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Seif El Dine Seif El Nasr (Central Bank of Egypt) • 2019 IFPRI Egypt - WB “Innovations for Agricultural Development in Egypt”

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As part of the IFPRI Egypt Seminar in partnership with the World Bank, IFPRI Egyprt seminar “Innovations for Agricultural Development in Egypt”.

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Seif El Dine Seif El Nasr (Central Bank of Egypt) • 2019 IFPRI Egypt - WB “Innovations for Agricultural Development in Egypt”

  1. 1. The CBE’s Vision & Strategy Towards the Agriculture Sector June 2019
  2. 2. 01 The Central Bank of Egypt’s Strategic Objectives The main objectives of supporting MSMEs Inflation targeting Reducing trade balance and demand for foreign currency Encouraging investment Increase employment through promoting entrepreneurship and financial inclusion Increase employment through increasing the number of start- ups Import Substitution Increase the volume of exports Automation and technology Enhancing creativity and innovation
  3. 3. 02 The active role of the CBE in agriculture sector development The CBE’s SME Initiatives In January 2016 all banks operating in Egypt’s Banking Sector were obligated to delegate 20% of their total credit portfolio towards SMEs within a 4 year period at subsidised interest rates Small Enterprises for all sectors Equipment & Machinery Working Capital (Reached its limit) Several exceptions were made to the agriculture sector only  Decreasing min. sales turnover threshold for the 5% initiative from EGP 1 mn to 250K only for agri.  Allowing The Agriculture Bank of Egypt (ABE) to finance agriculture cooperatives  Allowing all banks to finance agriculture cooperatives for switching to modern irrigation methods  Allowing The Industrial Bank of Egypt (IDB) to finance exchange commodities – Fruits and Vegetables Collection Centers Outcome Action Plan Agriculture is the least impacted sector by the CBE’s SMEs initiatives contributing to only 5.5% of the EGP 137.7 bn total availed funds (as of March 2019). That said, the sector remains greatly underfunded due to major deficiencies in the market that hinders accessing the availed finance. CBE aims at unlocking the agriculture sector’s potential by overcoming a number of the sector’s challenges – financial and non-financial – at different stages of the agriculture value chain through setting out a series of agriculture focused projects/initiatives.
  4. 4. 03 The CBE’s current and future agriculture projects/initiatives 1. Improving Access to Finance ABE Transformation Credit Guarantees Targeted Interventions 2. Supporting the Agriculture MSMEs Business Environment Agriculture & Rural Development Companies – Developing sustainable and profitable anchor leading companies Council of Ministers Committee for SMEs – Consolidating local efforts Fruits and Vegetables Collection Centers – Strengthening Value Chains SASME Project – Education Value Chain Development Excellence Center – NilePreneurs Initiative 3. Capitalizing on Technology and Innovation Agri Platform Agricultural Investment Map Fertilizers/Seeds and Soil Matching Map New Specialized Cooperatives/Virtual Coops. Agri Labs * Current projects * Future Projects
  5. 5. 04 1. Improving Access to Finance Agriculture Bank of Egypt (ABE) Transformation Targeted Interventions Credit Guarantees  Structural improvement in access to finance in the agriculture sector • Transform ABE from being the village bank into a full service Rural Development Bank (Rural Bank).  Quick win initiatives • Banks’ contribution to the agriculture sector is minimal (as explained in slide 2). Therefore, CBE could launch targeted incentivized funding specifically to the agriculture sector to help enhance the local banks’ input towards this sector. • In addition, targeted interventions could be made to fund specific identified gaps in the agricultural value chains. CBE is currently working on consolidating the local and international efforts done on various value chains in Egypt – including the World Bank’s study about Value chain mapping of some commodities (oranges, dates, onions, and garlic) to preliminary identify the highest potential value chains and greatest funding gaps. • CBE-CGC EGP 2 bn trust fund for MSMEs Outstanding Guarantee: EGP 12.8 bn – 27% to the agri sector. • CGC & Ministry of Agriculture EUR 9 mn grant from the EU for SMEs in Agri sector. Outstanding Guarantee: EGP 400 mn
  6. 6. 05 2. Supporting the Agriculture MSMEs Business Environment Agriculture & Rural Development Companies – Developing sustainable and profitable anchor leading companies Council of Ministers Committee for SMEs – Consolidating local efforts Fruits and Vegetables Collection Centers – Strengthening Value Chains • Developing sustainable and profitable anchor leading companies in the agricultural sector that provides value added solutions to all segments of the local and global markets. • This will help support the formalization of trade activities to the best interest of the farmers according to the international best practices through filling sector gaps, complementing local and international efforts, and leading the sector. • According to the Prime Minister's Decision No. 2017/1840, a committee headed by CBE was formed to develop recommendations that aims at supporting SMEs. • Combine the efforts of local government entities • A proposal that maps the main aspects of the agriculture export cycle and that identifies the main obstacles, proposed solutions and implementation entities was prepared. • The Industrial Development Bank has financed the first center for the collection of fruits and vegetables in Egypt and the Middle East in Beheira. • The bank signed a protocol to establish 8 centers in other governorates. • The aim of these centers is to: - Cut out the middlemen - Control prices and prevent monopolistic practices - Reduce agriculture produce losses
  7. 7. 06 2. Supporting the Agriculture MSMEs Business Environment cont. SASME Project – Education Value Chain Development Excellence Center – NilePreneurs (NP) Initiative • SASME project is a cooperation agreement between the Egyptian Banking Institute (EBI) and AFD was signed to grant EUR 1.8 bn to support SMEs in the agriculture sector through: - Training programs for bankers, CGC, and NGOs - Technical assitance in product development, credit rating, risk management, credit risk guarantee programs • NP is a national initiative, sponsored and financed by the CBE and implemented by Nile University, which seeks to support entrepreneurship, small enterprises, innovation and the enhancement of local production. • Current Agri-focused project in NilePreneurs is The Value Chain Development Excellence Center that help finance provide TA to SMEs along agri value chains
  8. 8. 07 3. Capitalizing on Technology and Innovation Agriculture Platform • Project Objective: CBE aims at addressing the current sector deficiencies by capitalizing on digitization through building an Agriculture Market place platform that will digitalize key payment inflows and outflows for farmers and MSMEs , farmer transaction histories, bringing to bear the much needed efficiency, cost savings, and data collection to the agriculture value chain. • Cooperation with ABE and Mastercard • An independent company will be founded to own and operate the platform. • Current Status: The Strawberry and Livestock value chains are currently being thoroughly studied to help develop the platform. The preliminary expected pilot phase launch date is September 2019. Source: Mastercard
  9. 9. 08 3. Capitalizing on Technology and Innovation cont. Agriculture Investment Map Fertilizers/Seeds and Soil Matching Map New Specialized Cooperatives/Virtual Coops Agri Labs • An indicative guiding document for investment in the agriculture sector showing all available resources ( Natural- Human – Infrastructure) at a governorate level. • Designing a map for matching different types of soils with the complementary fertilizers and seeds to optimize productivity. • New Product-Specific Cooperatives based on the market gaps can be formed to overcome the Structural and Governance related challenges of the current ones. • Virtual Cooperatives can act as small market- oriented enterprises and can be incorporated on the Agri Platform. • Replicating the NilePreneurs initiative through establishing Agri Labs in universities in cooperation with governmental entities.
  10. 10. 09 Support Needed to Implement the CBE’s agriculture projects/initiatives International Expertise Finance for targeted interventions Technical Assistance R&D

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