reform
in Egypt. Section 3 shows the questionnaire design. Section 4 presents a landscape of SMEs characteristics using
the firm-level data that have been collected. Section 5 focuses on SMEs and their access to finance. Finally,
section 6 concludes and presents some policy implications.
2. Banking Reform in Egypt
The Central Bank of Egypt in 2004 adopted a reform program that aims at building solid infrastructure and
more efficient and sound banking sector. Although the global financial crisis led to many negative repercussions
on several world economies, the Egyptian banking sector weathered the negative repercussions due to the

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
144
successful reform program that have launched in 2004. Indeed, as it was mentioned by the World Bank (2009)
“the Egyptian financial sector is the most far reaching, substantive and comprehensive drive toward financial
sector strengthening so far in Egypt-and indeed in any other country of the Middle East and North Africa region”.
This reform has been implemented in two phases. The first phase had three main pillars: first, strengthening
the legal, regulatory and supervisory framework; second, consolidating the banking sector and increasing private
participation within banking assets and finally the financial, operational and institutional restructuring of
public-sector banks. Those reforms led to a robust, solid and well capitalized banks (see Table 1), as banks
decreased from 57 to 39; assets increased by 88% to reach EGP 1.1 billion in 2008 up from EGP 0.57 billion in
2003; total deposits increased by 85% over the same period; capital adequacy ratio increased from 12.2% to reach
15.1% and total net worth increased by more than 100% from EGP 32 billion to EGP 75 billion.
Table 1 Banking Aggregates before and after 2004 Reform
LE million (as at June) 2003 2008 % change
Total Assets 577,938 1,083,311 + 87.7%
Total Deposits 403,144 747,199 + 85,3%
Loans & Discounts 284,722 401,425 + 41.2%
Capital & Reserves 29,960 53,436 +82.7%
Source: Central Bank of Egypt.
The second phase of the banking sector reform program that started in 2009 aims at deepening the Egyptian
banking sector and enhancing its efficiency and competitiveness through enhancing Access to Financial Services,
continuing the strengthening of the regulatory and supervisory framework through the implementation of Basel
II/III and enhancing the implementation of Corporate Governance rules and regulations. Those reforms increased
the loans-deposits ratio reaching 54%, average loans-GDP ratio reaching 49.4% and average deposits-GDP ratio
reaching 90%. Those figures are much higher than the world average in 2008.
Yet, despite this significant improvement at the macroeconomic level, there is still a challenge related to the
access to finance, especially for SMEs. Figure 1 shows that, in non-OECD countries, bank’s primary target is
large enterprises that represent only 1 percent of total firms. By contrast, micro-firms, though representing around
70 percent of total firms, get merely credit or financial services from banks.
Figure 1 Business Landscape in Non-OECD Countries
Source: OECD, 2011.
Micro-Enter
p
rises
Small Enterprises
1%
5-10%
20%
65-75%
Corporate, Multinational and
Large Enterprises Bank’s Primary Target
Medium Enterprises
Micro Finance Institutions

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
145
For this reason, and in order to be able to extend the financial services provided to this segment and increase
the benefits of the banking reform, establishing a database for SMEs to serve bankers as well as policy makers
seems to be an important priority. Hence, as it was mentioned before, the Central Bank of Egypt launched in
December 2008 an initiative, as an integral part of the Second Phase of the Banking Sector Reform Program
(2008-2011), to enhance SMEs access to finance and banking services. The next section provides more details
about this census.
3. Questionnaire Design
3.1 Structure
The questionnaire includes four main categories of questions.
First, it contains some general information regarding the legal status of the firm (whether it is a partnership, a
limited liability firm, branch of a foreign firm, sole proprietorship, etc.). In addition, since only formal firms are
taken into account, the interviewee should mention the number and the date of his industrial and commercial
registration.
Second, it includes some information related to the firm endowments, such as the number of workers (less
than 20; from 20 to 34; from 35 to 50 and more than 51) and the value of the capital.
Third, the questionnaire is categorizing firms according to the sales turnover which is the variable banks
consider the most while giving loans. In addition, this section includes some questions showing whether the firm
exports or not, the destination of exports (Arab countries, African countries, other) and the share of exports to total
sales (less than 25%, from 25 to 50% and more than 50%).
Fourth, the questionnaire contains a final module on access to finance by asking the interviewee:
 whether she/he deals with banks or not,
 whether she/he benefits from some banking facilities or not,
 whether she/he faces problems with banks or not and if yes, she has to determine the type of the problems
(high interests, commissions and administrative expenses; banks ask for a lot of collaterals; procedures are lengthy
and complicated; banks ask for a lot of documents; others)
3.2 Scope
The census covers all SMEs in Egypt, identified here as every company or economic activity:
 That is formally registered: therefore we exclude informal firms which represent almost 20 percent in Egypt
 That employs five employees or more.
 That has a significant economic value added: thus activities of limited economic value added have been
excluded, namely Barber shops, beauty salons and kiosks were excluded from the survey.
In other words, three filters have been taken into account in order to include only registered firms with more
than 5 employees and having a significant value-added. Based on these criteria, the census ended-up by including
around 36,492 firms.
3.3 Methodology
First, it is worth to mention that the framework used is that developed by the Central Agency for Public
Mobilization and Statistics (CAPMAS) in 2006 adding new establishments and excluding activities of limited
economic value added. Second, the primary data was obtained through conducting face to face interviews with
SMEs, using a well-structured questionnaire designed jointly by Central Bank of Egypt (CBE)/Egyptian Banking

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
146
Institute (EBI) committee in consultation with an experienced statistician to measure both quantitative and
qualitative factors. The census was done through seven phases to guarantee the quality of the collected data
 Pre-testing the questionnaire: A pretest of the questionnaire was conducted to a sample of SMEs in “El
Qualiobia” governorate whereby some modifications and repositioning of sequence of questions was made
according to the pretest results.
 Training of CAPMAS researchers: Extensive training sessions were conducted to all CAPMAS field
researchers to ensure their understanding of the questionnaire and the approach in conducting the interviews. The
training was conducted jointly by CAPMAS and the Center of Surveys and Statistical Applications (CSSA) at the
Faculty of Economics and Political Science under the supervision of CBE and EBI.
 Pilot: After collecting the data of the pilot (that was conducted in “El-Sharkia” governorate in April 2010) the
data collected was analyzed, verified and validated, accordingly, some activities of limited economic value added
were excluded throughout the survey.
 Collecting the data: Data was collected through face-to-face interviews conducted by CAPMAS researches
using the developed questionnaire.
 Quality control: Two different quality control teams were assigned to ensure the validity and accuracy of the
data collection process
 On-site QC: Undertaken by the (CSSA) that was responsible for monitoring and controlling the process of
data collection in the field on a daily basis.
 Off-site QC: Undertaken by a joint team from CBE and EBI responsible for verification and quality
controlling the data entry process with random checks.
4. Landscape of SMEs in Egypt
4.1 Legal Form
Figure 2 shows the distribution of SMEs according to the legal form. SMEs adopt chiefly a
sole-proprietorship (that represents almost 60 percent of total firms) given the fact that it is the easiest to be
created. Those firms are owned and run by one individual and in which there is no legal distinction between the
owner and the business. The owner receives all profits (subject to taxation specific to the business) and has
unlimited responsibility for all losses and debts. Its advantages are related to the fact that entrepreneurs have the
ability to limit risk to investors. Sole proprietorships also have the least government rules and regulations affecting
it which fosters their creation by entrepreneurs. The remaining 40 percent are distributed among joint liability,
partnership in commendams, joint stock, de facto, limited liability, limited partnership in shares and subsidiaries.
4.2 Geographical Location
It is worthy to note that SMEs are highly skewed at the geographical level since almost half of them is
concentrated in the three governorates of Sharkeya, Cairo and Gharbeya (see Figure 3). This may be explained by
higher externalities coming from other firms which are located in large governorates that are located in urban
regions. Similarly, access to road and to transportation of goods positively and significantly affects firms’
productivity as they allow firms to better produce and market their products or services to a wider scope of clients.
Finally, since other governorates have not a significant share of SMEs, more attention should be attribute to them
in order to improve their infrastructure and therefore to allow firms to be established there.

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148
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Table 2
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150
4.5 S
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Figure
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. This confir
m
E
s are very
s
that may in
c
o host and d
a
ter chance
o
a
ctivity whic
h
p
orts Perfor
do not perfo
erve only th
e
s
s to financi
a
1.8 percent
o
n
ce the share
l
ion–EGP 30
27.4%
2
a
nd Medium
E
ance at the
D
e
at both th
e
r
ger firms wi
t
v
er. Figure 8
M
Es’ sales ar
e
m
illion does
n
Figure 8
D
Sour
c
er finding re
l
c
an claim th
a
o
r the lowest
G
P 500,000
a
20 and 50
m
w
ith 20-34 a
n
n
to less th
a
c
ent of the fi
r
employees
m
s the missi
n
s
carce, perf
o
c
rease their
p
isseminate n
e
o
f succeedin
g
h
facilitates t
h
mance
rm very wel
e
domestic
m
a
l services. F
i
o
f the firms
h
of exportin
g
million and
m
0.2%
2.0
%
E
nterprises L
a
D
omestic Le
v
e
domestic
t
h more capit
points out t
h
e
less than E
G
n
ot exceed 2
p
D
istribution o
f
c
e: Constructe
d
l
ated to the li
n
a
t the higher
and highest
a
re endowe
d
m
illion have
m
n
d 35-50 e
m
a
n a million
r
ms produci
n
showing th
a
n
g middle st
o
o
rm poorly
a
p
roductivity
e
w technolo
g
g
in cluster
c
h
e spread of
k
l on internat
i
m
arket. Clear
l
i
gure 10 sho
w
h
aving less t
h
g
firms beco
m
m
ore than E
G
%
a
ndscape in E
g
v
el
and internat
i
al and more
l
h
e distributio
G
P 500,000.
B
p
ercent of tot
f
SMEs Accor
d
d
by the author
s
n
k between t
h
the number
categories o
f
d
with less t
h
m
ore than 5
0
m
ployees sinc
e
and millio
n
n
g between E
G
a
t those sma
l
o
ry since mo
s
a
nd consequ
e
is to target
g
ies, training
c
ommunities
k
nowledge a
n
i
onal market
l
y, this may
w
s that the
h
h
an EGP 250
m
es 27.1 and
G
P 30 millio
n
50.4%
g
ypt: New Fac
t
i
onal levels
l
abor are mo
r
n
of SMEs
a
B
y contrast,
t
al SMEs.
d
ing to the Sal
s
using SMEs d
a
h
e number o
f
of employe
e
f
the sales tu
r
h
an 20 emp
0
employees.
e
their share
s
n
to less th
a
G
P 500,000
a
l
l firms are
s
t companies
e
ntly constit
u
clusters esta
b
and marketi
n
owing to t
h
n
d skills wit
h
s since only
b
e explaine
d
h
igher the ca
p
, 000 do exp
o
24.4 percen
t
n
, respectivel
y
Less than
H
Half a Mil
l
Million -
L
t
s from a New
D
is highly d
e
r
e likely to b
e
a
ccording to
t
hose who ar
e
es Turnover
a
taset.
f
employees
a
e
s, the highe
r
r
nover. In fac
t
loyees and
6
Yet, it beco
m
s
in the mid
d
a
n 20 millio
a
nd EGP 1,0
0
more prod
u
are small an
d
u
te a “miss
i
b
lishment.
C
n
g techniqu
e
h
e cluster’s s
h
in the comm
u
6 percent o
f
d
by differen
c
p
ital, the hig
h
o
rt. This fig
u
t
of the firms
y
.
H
alf a Million
lion - Less tha
n
L
ess than 20 M
D
ataset
e
pendent on
e
productive
a
sales turnov
e
e
producing
b
a
nd the sales
r
the sales t
u
t
, 97 percent
6
0 percent
o
m
es more pr
o
d
le categorie
s
n) are signi
0
0,000 (milli
o
u
ctive than t
h
d
between la
r
i
ng middle”.
C
luster locati
o
e
s; moreover
pecializatio
n
u
nity.
f
SMEs exp
o
c
es in factor
h
er the share
u
re increases
having a ca
p
n
Million
illions
their facto
r
a
nd therefor
e
e
r and show
s
b
etween EG
P
turnover, i.e
.
u
rnover. Thi
s
of the SME
s
o
f the SME
s
o
blematic fo
r
s
of the sale
s
f
icantly low
.
o
n-20 millio
n
h
eir mediu
m
r
ge and smal
l
One of th
e
o
ns are goo
d
new policie
s
n
in a certai
n
o
rt, while th
e
endowment
s
of exportin
g
when capita
l
p
ital betwee
n
r
e
s
P
.
,
s
s
s
r
s
.
n
)
m
l
e
d
s
n
e
s
g
l
n

This r
e
employees
a
percent of t
h
firms since
e
Figure
higher the s
a
productive
f
in line with
about their
market. Fol
l
face fixed p
r
to the exit
o
1
Small
a
Figure 9 D
e
mark holds
f
a
nd/or the hi
h
e firms en
d
e
xporting fir
m
12 presents
e
a
les turnover
,
f
irms who se
r
the Melitz
m
future prod
u
l
owing entry,
r
oduction co
s
o
f inefficient
f
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
L
9
7
0%
20%
40%
60%
80%
00%
Les
s
250,0
9
a
nd Medium
E
istribution of
S
Sour
c
Figure 10
Sour
c
f
or both labo
gher the sal
e
d
owed with
m
m
s represent
o
e
xporting vs.
,
the more a
f
r
ve the dome
s
m
odel (2003
)
u
ctivity whe
n
firms produ
c
s
ts, resulting
f
irms whose
L
ess than Half a
Million
7
.1%
s
than
00 LE 250,
0
Le
s
M
1.8%
9
8.2%
E
nterprises L
a
S
MEs Accord
i
c
e: Constructe
d
Distribution
o
c
e: Constructe
d
r (Figure 11
)
e
s turnover,
t
m
ore than 50
o
nly 1.8 per
c
non-exporti
n
f
irm is likely
s
tic market
h
)
of heterog
e
n
making an
c
e with diffe
r
in increasin
g
productivitie
Half a Millio
n
than Mill
i
90.1%
0
00 LE -
s
s than
M
illion
Mil
l
than
11.6%
88.4%
Exp
o
a
ndscape in E
g
i
ng to the Nu
m
d
by the author
s
o
f SMEs by Ex
d
by the author
s
)
and sales t
u
t
he more a
fi
employees
d
c
ent of those
h
n
g firms acc
o
to being an
e
h
ave a greate
r
e
neous firms.
irreversible
r
ent producti
v
g
returns to s
c
s are lower t
h
n
- Less
i
on Milli
o
2
0
56.4
%
l
ion - Less
5 Millions 5
L
e
20.8%
79.2%
o
rting No
t
g
ypt: New Fac
t
m
ber of Emplo
y
s
using SMEs d
a
porting Statu
s
s
using SMEs d
a
u
rnover (Fig
u
fi
rm is likely
d
o export. T
h
h
aving less t
h
o
rding to the
e
xporter. In o
t
r
potential to
According
t
costly inve
s
v
ity levels. I
n
c
ale of prod
u
h
an a thresh
o
o
n - Less than
0
Millions
%
Millions -
e
ss than 15
Millions
1
L
27.0%
73.0%
t
Exporting
t
s from a New
D
y
ees and the S
a
a
taset.
s
and Capital
a
taset.
u
re 12) since
to export.
F
h
is figure is
r
h
an 20 empl
o
sales turnov
e
t
her words,
w
serve intern
a
t
o this mode
l
s
tment decisi
n
addition to
t
u
ction. The f
i
o
ld level, as
t
20 Millions - L
than 50 Millio
n
6
0
1
5 Millions -
L
ess than 30
Millions
3
27.1%
72.9%
D
ataset
a
les Turnover
the higher t
h
F
igure 11 sh
o
r
emarkably l
o
o
yees.
e
r. It is quite
w
e can claim
a
tional one as
l
, firms face
on to enter
t
t
he sunk entr
y
i
xed producti
t
hey do not e
x
ess
n
s
0
.0%
<
2
3
>
3
0 Millions and
More
24.4%
75.6%
151
h
e number o
f
o
ws that 28.
4
o
w for smal
l
clear that th
e
that the mos
t
well. This i
s
uncertaintie
s
t
he domesti
c
y
costs, firm
s
on costs lea
d
x
pect to ear
n
<
20
2
0-34
3
5-50
>
50
f
4
l
e
t
s
s
c
s
d
n

152
positive pro
the continu
u
at a consta
n
exporting a
c
enters expo
r
cover the fi
x
By ob
s
destination
o
countries. S
destination
s
to more tha
n
their produc
Finally
,
Small
a
fits in the fu
t
u
m of varieti
e
n
t markup o
v
c
tivities. Ho
w
r
t markets if
x
ed exportin
g
Figu
r
F
s
erving the
d
o
f SMEs pr
o
econdly, it i
s
s
ince 52.7 p
e
n
two destina
t
tivity, chang
e
,
another fac
t
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
a
nd Medium
E
t
ure. On the
e
s. As each f
i
v
er its margi
n
w
ever, the d
e
and only if t
h
g
costs.
r
e 11 Distrib
u
Sour
c
igure 12 Dis
t
Sour
c
d
estination
o
o
ducts since,
s
worthy to
n
e
rcent of the
e
t
ions. This fi
n
e
their non-e
x
t
or affecting
f
<20
1.8%
98.2%
Less than Half a
Million
0.7%
99.3%
E
nterprises L
a
demand sid
e
i
rm is a mon
o
n
al cost. Th
e
e
cision to e
x
h
e net profit
s
u
tion of SME
s
c
e: Constructe
d
t
ribution of S
M
c
e: Constructe
d
o
f those exp
o
on average,
n
ote that the
e
xporting fir
m
n
ding shows
x
porting stat
u
f
irms exporti
n
20-3
1
3
8
Exp
o
Half a Mil
l
than
M
E
x
a
ndscape in E
g
e
, the agents
o
polist for th
e
re are also
f
x
port occurs
s
generated
fr
s
by Exporting
d
b
y the author
s
M
Es by Expor
t
d
by the author
s
o
rts, Figure
43 percent
o
higher the
c
m
s endowed
to what exte
n
u
s or even he
l
n
g status is r
e
4
3
.3%
6.7%
o
rting Not
E
l
ion - Less
M
illion M
i
3.1%
96.9%
x
porting N
o
g
ypt: New Fac
t
are assumed
e variety it p
f
ixed costs
a
after the fir
m
fr
om its expo
r
Status and N
u
s
using SMEs d
a
t
ing Status an
d
s
using SMEs d
a
13 shows
fi
o
f SMEs goo
d
c
apital, the
m
with a capit
a
n
t boosting
S
l
p them to se
r
e
lated to hav
i
35-50
19.8%
80.2%
E
xporting
i
llion - Less than
Millions
13.5%
86.5%
o
t Exporting
t
s from a New
D
to have Dix
i
roduces, it s
e
a
nd variable
m
s observe
t
r
ts in a give
n
u
mber of Emp
a
taset.
d
Sales Turno
v
a
taset.
fi
rst that Ar
a
d
s and servi
c
m
ore a firm c
a
l of more th
a
S
MEs capital
r
ve several f
o
i
ng access to
>50
28.
4
71.
6
20 20 Milli
o
than 50
M
D
ataset
i
t-Stiglitz pr
e
e
ts the price
o
costs associ
a
t
heir product
n
country ar
e
loyees
v
er
a
b countries
c
es are impo
r
an export to
a
n EGP 30
m
endowment
s
o
reign marke
t
financial se
r
4
%
6
%
o
ns - Less
M
illions
34.4%
65.6%
e
ference ove
r
o
f its produc
t
a
ted with th
e
ivit
y
. A fir
m
e
sufficient t
o
are the firs
t
r
ted by Ara
b
more than
a
m
illion expor
t
s
can increas
e
t
s.
r
vices. Figur
e
r
t
e
m
o
t
b
a
t
e
e

14 shows t
h
productivit
y
b
anking fac
i
5. Ac
c
From
t
government
prefer to e
x
finally, ban
k
it is less ris
k
records, ha
v
less stable,
a
and are les
s
registration,
0
%
20
%
40
%
60
%
80
%
100
%
Small
a
h
at 91.5 per
c
y
and that is
w
i
lities are the
Fig
u
c
ess to Fin
a
t
he SMEs’
p
and interna
t
x
tend credit
t
k
s are much
m
k
y to provid
e
v
e structured
a
re more pro
s
profitable.
license, and
%
%
%
%
%
%
Less th
a
250,000
55
1.
18
.
2
4
A
a
nd Medium
E
c
ent of exp
o
w
hy only lar
g
most produc
Figure 13
D
Sour
c
u
re 14 Distri
Sour
c
a
nce
p
oint of vie
w
t
ional devel
o
t
o large corp
m
ore trust w
o
e
loans for la
r
information,
ne to risk, d
o
They suffer
tax cards) a
n
a
n
LE 250,00
0
Less
t
Mill
.6%
5
3%
.
5%
1
4
.5%
3
A
rab Countrie
s
Other Countri
e
0%
20%
40%
60%
80%
100%
E
nterprises L
a
o
rting firms
d
g
er firms ha
v
tive and ther
e
D
istribution o
f
c
e: Constructe
d
bution of SM
E
c
e: Constructe
d
w
, it is mor
e
o
pment com
m
orate clients
o
rthy than ob
t
r
ger busines
s
are easier t
o
o
n’t have av
a
from some
o
n
d the reliabil
0
LE -
t
han
ion
Milli
o
than 5
5
1.1%
1.5%
1
5.2%
3
2.2%
s
Only
e
s Only
Exporting
91.5%
8.5%
Dealing with
B
a
ndscape in E
g
d
eal with b
a
v
ing more e
m
e
fore are the
f
SMEs by Ca
p
d
by the author
s
E
s by Exporti
n
d
by the author
s
e
difficult fo
m
unities are
and connec
t
t
aining it fro
m
s
es since the
y
o
access, are
a
ilable recor
d
o
ther proble
m
ity of financ
i
o
n - Less
Millions 5
M
Le
s
M
46.0%
3.0%
18.3%
32.7%
N
o
B
anks Not
D
g
ypt: New Fac
t
a
nks. Conseq
u
m
ployees, wit
h
most likely t
o
p
ital and Impo
r
s
using SMEs d
a
n
g Status and
D
s
using SMEs d
a
r
SMEs to
o
focusing m
o
t
ed individu
a
m
other sourc
y
are more st
a
more profit
a
d
s, have uncl
e
m
s such as:
i
al statement
s
M
illions -
s
s than 15
M
illions
1
L
35.3%
2.9%
19.7%
42.0%
African
N
Two or
m
o
t Exporting
44.9%
55.1%
D
ealing with B
t
s from a New
D
u
ently, all t
h
h
a larger ca
p
o
export.
r
ting Country
a
taset.
D
ealing with B
a
taset.
o
btain finan
c
o
re on micr
o
a
ls that are c
es. Yet, fro
m
a
ble, less pr
o
a
ble. By con
t
e
ar informat
i
lack of busi
s
, as well as t
h
5 Millions -
L
ess than 30
Millions
3
38.9%
1.1%
12.6%
47.4%
N
on-Arab Cou
n
m
ore Destinatio
anks
D
ataset
h
ose factors
p
ital and hav
anks
c
ing from b
a
o
b
usinesses;
onsidered le
s
m
the banks
p
o
ne to risk, h
a
t
rast, small b
u
i
on, are diffi
c
ness docum
e
h
e “financial
3
0 Millions and
More
31.9%
2.2%
13.2%
52.7%
n
tries Only
ns
15
3
affect SME
s
ing access t
o
a
nks, as: th
e
banks ofte
n
s
s risky; an
d
p
oint of view
,
a
ve availabl
e
u
sinesses ar
e
c
ult to acces
s
e
nts (such a
s
performanc
e
3
s
o
e
n
d
,
e
e
s
s
e
”

154
represent 7
0
we found th
as shown in
It is w
o
2013), we e
m
above, ther
e
the access t
o
sells (Figur
e
why 18.6 p
e
respectively
firms since
5
respectively
Small
a
0
percent; we
a
at 47 percen
t
Figures 15 a
n
Fi
g
o
rthy to exa
m
m
pirically es
t
e
is a strong
c
o
finance sin
e
s 19 and 20
)
e
rcent and 4
1
deal with b
a
5
9 and 84 p
e
deal with b
a
0%
50%
100%
L
2
5
a
nd Medium
E
a
kness of m
a
t
of SMEs in
n
d 16.
Figure 15
Sour
c
g
ure 16 Dist
r
Sour
c
m
ine the fac
t
t
imate the d
e
c
orrelation b
e
ce that the h
i
)
, the more a
1
.2 of small
a
nks and hav
e
e
rcent of SM
E
a
nk.
Figure 17
D
Sour
c
5
L
ess than
5
0,000 LE 25
0
L
18.6%
81.4%
Have
B
E
nterprises L
a
a
nagement a
n
Egypt do no
t
Distribution o
c
e: Constructe
d
r
ibution of S
M
c
e: Constructe
d
t
ors that det
e
e
terminants o
f
e
tween num
b
i
gher the ca
p
firm is likel
y
firms with
a
e
access to b
a
E
s with a ca
p
D
istribution o
f
c
e: Constructe
d
5
3.0%
77.6%
0
,000 LE -
L
ess than
Million
Mi
l
M
33.3%
66.7%
B
anking Facilit
i
a
ndscape in E
g
n
d lack of bu
s
t
deal with b
a
f SMEs Accor
d
d
by the author
s
M
Es According
d
by the author
s
e
rmine acces
s
f
access to fi
n
b
er of emplo
y
p
ital (Figure
1
y
to deal wit
h
a
capital less
a
nking facilit
i
p
ital more th
a
f
SMEs by Ba
n
d
by the author
s
47
.
22.4
l
lion - Less
than 5
M
illions
5
M
Le
s
M
41.7%
58.3%
i
es Do
g
ypt: New Fac
t
s
iness plans.
B
a
nks and 22.
4
d
ing to Dealin
g
s
using SMEs d
a
to Having Fa
c
s
using SMEs d
a
s
to finance.
n
ance of SM
E
y
ees, capital
a
1
7), the larg
e
h
banks and
b
than EGP 2
5
i
es. Those fi
g
a
n EGP 30
m
n
king Facilitie
s
s
using SMEs d
a
.
0%
%
M
illions -
s
s than 15
M
illions
15
M
Le
s
M
50.9%
49.1%
not Have Ban
k
t
s from a New
D
B
earing thes
e
4
percent hav
e
g
with Banks
a
taset.
c
ilities from B
a
a
taset.
In a compa
n
E
s in Egypt.
a
nd sales tur
n
e
r the firm (
F
b
enefit from
5
0,000 and/
o
g
ures are sub
s
m
illion and/ o
r
s
and Capital
a
taset.
Yes
No
Yes
No
M
illions -
s
s than 30
M
illions
30
a
n
49.3%
50.7%
k
ing Facilities
D
ataset
e
characteris
t
e
access ban
k
a
nks
n
ion paper (
E
First, as it w
a
n
over. This i
s
F
igure 18) an
d
financial ser
v
o
r less than
2
s
tantially hig
h
r
more than
5
Millions
n
d More
58.7%
41.3%
t
ics in minds
,
k
ing facilitie
s
E
l Said et al.
,
a
s mentione
d
s
reflected o
n
d
the more i
t
v
ices. This i
s
2
0 employee
s
h
er for large
r
5
0 employee
s
,
s
,
d
n
t
s
s
r
s

Small
a
Figur
e
F
i
Fi
g
0%
20%
40%
60%
80%
100%
0%
20%
40%
60%
80%
100%
L
0%
20%
40%
60%
80%
100%
L
e
a
nd Medium
E
e
18 Distribu
t
Sour
c
i
gure 19 Dist
Sour
c
g
ure 20 Dist
r
Sour
c
<20
41.2%
58.8%
D
L
ess than Half a
Million
12.6%
87.4%
Hav
e
e
ss than Half a
Million
31.0%
69.0%
D
E
nterprises L
a
t
ion of SMEs
b
c
e: Constructe
d
ribution of S
M
c
e: Constructe
d
r
ibution of S
M
c
e: Constructe
d
20-
3
7
2
D
ealing with B
a
Half a Milli
o
than Mi
l
2
7
3
e
Banking Faci
l
Half a Milli
o
than Mi
l
5
4
7
D
ealing with B
a
ndscape in E
g
b
y Dealing wi
t
d
by the author
s
M
Es by Banki
n
d
by the author
s
M
Es by Dealing
d
by the author
s
3
4
7
6.4%
2
3.6%
a
nks No
t
o
n - Less
l
lion Mill
i
2
6.5%
3
.5%
l
ities D
o
o
n - Less
l
lion Mill
i
2.2%
7
.8%
anks N
o
g
ypt: New Fac
t
h Banks and
N
s
using SMEs d
a
n
g Facilities an
s
using SMEs d
a
with Banks a
n
s
using SMEs d
a
35-50
84.4%
15.6%
t
Dealing with
B
i
on - Less than
2
0 Millions
37.9%
62.1%
o
not Have Ba
n
i
on - Less than 2
0
Millions
75.3%
24.7%
o
t Dealing with
t
s from a New
D
N
umber of Em
a
taset.
d Sales Turno
v
a
taset.
n
d Sales Turn
o
a
taset.
>50
84.
1
15.
9
B
anks
20 Millions -
than 50 Mill
i
56.
5
43.
5
n
king Facilitie
s
0
20 Million
s
than 50 M
i
9
5
4
Banks
D
ataset
ployees
v
er
o
ver
1
%
9
%
Less
i
ons
5
%
5
%
s
s
- Less
i
llions
5
.5%
4
.5%
15
5
5

156
Numer
o
likely to ha
v
countries as
SMEs in no
n
Africa, this
financially
c
b
ank standp
high interes
t
SMEs oper
a
not have le
g
some probl
e
share incre
a
000 do hav
e
SMEs with
a
At the
main gover
n
b
anks (see
0
2
0
4
0
6
0
8
0
10
0
Small
a
o
us studies
h
v
e access to
there is larg
e
n
-OECD co
u
number is
e
c
onstrained,
a
oint, the hig
h
t
rates
a
nd c
o
a
te in enviro
n
g
al titles to h
o
e
ms with ban
k
a
ses with sm
a
e
problems
w
a
capital mor
Fi
g
governorate
n
orates (Cai
r
Figure 23)
s
0
%
0
%
0
%
0
%
0
%
0
%
Less t
h
250,00
0
1
6
8
a
nd Medium
E
h
ave discuss
e
formal fina
n
e
financing g
a
u
ntries reach
o
e
ven lower,
a
nd almost
6
h
er costs, lac
k
o
llateral requ
i
n
ments with
w
o
use or land,
a
k
s. As it is s
h
a
ller firms (F
i
w
ith banks.
B
e than EGP
3
g
ure 21 Dist
r
Sour
c
Figure 22 D
i
Sour
c
level, as it
w
r
o, Sharkeya
s
ince 16.9 p
e
h
an
0
LE 250,0
Les
s
M
i
6
.4%
3.6%
Have Probl
e
E
nterprises L
a
e
d that SME
s
n
ce. Banks
a
a
p fo
r
SMEs
o
nly 20% of
f
at 5%. Nea
r
6
0% do not
h
k
of skills a
n
i
rements. Fu
r
w
eak proper
t
a
nd therefo
r
e
h
own in Fig
u
i
gure 22). In
d
B
y contrast, t
h
3
0 million ha
v
r
ibution of S
M
c
e: Constructe
d
i
stribution of
S
c
e: Constructe
d
w
as mentione
d
& Gharbey
a
e
rcent of S
M
83.9%
00 LE -
s
than
i
llion
Mil
l
than
16.2%
83.8%
e
ms with Ban
k
a
ndscape in E
g
s
are financi
a
a
re not adeq
u
in developin
g
f
ormal micr
o
r
ly 25% of
h
ave a loan
o
n
d higher (pe
r
r
thermore, p
o
t
y rights and
e
cannot use
t
u
re 21, 16.1
p
d
eed, 16.4 p
e
h
is figure is
s
v
e banking p
r
M
Es According
d
by the author
s
S
MEs by Prob
d
by the author
s
d
before, m
o
a
). The same
M
Es dealing
16.1%
l
ion - Less
5 Millions 5
M
th
a
14.4%
85.6%
k
s
D
g
ypt: New Fac
t
a
lly more co
n
u
ately provi
d
g
countries.
F
o
enterprises
a
SMEs in e
m
o
verdraft, bu
t
r
ceived) risk
s
o
sting collate
r
poor contra
c
t
hese as colla
t
p
ercent of S
M
e
rcent of SM
E
s
lightly low
e
r
oblems.
to Having Pro
s
using SMEs d
a
lems with Ba
n
s
using SMEs d
a
o
st of the Eg
y
pattern can
with banks
a
M
illions - Less
a
n 15 Millions
14.7%
85.3%
D
o not Have P
t
s from a New
D
n
strained tha
n
d
ing SMEs
w
F
or instance,
a
nd SMEs. I
n
m
erging mar
k
t
need one (
D
s
of investm
e
r
al is compli
c
c
t enforceme
n
t
eral. For thi
s
M
Es have pro
b
E
s having a
c
e
r for larger
f
blems with B
a
a
taset.
n
ks and Capit
a
a
taset.
y
ptian SMEs
be observed
a
re located
i
Y
N
15 Millions -
Less than 30
Millions
9.4%
90.6%
roblems with
B
D
ataset
n
large firms
w
ith capital i
n
the top five
b
n
addition, in
k
ets have a
D
alberg, 201
e
nt in SMEs
t
c
ated by the
f
n
t in which
b
s
reason, so
m
b
lems with b
a
c
apital less t
h
f
irms since 9
a
nks
a
l
are concent
r
for SMEs t
h
i
n Cairo, 11
.
Y
es
N
o
30 Millions an
d
More
9.9%
90.1
%
B
anks
and are les
s
n
developin
g
b
anks servin
g
Sub-Sahara
n
loan but ar
e
1). From th
e
t
ranslate int
o
f
act that mos
t
b
orrowers d
o
m
e SMEs fac
e
a
nks and thi
s
h
an EGP 250
,
.9 percent o
f
r
ated in thre
e
h
at deal wit
h
.
5 percent i
n
d
%
s
g
g
n
e
e
o
t
o
e
s
,
f
e
h
n

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
157
Sharkeya and 9.5 in Gharbeya. Similarly, SMEs having banking facilities (see Figure 24) are chiefly concentrated
in the same governorates (22.6 percent in Cairo, 13.9 percent in Sharkeya and 8 percent in Gharbeya). Clearly,
there is a great potential of developing new SMEs in other governorates through an easier and more equitable
access to finance.
Figure 23 Distribution of SMEs Dealing with Banks by Governorates
Source: Constructed by the authors using SMEs dataset.
Figure 24 Distribution of SMEs Having Banking Facilities by Governorates
Source: Constructed by the authors using SMEs dataset.
Concerning economic activities, most of the firms that benefit from dealing with banks (see Figure 25) are
mostly concentrated in manufacturing (44.3 percent) and trade (43.8 percent). Yet, having a more detailed look on
each sector separately (Figure 26) shows that 86.8 percent of construction firms and 72 percent of food and
beverage ones deal with banks. This figure is lower for SMEs working in the manufacturing and trade sectors
since SMEs who deal with banks represent 40.7 and 50.9 percent respectively of firms operating in these two
sectors. Those findings are not contradictory since there is a frequency effect as almost 90 percent of SMEs are
concentrated in just the manufacturing sector (51.1 percent), followed by the wholesale trade (40.5 percent).

158
To put
larger firms
b
anking fac
among ban
k
effect; CB
E
assistance t
o
discussing
b
and lenders
,
fostering ac
national ce
n
Small
a
Figur
e
Figure 2
in a nutshe
l
with a gre
a
ilities. Ther
e
k
s to provid
e
E
’s relaxatio
n
o
banks and i
m
b
ottleneck is
s
,
which is pa
r
cess to fina
n
n
sus.
1.1%
46.3
%
53.7
%
a
nd Medium
E
e
25 Percent
D
Sour
c
6 Percent D
i
So
l
l, small fir
m
a
ter capital,
m
e
fore, in ord
e
e
full fledge
n
of the 10
%
m
proving th
e
s
ues and bri
d
r
ticularly ac
u
n
ce for SME
s
44.3%
%
40.7%
%
59.3
%
D
E
nterprises L
a
D
istribution o
f
c
e: Constructe
d
i
stribution of
S
urce: Construc
t
m
s face serio
u
m
ore emplo
y
e
r to resolve
of diversifie
d
%
banks’ res
e
e
communica
t
d
ging the ga
p
u
te in the “in
f
s
through NI
43.8%
50.9%
%
49.1%
D
ealing with
B
a
ndscape in E
g
f
SMEs Deali
n
d
by the author
s
S
MEs by Deali
n
t
ed by the auth
o
u
s impedime
n
y
ees and hig
h
problems r
e
d
products
w
e
rve require
m
t
ion between
p
; overcomi
n
f
ormationall
y
LEX (Box 1
2.7%
72.0%
28.0%
B
anks Not
D
g
ypt: New Fac
t
n
g with Banks
b
s
using SMEs d
a
n
g with Bank
s
o
rs using SME
s
n
ts in wh
a
t
c
h
er sales tur
n
e
lated to acc
e
w
ith lowest c
h
m
ents on S
M
the two side
s
n
g the asym
m
y
opaque” m
a
), the establ
i
1.9%
65.5%
34.5%
D
ealing with B
t
s from a New
D
b
y Economic
A
a
taset.
s
and Economi
s
dataset.
c
oncerns ac
c
n
over are m
o
e
ss to financ
e
h
arges due t
o
M
Es lending
;
s
of the SM
E
m
etric infor
m
a
rket fo
r
sm
a
i
shments of
t
2.9%
3
86.8%
13.2%
anks
D
ataset
A
ctivity
i
c Activity
c
ess to finan
c
o
re likely to
e, encourag
e
o
the econo
m
;
facilitation
E
s’ lending m
a
m
ation betwe
e
a
ll business c
r
t
he I-score (
B
3
.4%
61.0%
39.0%
c
e given tha
t
benefit fro
m
e
competitio
n
m
ies of scal
e
of technica
l
a
rket throug
h
e
n borrower
s
r
edit throug
h
B
ox 2) and
a
t
m
n
e
l
h
s
h
a

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
159
Box 2: Egyptian Credit Bureau “I-Score”
The Egyptian Credit Bureau “I-Score” maintains a database of credit information for SMEs and consumers. The first credit
bureau in Egypt, which demonstrates how a private credit bureau can be set up in a relatively short time when all stakeholder
interests are aligned and the project has backing of the authorities. The Credit Bureau has been established under the name of the
Egyptian Credit Bureau “Estealam”. The first general assembly meeting was held on September 5th, 2005. 25 banks in addition
to the Social Fund for Development contributed in the company, with an issued capital of 30 million Egyptian pounds distributed
to seven million and five hundred thousand shares, the value of each share of four pounds (all the shares in cash). The founders
and subscribers have paid the 25% of the nominal value of the shares upon subscription and completed the paid up capital in
February 2007. The purpose of the company is to provide information services and credit classification.
It includes work in the following areas:
 Gathering all information about customers, whether associated with credit companies and financial institutions,
retailers and credit provided by banks or other views from all available sources of information.
 Creating certified official records of that information with the company, analyzing the data and classifying it.
 Creating indicators of credit quality for debtors whether individuals or institutions, making it possible for them to form
a sound credit history.
 Providing financial advice and practical solutions, all of the specialized counseling to individuals or institutions who
want to improve the level of credit ratings, or those who want to improve the financial instrument or who want to build
a credit history on a sound basis to start by a specific institution (with the exception of legal advice).
 The sale of information services and products associated service and other new services to all beneficiaries in Egypt
and in a manner that does not conflict with the provisions of secret bank accounts.
 Carrying out the work of the agency in the field of information and credit classification of enterprises or companies
linked to their work with the company subject to the provisions of laws, regulations and decisions applicable licensing
condition for the exercise of such activities.
Impact of I-Score:
 I-Score led the process of the creation of the borrower data bank with Unique ID (GT 5.7 Million).
 Significant increase in number of credit facilities/loans data base size (GT 14.3 Million).
 Catalyst for banks/lenders to improve their data quality, revision of internal lending policies/procedures leading to new
avenues to grow credit/improved profitability and advanced skill sets.
 Contribution to increased awareness among lenders on data quality in acquisition and management.
 Catalyst for active credit growth with prudence and confidence by providing a unified and robust borrower database
across the lending community
For more information, please check www.i-score.com.eg
Box 1: NILEX
NILEX is the Egyptian Exchange’ market for growing medium and small companies, which offers an appropriate, secure, yet
flexible regulatory framework, for both companies and investors, together with a streamlined admission process.
It supports the capital raising activities of small and mid cap developing companies. Its advantage is not only limited to
providing finance, but companies can access to long term capital for the expansion of their businesses.
It supports promising sectors in the economy which suffers from finance obstacles; and it also provides opportunity for investors
to diversify their portfolios by investing in high growth companies.
NILEX Benefits can be summarized in the following:
 Unlimited Long-term Finance
 Cheap Financing cost
 Relaxed Rules & Regulation
 Dedicated Funds to ensure liquidity
 Full Government Support
 Lower Listing Fees (0.5 per thousand of the capital)
 Local & Foreign investors’ Interest
For more information,
p
lease check: www.nilex.e
gyp
tse.com/ar
/

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
160
6. Conclusion and Policy Implications
Small and medium sized enterprises (SMEs) have usually been perceived as a dynamic force for sustained
economic growth and job creation in developing countries. In Egypt, despite banking reforms that have been
launched in 2004, the ability of SMEs to more easily access suitable and sufficient means of finance has always
been considered a major obstacle facing many SMEs. For this reason, and in order to be able to extend the
financial services provided to this segment and increase the benefits of the banking reform, the Central Bank of
Egypt launched in December 2008 an initiative, as an integral part of the Second Phase of the Banking Sector
Reform Program (2008-2011), to enhance SMEs access to finance and banking services. In this paper, we present
a descriptive analysis of the SMEs landscape in Egypt relying on this extensive census. The main findings of the
census show that there is a high concentration of SMEs at different levels. First, the geographical distribution of
SMEs is significantly skewed since almost half of them are concentrated in three governorates (Cairo, Sharqiya &
Gharbeya). Second, they are chiefly operating in two economic activities, namely manufacturing and trade. Third,
a very few firms are exporting. Finally, financial services seem to be under-utilized by SMEs as only 50 percent
are dealing with banks and benefiting from an improved access to finance.
From a policy implication standpoint, there is a need for strategic economic reforms to bring Egypt’s
economic condition into vitality and promote investment, especially for SMEs through:
 Improvements in the legislative infrastructure, several rules and regulations associated with bankruptcy,
creditor capacity to take fast possession of collateral in case of default. In addition, there is an urgent need to
speed up the process of establishing collateral registries which should aim at building electronic registers and
streamlining registration process.
 Encouraging banks to build on their expertise in matchmaking their clients in different stages of value chain
(linkages)
 A need for updating financial method for financial reporting (e.g., standardized template)
 Changing the Mindset
 Enhancing Entrepreneurship Education
It is worth to mention that this last point is crucial to improve SME performance in Egypt. Indeed, the role of
entrepreneurship has become increasingly apparent in economic and social development. Economically,
entrepreneurship stimulates markets. The formation of new business leads to job creation and has a multiplying
effect on the economy. Socially, entrepreneurship empowers citizens, generates innovation and changes mindsets.
These changes have the potential to integrate developing countries into the global economy. Thus,
entrepreneurship is described as a potential driver to support the economic growth, since it is important for
productivity, innovation and employment. Accordingly, it has been a policy goal of many developed countries to
develop a culture of entrepreneurial thinking. This can be done through providing appropriate enabling
environment via integrating entrepreneurship into education systems, learning process, technical assistance,
legislation and integration among all stakeholders.
Access to finance of small and medium enterprises is extremely important in promoting entrepreneurship and
innovation as well improving the state of the national economy in Egypt. Accordingly helping those who decide to
start their small enterprise in acquiring necessary entrepreneurial and managerial competencies is essential in
order to ensure their success. Being aware of the importance of entrepreneurship development, EBI SME unit is

Small and Medium Enterprises Landscape in Egypt: New Facts from a New Dataset
161
providing several training packages for Small and medium business owners who need to enhance their
understanding of dealing with and satisfying the requirements of banks.
References:
Central Bank of Egypt (2010). “Banking Reform in Egypt”, mimeo.
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