On the 21st September 2023, the EMEA held the third access to finance workshop designed to support the project trainees and subgrantees with further financing for their sustainable businesses under the INVESTMED project. The workshop brought together 4 experts on Credit Guarantee Schemes from the region and introduced the complex topic to the INVESTMED beneficiaries giving insights into how to make the best use of this resource in Egypt, Lebanon, and Tunisia.
Credit Guarantee Schemes have emerged as a key tool utilised by governments and development institutions to overcome challenges faced by MSMEs in accessing credit including; high cost, limited supply, and collateral requirements, therefore making MSME financing more available and affordable. The session was moderated by Jost Wagner, Managing Director and Senior Facilitator at the Change Initiative.
To kick off the session, Dr. Mais Sha’ban, Assistant Professor of Banking and Finance at Al-Zaytoonah at the University of Jordan, and Research Fellow at the Euro-Mediterranean Economists Association, introduced the topic by explaining that Credit guarantee schemes reduce the credit risk of MSMEs making their financing more available and affordable. They serve a number of sectors: industrial, agricultural, and commercial sectors and are present in Egypt, Lebanon, and Tunisia. Highlighting the views of MSMEs on this area of finance, she explained that, according to a survey carried out with the INVESTMED subgrantees, 73% believe that access to finance is a high impact barrier for development and just 29% feel they receive good support from banks and financial intermediaries. These insights make this workshop and access to finance all the more crucial for MSMEs.
The first speaker was Tahar Ben Hatira, Managing Director, Sotugar, the credit guarantee company in Tunisia. He explained that their services are targeted at entreprises and MSMEs with less than 15 million of investment funds (Tunisian Dinars). The percentage guaranteed depends on the company, however, Sotugar guarantees a wide range of sectors. He then methodically explained how an MSME may make use of their services.
The second speaker was Nagla Bahr, Managing Director, Credit Guarantee Company Egypt and Chairwoman of the Euro-Mediterranean Guarantee Network. She explained that guarantee schemes are a global industry and thrive in crises. They are proved to be a key tool for leveraging resources, however, their prevalence depends on government appetite. In Egypt, she elaborated, they are trying to diversify. They have equity guarantee, export guarantee, direct investment guarantee and are working to include all areas of Egypt and all sectors. The focus of their business model is not only to create jobs but also to directly support MSMEs in their journey of growth.
Finally, Yolla Serieddine, Deputy General Manager at Kafalat S.A.L, based in Beirut, gave some context on the situation in Lebanon and expectations for the future. Given the ongoing financial crisis, she explained there is difficulty in accessing this source of finance. However, microfinancing still remains a valid option.
The workshop closed with an open discussion between the credit guarantee managers and the INVESTMED subgrantees. Useful insights were drawn form this discussion such as that the credit guarantee company can act as a direct support between the company asking for a loan and the bank. There was also a comment that more needed to be done on the bank’s side as they need to more willing and flexible to provide loans to MSMEs rather than big corporates.
The INVESTMED project is co-funded by the European Union under the ENI CBC Mediterranean Sea Basin Programme 2014-2020. INVESTMED will have an impact on MSMEs, start-ups and recently established enterprises where staff will be trained and coached to become more sustainable and competitive and financially supported via an open competition. INVESTMED has a duration of 39 months, with a total budget of 3.8 Million euro, of which 3.4 Million euro are funded by the European Union (90%). It has 8 partners from Tunisia, Spain, Lebanon, Greece, Egypt, and Italy.
