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The CBE Initiative for Financing Renewable Energy Projects
The Central Bank of Egypt (“CBE”) has launched a few years ago an initiative for concessional financing for small and medium enterprises (“SMEs”) at concessional interest rates of 5% and 7% respectively. Banks operating in Egypt under the CBE supervision were required to achieve certain thresholds of their lending portfolios to SMEs.
Based on the CBE circular, the renewable energy sector was introduced to be included in the CBE facility. The same CBE Circular provides that an SME would be eligible to apply for the CBE facility as follows:
|Annual Revenues||Applicable Interest Rate|
Up to EGP 50 Million
Up to EGP 200 Million
|Newly Incorporated SMEs||Paid-up Capital|
Applicable Interest Rate
Up to EGP 5 Million
|Up to EGP 15 Million|
In practice, we understand that CBE circulated instructions to Egyptian commercial banks with respect to certain shareholding restrictions that apply in assessing whether a specific company falls within the SME definition. It is worth noting that CBE circulars to banks are not published and hence we rely on information received from commercial banks in this respect.
According to the CBE instructions, the following entities shall not fall within the SME definition and facilities extended for them shall not count in the SME initiative thresholds that are required to be achieved by banks operating under the CBE supervision:
- companies with foreign shareholders;
- companies with one or more shareholders holding 10% or more of capital that does not satisfy the definition of an SME. In other words, any shareholder with an ownership stake of 10% or above must not have annual revenues exceeding EGP 200 Million. The same applies as well to the board of directors of the applicant companies.