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JICA, SMBC, Banque Misr sign $100 m loan deal to back MSMEs in Egypt
The Japan International Cooperation Agency (JICA), Banque Misr and Sumitomo Mitsui Banking Corporation (SMBC) have signed a 100-million-dollar loan agreement to support micro, small and medium-sized enterprises (MSMEs) in Egypt in line with the Sustainable Development Goals.
This is JICA’s first Private Sector Investment and Finance (PSIF) project in the Middle East and Europe region co-financed with a Japanese private financial institution after PSIF was relaunched.
MSMEs play a crucial role in the Egyptian economy, accounting for 25 percent of the gross domestic product and 75 percent of the employment (employing 11 million people). However, their access to finance is limited; especially, very few women-owned MSMEs (WMMSMEs) are able to finance their businesses.
The loan from JICA will help Banque Misr expand lending to MSMEs, including WMMSMEs, thus contributing to Egypt’s sustainable economic growth. This is also aligned with the Sustainable Development Goals (SDGs); SDG 5 Gender equality, SDG 8 Decent work and economic growth, SDG 9 Industry, Innovation, and Infrastructure, and SDG 17 Partnership for the goals.
In a statement on Monday, JICA chief representative in Egypt Yoshifumi Omura said this is the first sustainable-financing cooperation that takes into consideration environmental, social and governance standards.
It is meant to achieve the sustainable development goals in accordance with international standards of collective financing, Omura added.
The loan should help increase potentials of SMEs and micro projects to better lead economic growth in Egypt, he said.
This is done through securing loan opportunities to help reduce unemployment, promote the national economy and alleviate the negative impact of coronavirus, he added.
The deal is also about the economic empowerment of women and this goes in line with an initiative launched by the Group of Seven G-7 countries, one of which is Japan, he said.
The portfolio of cooperation between JICA and the Egyptian government is estimated at about $ 3 billion, he noted.
On March 30, JICA and SMBC launched the “SMBC-JICA Sustainable Finance Framework” which aims at improving borrowers’ sustainable businesses and the above-mentioned loan agreement is the first project under this Framework. The Framework will utilize JICA’s experience as a development finance institution to identify development challenges, project monitoring, and project impact evaluation.
This Framework will adopt the common impact evaluation and monitoring majors for the co-finance project, and share and manage the results together. With such elements in the Framework, it will align with internationally recognized guidelines and principles to target the achievement of SDGs and receive third party reviews of the Framework to confirm its alignment. Through the Framework, JICA will further collaborate with SMBC, mobilize more private funds to developing countries, and contribute to the socio-economic development of developing economies.