The European Investment Bank (EIB) has signed two financing agreements for a total amount of €229m, to support sanitation and community infrastructure in Egypt.
These investments will contribute towards the development of a sustainable modern economy— a key element of the EU-Egypt’s partnership priorities. The signing ceremony took place in Sharm El-Sheikh during the Business for Africa 2018 Forum, in the presence of Prime Minister Mostafa Madbouly.
The EIB’s President Werner Hoyer, stated after the signing that the EIB continues to “support a sustainable, modern economy in Egypt, and to reinforce its economic resilience.”
Hoyer added “We are proud to announce that with the new agreements, the total EIB financing signed in Egypt since 2012, reached €5bn. The projects we finance in Egypt make a substantial difference to peoples’ lives. The Kitchener Drain Depollution project is a good example as it will improve the availability of sanitation services, as well as the drain infrastructure in the Delta region. In addition, the €15m grant will finance investments, to improve the living standards for the disadvantaged and vulnerable persons living in and around urban centres in Egypt.”
Hoyer noted that the first agreement signed was the €214m loan to the Kitchener Drain Depollution project. This is the first phase of a larger investment programme, that was identified by a EU financed pre-feasibility study, under the supervision of the Mediterranean Hot Spots Investment Programme II.
He elaborated that the project will reduce pollution in the 69 km-long Kitchener Drain, which extends across the governorates of Gharbeya, Kafr El-Sheikh, and Daqahleya in the Nile Delta region. It is a good example of a multilateral cooperation, as it is a part of an integrated depollution project comprising of a number of investments, financed by the EIB, the EU-Neighbourhood Investment Facility (NIF), and the European Bank for Reconstruction and Development, in wastewater and sanitation, solid waste, and drain rehabilitation– a first of its kind in Egypt.
He revealed that the bank also signed a grant agreement with Egypt and the Medium, Small, and Micro Enterprises Development Agency, for an amount of €15m, to support the Community Development Programme.
This grant is funded by the EU under the NIF, and will finance investments in community infrastructure to improve the living standards for disadvantaged and vulnerable persons, living in and around urban centres in several governorates in Egypt. The projects to be funded from the grant, are expected to include the provision or enhancement of community facilities, including schools, health clinics, and community centres.
The new agreements bring the EIB’s total finance in 2018, to €800m for transport, energy, water and wastewater sectors, as well as SMEs, mid-caps finance, and microfinance.
On the other hand, the EIB has signed an agreement to invest $11.3m in Sawari Ventures’ fund, a regional venture capital fund, investing in growth and seed stage innovative businesses in Egypt, Tunisia, and Morocco. The EIB investment is the first commitment to a venture capital fund focused on Egypt.
It will contribute to the modernisation of the economy, by encouraging entrepreneurship, in line with the EU-Egypt’s partnership priorities. Moreover, it is the first EIB operation, under the risk capital facility of the Economic Resilience Initiative.
Through this fund, the EIB will provide access to needed risk capital, in order to support early and growth stage innovative start-ups, and small and medium-sized enterprises (SMEs) in Egypt, Tunisia, and Morocco which have the potential to scale rapidly and grow regionally, boosting the local tech ecosystem.
Furthermore, by investing in seed stage companies through a local accelerator, the EIB investment will contribute towards knowledge transfer, and enhanced competitiveness of innovative sectors. The support provided to local SMEs, and dynamic start-ups is expected to contribute towards economic growth, increase economic resilience, and create employment opportunities, especially for youth.
The EIB is a cornerstone investor in the fund, which reached a first closing of $35m. Other investors in the fund include CDC (UK), Proparco (France), and DGGF (Netherlands). The fund has a target size of $50m.
The EIB will crowd-in additional local capital in the fund, through the creation of an Egypt based co-investment vehicle, which will support, alongside Sawari Venture, Egyptian investments, and will include local financial and public institutions.