Funders key for Egypt's small firms

Six months after Hosni Mubarak was forced to give up the presidency of Egypt, the country is still grappling with economic hardship and heading towards a recession.

But even as obstacles emerge for the new government, Egypt is experiencing a renaissance of private small and medium-sized businesses.

On this new playing field, microfinance entrepreneurs are stepping forward to fill a funding gap for those wishing to expand or simply survive.

The small and medium enterprises (SME) sector accounts for the majority of Egypt's employment, and after the revolution there has been a deliberate refocus by the government to support Egyptians and their businesses.

One clear indication of the private-sector desire to take advantage of the new landscape is the increasing popularity of microfinance companies as a source of funding for SMEs, bypassing banks that perceive smaller businesses to be poor credit risks.

There are about 500 microfinance networks in Egypt, and Ranya Abdel Baki, the executive director of Sanabel, a Cairo-based network serving the microfinance network in the Middle East, said the country represents the largest borrowers market in the Middle East, and she saw no signs of a slowdown.

"I have all sorts of people calling me every day now who want to start a business and need funding including college students and older more established entrepreneurs," said Ms Abdel Baki.

Despite growing demand for Egypt's products, the post-revolution hardships affecting the country are an issue for the microfinancers. Some companies have been forced to shut down select offices in the hardest hit areas, and reduce the amount of money they lend at a time when capital is scarce.