Arab Republic of Egypt

MENA MICRO, SMALL AND MEDIUM ENTERPRISES (MSME) FACILITY

Joint World Bank-IFC-CGAP Mission

March 11–15, 2012

AIDE-MÉMOIRE

I. INTRODUCTION

1. A joint World Bank-IFC-CGAP mission for the MENA Micro, Small and Medium Enterprises
(MSME) Facility visited Egypt between March 11-15, 2012. The team was led by Ms. Sahar Nasr, Lead
Financial Economist (MNSFP), Mr. Xavier Reille, Manager, (CMEAF); and Ms. Mayada El Zoghbi,
Senior Microfinance Specialist, (CGAP); and comprised Mmes./Messrs. Niraj Verma, Senior Financial
Sector Specialist (SASFP); Mohamed Khaled, MENA Regional Representative (CGAP); Laila Abdel
Kader, Finance and Private Sector Development Analyst (MNSFP); Nahla El-Okdah, Finance and
Private Sector Development Analyst (MNSFP); and Amira Zaky, Program Assistant (MNCO3). This
Aide-Mémoire summarizes the findings and recommendations of the mission, which are subject to
management review.

2. The mission coordinated with all stakeholders actively involved in the MSME sector in Egypt
including the Central Bank of Egypt (CBE), the Ministry of Finance, the Egyptian Financial Supervisory
Authority (EFSA), the General Authority for Free Trade and Investment (GAFI); the Social Fund for
Development (SFD) and the Egyptian Banking Institute (EBI), as well as the various market players
from the public and private sector. The Bank mission has also met with microfinance NGOs, banks, and
micro and small enterprises.

3. The mission also closely liaised and coordinated efforts with donors and development partners
active in the area of micro, small, and medium enterprise (MSME) development namely, USAID,
Canadian International Development Agency (CIDA); the Spanish Agency for International
Development Cooperation (AECID); the European Union (EU); the Agence Francaise de Developpment
(AFD); the Japan International Cooperation Agency (JICA); the Netherlands Embassy; the Swiss
Embassy; the United Nations Industrial Development Organization (UNIDO); the United Nations
Development Programme (UNDP); and the German Development Cooperation (GIZ). A list of officials
met is provided in Annex I.

II. MISSION OBJECTIVES

4. The mission's main objective was to launch and initiate the work of the MENA MSME Facility,
as well as continue the policy dialogue with the Egyptian authorities on the progress made, and the
challenges confronting MSME development in Egypt. The mission also explored areas of potential
partnerships under the MSME Facility’s three pillars, namely:

(i) Developing the enabling environment for MSMEs through supporting policy, legal and regulatory
reforms to facilitate their access to finance.

(ii) Providing advisory services to financial institutions that serve MSMEs to attain a more inclusive
system, focusing on youth, women and regional disparities.

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(iii) Building the capacity of MSMEs through entrepreneur networks, mentoring, and business incubator-
type services.

5. In the context of South-South cooperation and the sharing of experiences and knowledge, the
mission took this opportunity to prepare for the twining arrangement between Egypt and India in MSME
development. This would be a good opportunity for the regional cross sharing of knowledge and
experience with the Small Industries Development Bank of India (SIDBI).

III. BACKGROUND
6. The Egyptian January Revolution has brought to the forefront, key challenges as well as
prospects. It has highlighted the need to create job opportunities, equal access, a level playing field,
governance, transparency and accountability, as well as a fair and competitive environment in order to
accelerate inclusive growth. It is also a time of change — the recent political and economic
developments, enhanced prospects for change, and an appetite for reforms. It is essential to address the
challenges and build on the opportunities at this historical time.

7. In the wake of the revolution, and in order to address one of the key demands made by the
Egyptian youth, it has become increasingly important to support sustainable job creation, especially in
the private sector. This process entails creating equal opportunities for all and leveling the playing field
in a way that moves from privilege to competition. A key way to achieve this is to support the financing
needs of MSMEs.

8. MSMEs account for the vast proportion of firms the world over. And in many parts contribute
significantly to the country’s GDP and employment, thereby being important contributors to country
growth. In Egypt, despite some progress, MSME financing remains a significant constraint. Lenders, like
elsewhere in the world, are concerned about transactions costs in lending to SMEs, lack of good quality
information and collateral and concerns on credit risk and asset quality. Policymakers and donors are
working together to find ways that can address this market failure.

9. In Egypt, MSMEs1 are the main source of private sector jobs. However, employment in MSMEs
is likely to be significantly under-counted in official records due to informality. MSMEs represent 97
percent of all formal sector enterprises, and an even higher proportion if informal enterprises are also
taken into account. Although MSMEs account for a majority of enterprises and employment in Egypt,
they were confronted with key constraints and obstacles, constraining the development of the sector, and
its potentials to create private sector jobs and entrepreneurs. It was mainly the large and connected firms
that benefited most from the regulatory reforms that took place over the past decades, leaving the other
enterprises at a disadvantage. Ensuring commercially sustainable MSME lending, with a focus on their
role in creating sustainable private sector jobs, in Egypt in this critical post-revolution period satisfies an
important revolutionary demand.

10. Fostering greater access to financial services requires a stable financial system. On a positive
note, the Egyptian financial system (notably the banking sector supported by a series of World Bank
DPLs) has resisted very well both the global economic crisis and the more recent Arab Spring turmoil,
maybe even when compared to other countries in the region. Egypt’s financial system is mainly bank-
based, with banks constituting over 95 percent of the financial system’s assets—accordingly the non-
bank sector is too small. Reforms led to a substantial strengthening of the balance sheets of the banks
which was validated by the resiliency of the system. The banking system today is resilient, as indicated
by a capital adequacy ratio of 15.3 percent, a risk-weighted capital-asset ratio that rose from 14.7 percent

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The MSMEs are typically defined by employees (the minimum threshold for small enterprises in Egypt can be 5-10, 20-25 for
medium enterprises, and 100-200 for large enterprises, (but this varies widely by institution), turnover, and capital.

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in 2006 to 16.3 percent in 2010 and a loan to deposit ratio has declined to about 47 percent—typical of
countries that have gone through extensive financial restructuring. The ratio of deposits to GDP in Egypt
is about 85 percent, well above the levels predicted by the country’s per capita income, size, population
density, and other structural characteristics These ratios show that Egyptian banks enjoy comfortable
liquidity levels.

IV. MISSION MAIN FINDINGS

11. The mission discussed with the Egyptian authorities the government’s priorities in the MSME
sector, and explored with the authorities and stakeholders potential support that the World Bank Group
can provide under this Regional MSME Facility. Following are priority activities and potential partners
identified under the three pillars of the Regional MSME Facility.

Pillar I: Enabling Environment

12. Under this pillar, which the World Bank is leading, the facility will develop the enabling
environment for MSMEs and will suggest and support policy and legal reforms. The facility will
undertake tailor-made advisory services for legal and regulatory reforms to improve the MSME business
environment. It will also offer assistance for capacity building to financial regulators and government
agencies. Moreover, country diagnostics of demand and supply for MSME finance will be structured to
uncover gender gaps, drivers of access to finance for women, and the need for any tailored policy
responses. It was agreed that the following tasks would be undertaken:

13. Credit Guarantees. The Central Bank of Egypt (CBE) has played a critical facilitating role in
MSME financing. It is now desirous, through the support of the MSME Facility, to explore the current
market for credit guarantees in Egypt and examine the feasibility of establishing a guarantee facility for
MSME financing in Egypt. As an initial step, the Bank team undertook discussions with CBE to
understand the scope of work and thinking on this front. The Bank team also met with the Credit
Guarantee Company to understand their products, coverage, clients, business model, scale and capacity.
As a follow up step, the Bank team agreed to share a short outline of the scope of work in response to
CBE's interest in exploring the feasibility of establishing/scaling a credit guarantee facility in Egypt. This
would be shared with CBE by May 15, 2012. Following this a response from CBE to the scope of work
would help define the final outline. This response is expected by end-May 2012. Parallelly, CBE would
forward a formal request for including this activity within the scope of the MSME Facility.

14. Microfinance Law. A comprehensive licensing law for all non-bank financial institutions was
submitted to the Cabinet of Ministers in March 2010 and was pending submission to the Parliament. The
law allowed for the creation of the first commercial micro finance institutions (MFIs) in Egypt and
would allow NGOs that are actively involved in microfinance to convert into a full-fledged MFI
reporting to EFSA, establish an MFI arm for their respective NGOs or remain functioning as an NGO
and continue to report to the Ministry of Social Solidarity. The 2010 Parliament went into recess before
the law was submitted and with the dissolution of both houses of Parliament during the revolution. EFSA
confirmed that this law is a priority, and as soon as the political environment stabilizes, it will be ratified
by the newly elected Parliament. Discussions were held on hiring a consultant to work closely with
EFSA on building its capacity regarding rules and regulations associated with the law, as well as
educating Parliamentarians on that issue.

15. Islamic Finance. There is a growing demand for Islamic finance and Shariah-compliant
products in Egypt post-revolution. The current regulatory and legal framework in Egypt is not
sufficiently conducive to Islamic finance. Policy makers will need to introduce various regulatory and
legal changes for Islamic finance to develop further. The Egyptian authorities, as well as stakeholders,
highlighted that one of the main constraints identified by MSMEs is lack of financing products that are

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Shariah-compliant. In that context, the World Bank will organize a seminar on Islamic finance jointly
with the Central Bank of Egypt and the Islamic Financial Services Board, on November 13-14, 2012 in
Cairo, Egypt. The targeted participants are newly elected Parliamentarians, representatives of
government institutions, banks, non-bank financial institutions, and members of the international
delegations of the Islamic Financial Services Board. The main objective of the seminar is to give a deep
understanding on the basics of Islamic finance; the legal and regulatory environment required; and
exploring how to create an enabling environment for Islamic finance; as well as sharing country
experiences in establishing Islamic financial services (Malaysia, Bahrain, UAE, Sudan).

16. Capacity Building for GAFI. GAFI has been working on advancing the SME sector in Egypt,
through the issuance of the Board of Directors Decree No. 2/128 of 2011, launching and operationalizing
the SMEs Development Center (Bedaya). Bedaya Center works on promoting the SMEs sector through:
(i) providing SMEs and innovative enterprises with business development services; and (ii) streamlining
the regulations and procedures through the establishment of a dedicated window at the One-Stop Shop.
GAFI has also launched a website for SMEs (www.gafisme-bedaya.com) in December 2011, which
provides access to information on the SME sector, investment opportunities, and available services
provided by all entities and authorities at the national level, as well as allows for on-line application for
services, providing a level playing field. GAFI showed interest in the facility to the Bank mission,
specifically in Pillars I and III. Under this pillar, GAFI seeks Bank assistance in implementing
competitive clustering, designing legal changes to facilitate formalization of SMEs, and enforcing of
Executive Regulations of Law 141 of 2004 pertaining to the equal opportunities granted for SMEs to
supply 10 percent of public procurement and contracting. A formal request will be sent soon.

17. On cluster development, the bank mission has shared with GAFI the Indian experience. Any
cluster program should offer a judicious blend of financial and non financial services attending to both
demand and supply side needs of MSMEs. The soft and hard infrastructure need to be talking to each
other for greater efficiency and efficacy. As an implementing agency for the multi donor / multi activity
MSME Financing and Development Project involving the World Bank, DFID, UK, KfW and GIZ,
Germany as partners, the Indian SIDBI piloted a similar program by adopting 19 clusters for soft
infrastructure development and with aim of evolving them as role models. By fostering Business
Development Services (BDS), the project has attempted to give new dimensions to cluster development
by developing sustainable and technically competent—locally relevant experts in clusters. The Project
has also tried various innovative tools / model for BDS delivery. It has also built up the capacity of
Facilitator Agencies who are ready to take forward the initiative in other clusters. Hence, sharing the
Indian experience added great value to GAFI.

18. Secured Lending Framework. The mission has discussed with the authorities a Secured
Transaction Program to support the drafting of a new Secured Transactions Law and assist in the
establishment and operationalization of a collateral registry. This would help SMEs to pledge their
movable assets as collateral to the banks and lending institutions, thereby increasing their access to
finance and addressing the chronic problem of availability of suitable collateral. This activity will be led
by the IFC.

19. IFC has conducted several missions to Egypt during 2010 and 2011 tackling secured transactions
reform. These missions confirmed that local stakeholders consider secured transactions an important area
that requires improvements. Public stakeholders (Ministry of Industry and Trade) drafted a Law on
Secured Transactions, which IFC reviewed and provided recommendations to address a number of
weaknesses it had. In November 2011, and through the support of the Ministry of Finance, IFC
conducted a Secured Transactions country assessment to identify what is needed in order to establish a
solid framework for this area in Egypt. A comprehensive report including findings and recommendations
was shared with the Ministry of Finance to the Central Bank of Egypt. Currently, discussions are
ongoing with the Central Bank of Egypt in order to move the Secured Transactions agenda forward.

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20. Typically, the Secured Transactions reform initiative in Egypt would include: (i) legislative
reform which will enhance rights of creditors in movable assets; (ii) creation of a functioning movable
asset registry to enable lenders to effectively file a notice related to their proprietary rights; and
(iii) awareness raising and capacity building activities to increase knowledge among stakeholders’ (both
government and private sector) about the benefits of well-functioning secured financing systems.

21. Leasing Framework. The Egyptian Financial Supervisory Authority (EFSA), the leasing sector
regulator, is currently undertaking reform initiatives to enhance the leasing sector in Egypt and overcome
the existing impediments. Leasing market in Egypt started to evolve more than 15 years ago, however,
the industry has not reached its potential yet due to inadequate legal and institutional framework. In
view of EFSA’s strong support to develop the leasing industry and its interest in cooperating with IFC
and endorsing IFC's leasing activities, IFC AS MENA Leasing Program is planning to launch a new
leasing project in Egypt. The objective of the project will be to promote and strengthen the leasing
industry in Egypt and it will be achieved through: (i) capacity-building activities for select financial
institutions, Egyptian Financial Supervisory Authority (EFSA), the leasing sector regulator and other
different stakeholders; (ii) improvement of the legal/regulatory environment, and (iii) awareness raising
for both government and private sector stakeholders about the benefits of well-functioning leasing
systems.. IFC started the first phase of the project - market assessment, which is conducted to assess
existing gaps, current market conditions and legal/tax and accounting framework. IFC will then proceed
with the full scale project implementation based on the Reform Plan developed during the market
assessment stage.

22. Integration of MFIs into Credit Bureau. The Egyptian credit bureau, i-Score, is currently
working on including MFIs in its database. As a result of the deal which was reached between i-score
and the Egyptian Microfinance Network (EMN), i-Score began with the Alexandria Businessmen
Association (ABA)—one of the largest MFIs in the world and the leading in Egypt—as a model. The
whole data of ABA was entered into the i-Score system and several tests on that data were conducted.
This will give a clear model for the other MFIs about the benefits of such a system and how it is
working. The facility can help with the expansion of this exercise to other MFIs, as well as providing the
know-how for the creation of an SME rating agency.

23. IFC is currently working with EMN on this project which is aiming at integrating the
microfinance sector in the private credit reporting scheme in the country, represented by i-Score. The
objective is to ensure that MFIs have the capacity to make better credit decisions using credit reports and
hence leading to healthier credit portfolios. The project agreement was signed in February 2010 and
includes the following components: (a) conducting a technical assessment to analyze the key technical
hurdles preventing participating MFIs from contributing data; (b) conducting training sessions for MFIs
on data reporting and the integration of credit report data in decision making processes; (c) organizing
microfinance credit reporting awareness raising workshops/conference; and (d) developing financial
literacy curriculum for MFI clients and conducting Train the Trainers (ToT) sessions for MFIs to roll it
out to their clients.

24. Capacity Building for SFD.2 The newly appointed Secretary General is keen on enhancing the
role of SFD in job creation, and its overall social and economic development role During mission
meetings, SFD expressed its interest in being a potential partner in the MENA MSME facility. SFD
would seek support in improving its monitoring and evaluation capacity including a stronger MIS
system. The World Bank has already been working closely with SFD in developing and strengthening
their monitoring mechanism in order to compile the development indicators and results framework for
the Enhancing Access to Finance for MSEs project. SFD is also interested in seeking World Bank

2
SFD is the apex institution, responsible for MSEs development in Egypt, as mandated by Law 141 of 2004.

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support, through the MENA MSME Facility, to develop a new set of financial and non financial products
to respond to the needs of MSMEs. SFD is currently working on identifying its needs, and will send a
formal request soon.

Pillar II: Advisory Services to Financial Institutions

25. IFC will lead this pillar in terms of working with private sector banks and microfinance NGOs
and MFIs, while the World Bank will play a key role in strengthening state-owned banks to improve
access to finance for MSMEs and attain an inclusive system, focusing on youth, women and regional
disparities. This is especially critical as state-owned banks have the largest branch network in the poor
villages where most of the disadvantaged groups are located. This includes in-depth advisory services
for SME banking with emphasis on strengthening risk management and corporate governance practices.
This would be achieved through sharing knowledge and best practices via workshops, seminars and
training events. It was agreed that the following tasks would be undertaken:

26. Corporate Governance Trainings, with EBI. The CBE should be lauded for strengthening the
governance and accountability of the banking sector. Post revolution, the CBE has played a turnkey role
over the past months in Egypt’s efforts to enhance corporate governance in the banking sector through
issuing the banks Corporate Governance Regulations (CGR), and for amending Law 88 of 2003 with the
aim of strengthening CBE’s governance and addressing any potential conflict of interest. These reforms
will further serve to promote good corporate governance in the Egyptian banking sector. The CBE
continues to play an important role in enforcing corporate governance regulations, and enjoys a positive
reputation throughout the banking sector as a strict but fair regulator. Banks are still in the preparatory
phase to comply with the CGR. In that context, the Egyptian Banking Institute (EBI), operating under the
auspices of the Central Bank of Egypt, has started working on extensive training and awareness
programs on corporate governance in March 2012, in collaboration with the Regional MSME TA
Facility. A Train of Trainers program for Corporate Governance training for banks took place in the
same month. CBE is determined to raise the standards of corporate governance of all banks. EBI serves
both banks and NBFIs, and helps in improving their governance practices.

27. Advisory Services and Training Programs in SME Banking for Five Banks in Egypt. The
Regional MSME Facility will select five banks in Egypt, to work closely with on building the capacity of
their MSME departments—in a way that better serves women entrepreneurs and youth in particular. The
World Bank Group has teamed with the Egyptian Banking Institute to provide banks with training in
market analysis, product development, underwriting policy, turnaround of SME loans, and risk
management—all with a focus on their MSME portfolios. It is important to note that technical assistance
will go beyond training, and include advisory services and hands-on assistance on issues such as the
design of new products, strengthening corporate governance, improving credit information systems, and
reforming loan officer compensation. Banks identified as potential beneficiaries are the National Bank of
Egypt, Banque Misr, Banque du Caire, SAIB Bank, and Bank Audi. Priority will be given to state-owned
banks which express interest in developing their MSME portfolio, and have an active MSME portfolio
on which they wish to build. The mission has met with several banks and formal requests will follow
soon.

28. Capacity Building for the Egyptian Microfinance Network. In 2006, the Egyptian Microfinance
Network (EMN) was established as an association under the NGO Law—with the contributions of
thirteen founding members (twelve of the largest MFIs in Egypt and the SFD). The establishment of the
network came as a result of a recommendation in the National Strategy for Microfinance to establish an
entity to coordinate the efforts of stakeholders, particularly MFIs, in order to play a role in the
development of the Egyptian microfinance sector through the promotion of best practices. Under the
facility, EMN has requested funding of training workshops for MFIs on several areas, specifically on
governance and financial management.

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Pillar III: Support and Training to MSMEs

29. Under pillar three, which will be jointly led by the World Bank and the IFC, the facility will
work on supporting enterprises through entrepreneur networks, mentoring, and business incubator-type
services. This would include broadening the range of business development services in the region to
facilitate linkages with investors, new markets and technologies; as well as scaling up incubator
operations to reach a larger number of entrepreneurs. It would also link high potential entrepreneurs to
mentoring, networks, and risk capital. Moreover, it would provide business training to MSMEs that will
build capacity in the areas of accounting and responsible finance, marketing and business plan
development and corporate governance. It was agreed that the following tasks would be undertaken:

30. Women in Business. Women’s economic empowerment has become even more challenging in
Egypt post revolution. The aftereffects of the revolution have led to higher unemployment, especially
among women, where the unemployment rate is 23 percent, twice as high as that for men. This brings to
the forefront the urgent need to create sustainable private sector jobs. Innovative and growth-oriented
MSEs contribute in generating job opportunities, attaining a level playing field, and overall economic
growth. One of the key issues raised during the mission discussions was the need for gender
mainstreaming in the MSME sector. Promoting an enabling institutional, legal, and regulatory
environment for women’s equal ownership and access to economic resources and assets such as finance,
and resources is vital. The facility will work closely with the American University in Cairo’s (AUC)
Entrepreneurship and Innovation Program (EIP) and the Women’s Entrepreneurship and Leadership
Center (WELC) to incubate potential female-run start ups. Through this incubation, the start-ups will be
provided with all necessary financial and non-financial support including: business plan preparation,
business skills development, seed financing of approximately US$ 15,000-20,000 per start-up, physical
hosting, and, linking the start-ups with mentors and forging partnerships between them and other
business, government, or educational entities. The Egyptian Center for Women’s Rights will also be
involved in this activity.

31. Business Edge. Capacity building of SMEs will be carried out for developing their business
management skills so as to enable them run their businesses in a better manner. The authorities requested
from the mission support on this front. Most of the training programs in this regard will be carried out
under the umbrella of ‘Business Edge’; which is an internationally recognized program of the IFC,
designed specifically for SMEs. The Business Edge training program’s modules have been customized to
the local environment and are conducted in local languages. Business Edge certified trainers will conduct
capacity building programs of the selected SME groups; mainly in five business management areas: (i)
Marketing Management; (ii) Human Resource Management; (iii) Financial Management and
Accounting; (iv) General and Operations Management; and (v) Personal Productivity Skills. The activity
will be led by the IFC.

32. Capacity Building for GAFI. As mentioned earlier, GAFI showed interest as well in Pillar III.
Specifically, they would need the facility to fund GAFI’s business clinic under its Bedaya program
through hiring consultants to act as mentors beyond the initial incubation period already offered to
SMEs. At a later stage, the facility would assist Bedaya center in scaling up and replicating the business
clinic model in other governorates by installing an online, web-based, communication facility that helps
the SMEs and entrepreneurs at the remote governorates contact their consultants and technical supporters
at a distance. Another area of collaboration will be regarding the creation of a market intelligence
database with all relevant information and networks for SMEs and start-ups. A detailed formal request
will be sent soon.

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V. RECOMMENDATIONS AND NEXT STEPS
33. The Bank missions discussed the potential areas of partnership and agreed on a series of next
steps and that are summarized below:

 Following up with GAFI to discuss the potential areas of partnership in more detail and help
them draft an official formal request to the Bank.

 Following up with CBE on credit guarantees. The Bank team would share with CBE by May
15, 2012 a short outline of the scope of work. The Bank team will follow up with CBE on a
formal request for including this activity within the scope of the MSME Facility.

 Following up with EFSA on Microfinance Law. The Bank team will be following up with
EFSA on the status of the law, and the need to hire a consultant.

 Following up with SFD, to discuss the potential areas of partnership in more detail and help
them draft an official formal request to the Bank.

 Finalizing Islamic Finance Seminar arrangements. The World Bank Group will finalize the
logistical arrangements, and have a preliminary detailed agenda by end of May 2012.

 Finalizing the selection of the five banks, that will receive the advisory services and training
programs in SME banking. Also, providing support to write up an official formal request.

 Agreeing on an intervention design with AUC’s EIP and WELC to incubate potential female-
run start-ups.

 Setting up dates with EMN for training workshops required.

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 ANNEX I
Officials Met by the Bank Mission

Egyptian Financial Supervisory Authority

Dr. Ashraf El Sharkawy, Chairman
Mr. Mohamed Shousha, International Relations Manager

Central Bank of Egypt

Ms. Lobna Helal, Deputy Governor

Ministry of Finance
Ms. Amina Ghanem, Deputy Minister

General Authority for Investment and Free Trade

Mr. Osama Salem, Chairman
Ms. Nevine El Shafei, Vice Chairman
Ms. Reem Elsaady, Executive Director, Bedaya Center
Dr. Handia Hamdy Abdel Aziz, Consultant, Bedaya Center
Ms. Ghada Waheed,

Social Fund for Development

Ms. Ghada Waly, Secretary General
Mr. Essam El Quorashy, General Manager, Small Enterprise Development Organization (SEDO)

Egypt Post
Mr. Sherif Battisha, Vice Chairman, Relations and External Affairs

The Egyptian Credit Bureau "I-Score"

Mr. Mohamed Rifaat, Managing Director

National Bank of Egypt

Mr. Sherif Elwey, Vice Chairman
Ms. Soha Soliman, Head of SMEs Corporate Banking

Banque du Caire
Mr. Mounir El Zahid, Chief Executive Officer

Banque Misr
Ms. Maha Heba Einaet, Head of Business Units
Mr. Khaled Hammouda, Head of SME Banking and Microfinance

Society Arabe International de Banque (SAIB)

Mr. Hesham Nour, Head of SME Banking

Audi Bank
Ms. Fatma Lotfy, Vice Chairman

Al Baraka Bank
Mr. Adnan Ahmed Yousif, President and Chief Executive

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Mr. Tariq Kazim, Depute Geeral Manager and Co-Chair of Al Baraka Development and Microfinance
Committee
Dr. Ali Adnan Ibrahim, Vice President

Misr Iran Bank

Mr. Ismail Hassan, Chairman

Credit Guarantee Company

Mr. Mohamed Badul Hamid, Chairman
Ms. Naglaa Bahr, Executive Director
Ms. Soheir Sadek, Head of Health Care Providers
Mr. Amr Hamouda, Head of Small & Emerging Business Development Program
Mr. Amr Riad, Head of CGF-IMP Program
Mr. Hisham Halawa, Head of SME Program

Egyptian Banking Institute

Dr. Mona El Baradei, Executive Director

Cairo University
Dr. Hala El Said, Dean

Egyptian Microfinance Network

Mr. Hamed Hamed, Executive Director

Lead Foundation
Mr. Karim Fanous, Executive Director

Dakahliya Businessmen Association

Mr. Hassan Faried, Executive Director

Federation of Egyptian Chamber of Commerce

Mr. Alaa Ezz, Chairman

USAID
Mr. Steve Morin,

Japan International Cooperation Agency

Mr. Tatsuya Yanagi, Representative

European Union
Mr. Ivano Bruno, Programme Manager, Economic Cooperation

Agence Francaise de Developpement

Mr. Yves Mayet, Deputy Country Director

Embassy of the Kingdom of the Netherlands

Ms. Mehrechane Nayel, Senior Policy Officer for Trade Affairs

Spanish Agency for International Development Cooperation

Mr. Luis de Torres

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Embassy of Switzerland
Iman Radwan, Development Programme Officer

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 ANNEX II
IFC Training and Advisory Program for MENA Banks

I. Advanced SME Banking Training Program

Objectives and Target Audience

The goal of the proposed program is to assist mid-level bank officers and managers to develop a
thorough understanding of SME banking operations and international best practices.

The course is designed to help bank managers and staff to:

1. Formalize a strategy and conduct a successful planning process for SME banking and design
an appropriate business model to target the SME market for reducing costs and risk
2. Define and understand the SME market: refine portfolio segmentation and identify the cross-
selling potential
3. Build a competitive product range and efficient SME banking delivery channels
4. Measure product and client profitability in SME banking
5. Manage credit risk in SME banking

Content

The sessions cover the following topics through a 3 days training:

Introduction and Overview of SME
Banking
Business Models for SME Banking
Identifying new Market
Opportunities
Managing the SME Customer
Lifecycle
Credit Risk Management for SME
Lending
Information Technology (IT) and
Management Information Systems
(MIS) Optimization
Human Resources (HR)

Course methodology is highly interactive. It includes practical illustrations and case study, group
discussion and analysis, PowerPoint presentation supported with brief lecture. The course is delivered by
IFC senior SME banking specialists

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II. Trade Finance Training program

Objective

IFC has an important trade finance program covering both investment and advisory services to help
banks build capacity in trade finance operations. IFC trade finance training program covers banking
practices both from a product perspective as well as a lending perspective. The curriculum is suitable for
bankers, risk managers, international traders and finance professionals.

For participants already experienced and knowledgeable about Trade Finance, the program can be
delivered over 5 consecutive training days.

The course provides the opportunity to acquire a concrete understanding of the use of Trade Finance
products, the rationale behind related banking practices and applicable rules. It also provides insights
about Commodity Trading and financing considerations;

 what happens behind-the-scenes

 interface with the bank;
 identifying sources of risk;
 risk transfer;
 control measures

Course methodology
 Practical illustrations
 Case Study
 Real-life documentation
 Group Discussion and Analysis
 Sharing experiences and problem-solving
 Power Point presentation supported with brief lectures
 Supplementary reading material

Classroom setting is highly interactive.

Content

Documentary Collections, Letters Lending Propositions in

of Credit Components
Documentary Credit Practices
Performance Risk Products &
Account Receivable Financing
Insurance and Logistical Aspects of
International Trade
International Trade
Structures in Commodity Trade
Finance
Risk Management of Commodity
Trade

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III. Housing Finance Training Program

Background

The major impediments to the growth of the housing finance market in the MENA region include: 1) a
weak legal/regulatory infrastructure - unclear and cumbersome land titling and property registration
unclear foreclosure laws and restrictive/unclear planning laws; 2) weak macroeconomic conditions like
increasing unemployment and decreasing incomes; 3) limited availability of construction finance and
developer expertise, and; 4) limited availability of affordable housing finance and an obvious lack of
lender expertise in this area.

Objectives

The housing finance curiculum aims at strengthening and enhancing the operational capacity of banks
and regulators as they address the growing need for housing finance. It will do so by delivering two
comprehensive five-day localized HF trainings, to officers and managers from financial institutions and
regulators.

Content and Delivery

IFC is offering two training courses as follows:

 Housing Finance Course for Master Trainers designed for higher level mortgage
professionals and those that are interested in becoming master trainers or product champions
within their organization
 General Housing Finance Course targeted to mid-level employees and concentrated on core
lending issues

The sessions will cover the following topics:

Overview and Stages of Mortgage Lending
Key Players in MENA Mortgage Market
Conventional Mortgage Products
Islamic Finance Products
Borrower prequalification & File Building
Underwriting
Closing, Registration and Funding
Loan Servicing
Customer Service
Mortgage Marketing and Selling Techniques
New Product Development
Treasury Functions and Loan Funding
Loan Pricing
Enterprise Risk Management and Risk Analysis
Financial Risk Management Issues
Loan Portfolio Management
Operational and Strategic Risk Management
Emerging Markets Trends and Summary

The course will be delivered primarily in Arabic with Arabic slides and handouts. Interpretation will be
provided continuously throughout the program so as facilitate interaction with the international trainers.
The sessions will include computer-based mortgage calculations, interactive exercises and case studies.
A Mortgage Lending Reference Manual will be provided in its English Version. An Arabic version will
be provided at a later stage. A Session Guide with speaking points, discussion questions and suggested
activities will be provided to the Master Trainers to assist them in their course delivery.

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IV. COMPREHENSIVE SME BANKING ADVISORY SERVICE

IFC is a global leader on SME banking. It is leading the G20 SME banking forum and has developed
advance proprietary tools such as (CRM for SME or psychometric scoring). IFC is currently providing in
depth advisory services on best practice SME banking to 65 banks in emerging markets inclcuding 6 in
the MENA region.

Approach:
The IFC team conducts an initial assessment/diagnostic of a bank’s SME operations to identify gaps and
make recommendations for improvement in the following areas:

• Designing SME-focused organization and strategy;

• Segmenting clients by characteristics, behaviors, needs and profitability;
• Building strong value propositions in product offering and brand;
• Standardizing products and processes;
• Optimizing delivery-cost of products and services through appropriate delivery
channels and create a strong sales culture;
• Implementing independent and objective risk management through use of credit
scoring and rating tools for risk appraisal, underwriting, process streamlining,
and risk-based pricing
Results of this exercise are presented to senior management/BOD of the bank and a proposal provided to
scale up operations and take the bank to the next level. An advisory services engagement typically covers
the following areas:

a) Strategy and SME Focus;

b) Market Sizing and Segmentation;
c) SME Product Development and Value Proposition;
d) Sales Strategy and Delivery Channels;
e) Reengineering the Credit Underwriting Process;
f) IT and MIS; and
g) HR

Cost: The cost of the advisory service in SME banking range from USD 300, 000 to USD 1 million. The
Bank is expected to cover between 100% and 70% of the cost of the assignment.

Delivery model: The technical assistance is delivered by IFC senior SME banking specialists and a cadre
of specialized consultants (scoring or product design) trained in IFC tools and methodology.

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V. COMPREHENSIVE RISK MANAGEMENT ADVISORY SERVICE

IFC has a deep expertise in bank risk management, it has developed its own standards and proprietary
tools on best practices for risk management to help Banks in the Emerging Markets. IFC is providing in
depth advisory services on risk management to 57 Financial Institutions across 30 countries including 3
in the MENA region.

Approach:
The IFC team conducts an initial assessment/diagnostic of a bank’s governance, organizations and
operations to identify gaps and make recommendations for improvement. The results and
recommendations of this exercise are presented to senior management/BOD of the bank. IFC has
already delivered 92 risk management diagnostics in 31 countries and has developed a unique set of
benchmark to assess bank’s risk management performance.

Following the diagnostic, IFC can provide an in depth advisory engagement to help the bank build
capacity, acquire necessary risk management tools and implement the recommendation of the diagnostic.
An engagement is based on an holistic risk management framework and it covers the following areas:
risk governance, credit risk, market risk, liquidity risk, operational risk, asset liability management and
capital adequacy.

Cost:
The cost of the advisory service range from USD 300k to 500k. The Bank is expected to cover between
100% and 50% of the cost of the assignment.

Delivery model:
The technical assistance is delivered by IFC senior corporate governance and risk management
specialists and a cadre of specialized consultants trained in IFC tools.

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