The Worldwide Finance Company (IFC), a member of the World Financial institution Group, has ramped up investments in Egypt with a deal with bettering the nation’s infrastructure, supporting manufacturing corporations, and bettering entry to finance for small and medium enterprises (SMEs), fintech, and local weather tasks. Day by day Information Egypt interviewed Cheick Oumar Sylla, the Regional Director for IFC for North Africa and Horn of Africa, to debate the advances in cooperation between the Egyptian authorities and the worldwide establishment.
What was IFC’s funding in Egypt for FY23?
IFC’s technique in Egypt aligns with the nation’s nationwide technique to extend non-public sector participation within the financial system, localize industries, and increase native manufacturing. Since starting its operations in Egypt, IFC has invested and mobilized $8bn price of funding tasks and has an advisory portfolio amounting to $26.8m which demonstrates our dedication to Egypt’s promising financial future. Throughout FY23 alone, IFC invested and mobilized over $1.1bn in key sectors reminiscent of entry to finance, fintech, local weather finance, manufacturing, infrastructure (together with transport, logistics, and renewable vitality), healthcare, and gender inclusion.
What are IFC’s funding plans for Egypt in 2024?
For the reason that starting of fiscal yr 2024, IFC has dedicated investments with over $850m throughout totally different key sectors in Egypt, together with, for instance, a co-financing package deal with worldwide improvement companions to develop the second container terminal at Egypt’s Damietta Port and a $25m mortgage to Kandil Metal, one of many largest metal corporations within the Center East and Africa, to help the corporate’s sustainable development.
Furthermore, this yr, IFC expanded its partnership with Banque Misr with a $234m mortgage, marking IFC’s first gender-lens funding in a public sector financial institution in Egypt. This mortgage goals to extend entry to finance for MSMEs in Egypt, significantly these owned by girls.
Moreover, IFC has a sturdy pipeline of funding tasks masking numerous sectors together with renewables, logistics, manufacturing, tourism, and monetary markets for the rest of 2024. We anticipate that we are going to be near a $1bn funding in Egypt for the present fiscal yr.
What’s IFC’s outlook on the Egyptian financial system?
Egypt has not too long ago been implementing a reform programme to advertise extra dynamically inclusive development for the financial system, with the non-public sector taking part in an necessary function, particularly amid present macroeconomic challenges. IFC is dedicated to supporting the event of a non-public sector in Egypt that contributes to a sustainable and resilient financial system.
The nation boasts quite a few financial strengths, together with a aggressive and rising younger inhabitants, a strategic geographic location, and ample wind and solar energy sources that would assist gas Egypt’s financial engine and propel it towards sustained development. IFC places local weather funding on the forefront of its technique in Egypt to assist speed up the nation’s financial development. IFC is eager to construct on the success of Benban, which introduced collectively key improvement companions to ship Egypt’s largest photo voltaic park, in addition to our monetary package deal together with companions for the Abydos and Amunet photo voltaic and wind tasks.
How does the IFC consider Egypt’s latest reform tempo?
Egypt has achieved vital, optimistic steps in implementing its reforms programme—the State Possession Coverage (SOP) is an instance of that—to extend non-public sector participation within the financial system from 30 % to 65 % inside three years.
These efforts, which the World Financial institution Group helps, together with as demonstrated in our Nation Partnership Framework (CPF) and Nation Personal Sector Diagnostic (CPSD) for Egypt, are central to supporting the nation’s financial improvement. As well as, the Asset Monetization Programme underscores Egypt’s technique to empower the non-public sector to spur sustainable development and prosperity. With our wide-ranging sector experience, know-how, institutional community, and established market status, IFC is dedicated to supporting the Belongings Monetization Programme, which is working to harness non-public capital and know-how to handle state-owned property.
What’s the dimension of IFC’s funding portfolio in Egypt’s banking sector?
IFC is and stays dedicated to supporting Egypt’s banking sector— which accounts for 33% of our energetic portfolio in Egypt. By supporting the banking sector, we’re in flip serving to improve entry to finance for micro, small, and medium-sized enterprises (MSMEs), which make use of the overwhelming majority of Egypt’s non-public sector workforce.
IFC’s latest engagements within the banking sector embody the $100m COVID facility in 2020 to the Business Worldwide Financial institution (CIB), Egypt’s largest non-public sector financial institution, to assist maintain jobs and continued financial exercise in Egypt throughout the pandemic. IFC additionally financed CIB’s $100m inexperienced bond in 2021, the nation’s first non-public sector inexperienced bond, to assist deal with buyers’ wants for high quality long-term debt devices amid a rising urge for food for climate-smart and inexperienced tasks.
IFC has not too long ago ramped up its help to Egypt’s banking sector with some notable investments in business banks throughout FY23 and FY24 with commitments that quantity to greater than $580m. This consists of investments within the CIB, ADIBE, Banque Misr, and Al Baraka. Our investments within the sector have focused supporting rising banks’ MSME portfolio with a deal with women-owned companies in addition to scale banks’ local weather finance actions.
Lastly, the IFC seems ahead to persevering with its help of the banking sector in Egypt and has a robust pipeline of funding tasks for the sector lined up for the long run.
Can we anticipate IFC-backed debt issuances in Egypt this yr?
This yr, we stay up for supporting corporations in Egypt with native forex income streams, serving to them construct the foundations of a thriving non-public sector.
IFC is proud to have acquired the federal government’s consent to difficulty the EGP bond in international markets in FY2023. We stay up for supporting the Authorities of Egypt throughout the present macroeconomic challenges by means of native forex bonds, which can enable corporations to deal with their core companies reasonably than fear about change price volatility.
Concurrently, inexperienced bonds stay a cornerstone of IFC’s precedence monetary instruments in Egypt to assist unlock finance for climate-smart tasks, scale back greenhouse fuel emissions, and help the nation’s transition to a greener financial system.
How is IFC contributing to local weather mitigation and adaptation in Egypt?
IFC is devoted to fostering a low-carbon and resilient financial system in Egypt by channeling non-public funding into crucial sectors. These sectors, that are accountable for almost all of worldwide greenhouse fuel emissions and face adaptation challenges, embody vitality, agriculture, meals, water, land, city improvement, transport, and manufacturing. IFC’s technique additionally entails greening the monetary programs that underpin these sectors.
Since 2016, IFC has invested and mobilized over $2bn in climate-related tasks in Egypt.
A few of IFC’s key local weather tasks in Egypt over the previous couple of years embody:
Power transition: In November 2022, IFC, AMEA Energy, Sumitomo Corp along with JBIC, JICA, FMO, and personal sector business banks insured by NEXI supplied a $1bn finance package deal (together with debt and fairness) to construct and function twin photo voltaic and wind energy vegetation (Abydos & Amunet) that can collectively present a mixed capability of greater than 1 GW, delivering clear vitality to Egyptians on the lowest worth of electrical energy in Africa.
Local weather finance: Along with the aforementioned funding undertaking with the Business Worldwide Financial institution (CIB), IFC partnered with Banque du Caire to develop a local weather finance technique that can assist defend the financial institution from local weather dangers, improve its investments in inexperienced actions, and help the decarbonization of Egypt’s financial system.
Decarbonization: IFC partnered with Egypt’s Kandil Metal, one of many largest metal corporations within the Center East and Africa, by means of a $25m mortgage to help the corporate’s operational and monetary resilience, job creation, and its technique to chop carbon emissions. We additionally partnered with the Authorities of Egypt to spice up the availability of protected consuming water in Egypt by means of desalination vegetation to be delivered by means of public-private partnerships.
Inexperienced Buildings: With help from our longstanding improvement companions on the Swiss Secretariat for Financial Affairs (SECO), IFC partnered with the Housing and Constructing Analysis Middle (HBRC), the inexperienced constructing arm of the Ministry of Housing, Utilities, and City Communities, to boost the ecosystem of inexperienced buildings in Egypt, by means of coverage reform initiatives, capability constructing of public officers, elevating consciousness amongst private and non-private sectors and naturally offering inexperienced finance. One of many landmarks that received not too long ago licensed is the Grand Egyptian Museum, which acquired IFC’s EDGE Certification, a world inexperienced constructing certification system centered on making buildings extra resource-efficient.
