Promoting SME Access to Finance: Evidence from the Manufacturing Sector in Egypt

Abstract

The manufacturing sector and its small and medium enterprises (SMEs) segment are considered to be drivers of job creation. In Egypt, both these sectors have seen their share in total employment decline over the past decades. This paper examines the recent efforts by the Egyptian government to promote manufacturing sector growth and expand the sector's access to finance, particularly to SMEs. Using the World Bank Enterprise Surveys data from 2013, 2016 and 2020, the paper explores to what extent SMEs in the manufacturing sector have benefited from those recent financing programs. Findings indicate that insufficient access to finance remains a major constraint on manufacturing SMEs. The funding initiatives were not appropriately directed towards the most credit-constrained companies. This paper puts forward evidence-based policy recommendations to facilitate more effective banking and non-banking financing that can boost their employment generation capacities.