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Factorscan
12/11/2008

Egypt Factors begins facilitating trade for smaller

businesses

Egypt, Wednesday, 12 November 2008

Egypt Factors, a trade finance company established with IFC help, has begun operations to promote cross-border trade by the country’s smaller businesses, helping to improve access to finance in a time of global economic uncertainty.

The company is the first in Egypt to provide export factoring services, which is often scarce in developing countries. Export factoring is an alternative form of finance for local exporters that face difficulty obtaining domestic bank finance. A factoring company typically pays cash for an exporter’s foreign accounts receivables, freeing the exporter of the risk that a foreign purchaser of the exports might not be able to pay.

Egypt Factors provides such services as bad-debt protection, and financing of up to 90 percent of a client’s trade receivables.

“We are committed to supporting and promoting Egyptian cross-border trade as well as domestic — in particular by smaller businesses because banks tend to finance large organizations,” said Marius Savin, Egypt Factors’ General Manager. “We protect their cash flow and mitigate risks to help businesses integrate into the global market.”

In 2005, IFC, a member of the World Bank Group, signed an agreement to invest US$3 million for a 20 percent equity stake in Egypt Factors. Other sponsors were FIMBank and Commercial International Bank Egypt S.A.E., each of which took a 40 percent equity share.

“Providing risk mitigation to encourage trade with new and challenging markets is a priority for us now more than ever,” said Nada Shousha, IFC Country Officer in Egypt. “Egypt Factors will promote alternative trade finance products to benefit smaller businesses and spur economic growth. We expect that it will introduce industry best practices in Egypt and provide a model for others to replicate.”