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Tasaheel received the first SMEs microfinancing license approved by the Financial Regulatory Authority (FRA)

3 months 6 days ago

The Financial Regulatory Authority (FRA) has approved the granting of the first license for the financing of small and medium-sized enterprises to one of the companies authorized to engage in the financing of micro-enterprises and to allow it to provide financing to small and medium-sized enterprises for the first time in the non-banking financial sector. This comes according to the latest amendment issued in October 2020 by Act No. 201 of 2020 "On the Regulation of the Financing of Small and Medium-Sized Enterprises.” Companies, associations and private enterprises are authorized to engage in micro-financing activities for Small and medium-sized enterprises (SMEs).

“Tasaheel license is one of the objectives of the legislative amendment of certain provisions of Act No. 141 of 2014 regulating microfinance activities to expand the umbrella of financial inclusion to include a new category of small and medium-sized enterprises. The most recent economic study at the beginning of 2021 indicates that it has reached about 80% of the GDP in the Egyptian economy. Medium, Small and Micro Enterprise Development is defined in Act No. 152 of 2020 as an existing enterprise with an annual turnover of 1 million, less than 50 million for small enterprises, a yearly turnover of £50 million and up to £200 million for medium enterprises” Dr. Mohamed Omran, Executive Chairman of the Financial Regulatory Authority.

“The Legislative Amendment aimed at increasing the opportunities for financing for newly established medium and small enterprises that have been established, registered or active for no more than two years. The Act defines them as newly established enterprises with an investment or paid capital of 50,000 EGP and less than 3 million EGP for small non-industrial enterprises, or less than 5 million pounds for small industrial enterprises. Also, the newly established enterprises with an invested or paid capital of 3 million EGP and no more than 5 million EGP for medium-sized non-industrial enterprises, or 5 million EGP and no more than 15 million EGP for medium-sized industrial enterprises.” Added Omran.

The Executive Chairman of the Financial Regulatory Authority emphasized that the legislative amendment did not place limits on the ceiling on financing for small and medium-sized enterprises due to its nature that varies from one project to another. This was confirmed by the Financial Regulatory Authority's regulations on licensing and rules on the operation of small and medium-sized enterprise finance under Governing Council Resolutions No. 164 & 211 of 2020. It mentioned that the amount of funding would be determined by a credit study prepared by the funding entity in light of the financing needs and creditworthiness of the project. The Authority also provided qualifying programs for representatives of funding authorities eligible for a license during June 2021, to facilitate understanding of licensing requirements and rules for activity and to respond to queries to ensure clarity of vision and proper application.

It should be noted that the recent Act "On the Regulation of the Financing of Small and Medium-Sized Enterprises and Micro-Enterprises," was an investment in the success of the microfinance activity, which has led to a significant increase in the rate of financial inclusion in the various governorates of the Republic. By the end of May 2021, activity statistics show that there were about 3.3 million beneficiaries of microfinance services, and a funding portfolio of 21.7 billion EGP, the share of women was 62% with 2 million beneficiaries, and the share of young people from both genders was about 63%.

 

 

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