Publications

Publications

Trade and Access to Finance of SMEs: Is there a Nexus?”

Trade and Access to Finance of SMEs: Is there a Nexus?”

The report entitled “Trade and Access to Finance of SMEs: Is there a Nexus?” co-authored by Hala El-Said, Mahmoud Al-Said and Chahir Zaki underlines that, despite the banking reforms initiated in Egypt in 2004, SMEs’ access to sufficient and appropriate financing remains limited. This represents a handicap for these SMEs to access the international markets, with only 6% of them exporting their products or services.

The report, presented at the workshop organised by FEMISE, AMSE and the GDRI on 6th October in Aix-en-Provence, looks at the correlation between the internationalisation of small and medium-sized enterprises (SME) and access to financing. In this report, the authors give evidence that an SME’s chances of exporting is highly dependent on the arrangements they have with the banks and the bank services used. Those businesses with access to bank services are 1.8 times more likely to export. For those that use a credit organisation, this ratio climbs to 5 to 1.

The study also takes into account other factors such as the business’s maturity, its geographic location and its capital. “Only 1.8% of SMEs with a capital of less than EGP 250,000 (US$30,000) export”; the greater the capital, the more export activities. Size also appears to be a crucial factor. The report points out that, in Egypt, “an SME employs less than 10 people on average, whereas most exporters employ more than 50″.

Trade Finance

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