Home | | Contact Us

World Bank Loan for the Financing o

World Bank Loan for the Financing of Small and Micro Enterprises
On the 30 October 2014, a Presidential Decree was issued officially ratifying a loan agreement made by the World Bank’s International Bank for Reconstruction and Development ("IBRD") to Egypt.[1] The USD 300 million loan had initially been agreed upon and signed in Washington DC on 12 April 2014, by the then interim President, Adly Mansour. The loan will establish a credit line which is intended to expand available funding for small and micro enterprises through innovative means, with priority being given to enterprises undertaken by youth and women, as well as those enterprises taking place in underdeveloped areas. The loan will be executed through Egypt’s Social Fund for Development ("SFD").
Loan Mechanism
Small and micro enterprises shall access the funds through a direct line of credit with the body charged with executing the project, the SFD. The Egyptian government will conclude an ancillary agreement with the SFD pertaining to the transfer of the loan funds. The mechanisms by which Egypt shall have the right to access and withdraw the loan are set out in the annexes to the loan agreement. The final date that the funds can be accessed and withdrawn will be December 31st 2019. Repayment will be made every six months at an interest rate of 2.33%. In keeping in line with its supervisory role, the World Bank will have the right to suspend withdrawal of funds in the event that there is any significant occurrence or change that severely affects the ability of the SFD to execute the Project.
Main Loan Conditions set by the World Bank
Egypt will ensure that the SFD will execute the project while observing the Anti-Corruption Guidelines set by IBRD and will also guarantee that the SFD will finance intermediaries according to set cooperation agreements, further guaranteeing that those intermediaries will in turn distribute the funding to the small and micro enterprises, in accordance with the terms and conditions set out in the Operations Manual agreed upon by the World Bank. Although the implementation of the loan will be through an agreement concluded between the Egyptian government and the SFD, the World Bank will continue to play a supervisory and monitoring role. According to the loan agreement, the SFD must have a financial administration body that produces quarterly financial reports related to the loan to be submitted to the World Bank within 45 days of the end of the quarter. A yearly financial analysis for the entire project must be produced by the SFD, within six months of the end of the year.
A Wider Cooperation with the World Bank
This loan agreement is one of several loans and grants the Egyptian Government will rely on to boost the economy. The World Bank views Egypt as an ‘engine of growth in the Middle East’, and is supportive of the country’s economic reform measures. In 2014 alone, four other projects in cooperation with the World Bank have been approved. These are the Emergency Employment Investment Project (March 25th, 2014; value: USD 93 million), the Sustainable Persistent Organic Pollutants Management Project (June 13th, 2014; value: USD 23.6 million), the Household Natural Gas Connection Project (July 24th, 2014; value: USD 500 million), and the Inclusive Regulations for Microfinance Project (August 5th, 2014; value: USD 4.5 million).   [1] Presidential Decree No 182/2014 ratifying a loan agreement made by the World Bank’s International Bank for Reconstruction and Development to Egypt, Official Gazette, Issue No. 44, 30 October 2014
On the 30 October 2014, a Presidential Decree was issued officially ratifying a loan agreement made by the World Bank’s International Bank for Reconstruction and Development ("IBRD") to Egypt.[1] The USD 300 million loan had initially been agreed upon and signed in Washington DC on 12 April 2014, by the then interim President, Adly Mansour. The loan will establish a credit line which is intended to expand available funding for small and micro enterprises through innovative means, with priority being given to enterprises undertaken by youth and women, as well as those enterprises taking place in underdeveloped areas. The loan will be executed through Egypt’s Social Fund for Development ("SFD").
Loan Mechanism
Small and micro enterprises shall access the funds through a direct line of credit with the body charged with executing the project, the SFD. The Egyptian government will conclude an ancillary agreement with the SFD pertaining to the transfer of the loan funds. The mechanisms by which Egypt shall have the right to access and withdraw the loan are set out in the annexes to the loan agreement. The final date that the funds can be accessed and withdrawn will be December 31st 2019. Repayment will be made every six months at an interest rate of 2.33%. In keeping in line with its supervisory role, the World Bank will have the right to suspend withdrawal of funds in the event that there is any significant occurrence or change that severely affects the ability of the SFD to execute the Project.
Main Loan Conditions set by the World Bank
Egypt will ensure that the SFD will execute the project while observing the Anti-Corruption Guidelines set by IBRD and will also guarantee that the SFD will finance intermediaries according to set cooperation agreements, further guaranteeing that those intermediaries will in turn distribute the funding to the small and micro enterprises, in accordance with the terms and conditions set out in the Operations Manual agreed upon by the World Bank. Although the implementation of the loan will be through an agreement concluded between the Egyptian government and the SFD, the World Bank will continue to play a supervisory and monitoring role. According to the loan agreement, the SFD must have a financial administration body that produces quarterly financial reports related to the loan to be submitted to the World Bank within 45 days of the end of the quarter. A yearly financial analysis for the entire project must be produced by the SFD, within six months of the end of the year.
A Wider Cooperation with the World Bank
This loan agreement is one of several loans and grants the Egyptian Government will rely on to boost the economy. The World Bank views Egypt as an ‘engine of growth in the Middle East’, and is supportive of the country’s economic reform measures. In 2014 alone, four other projects in cooperation with the World Bank have been approved. These are the Emergency Employment Investment Project (March 25th, 2014; value: USD 93 million), the Sustainable Persistent Organic Pollutants Management Project (June 13th, 2014; value: USD 23.6 million), the Household Natural Gas Connection Project (July 24th, 2014; value: USD 500 million), and the Inclusive Regulations for Microfinance Project (August 5th, 2014; value: USD 4.5 million).   [1] Presidential Decree No 182/2014 ratifying a loan agreement made by the World Bank’s International Bank for Reconstruction and Development to Egypt, Official Gazette, Issue No. 44, 30 October 2014