The European Bank for Reconstruction and Development (EBRD) will focus on several pillars over its strategy (2017-2020) in Egypt, mainly green municipalities, energy efficiency, renewable energy, supporting equity, initial public offerings programme (IPOs), and the public private partnerships (PPPs), said President of EBRD Suma Chakrabarti.
“We have very strong experience in the private sector. EBRD will continue to invest more in Egypt’s private sector as that’s what makes us different and it’s our focus,” Chakrabarti mentioned, adding that about 29% of the bank’s projects in Egypt are for the public sector while the other 71% are for the private sector.
Daily News Egypt sat down with Chakrabarti during his recent visit to Egypt to participate in the Africa Investment Forum held at the New Administrative Capital on 22-23 November to know more about the bank’s strategic cooperation with Egypt and Africa, in addition to shedding the light on the banks’ future plans.
Can you please elaborate on your visit to Egypt?
This visit has been very much focused on participating in the 2019 Africa Investment Forum, meeting with President Abdel Fattah Al-Sisi and Prime Minister Mostafa Madbouly. We had a very good discussion as we discussed the economic situation in Egypt.
I am very happy with the way the economy in Egypt is progressing as the International Monetary Fund (IMF) programme has been very good for Egypt. It made investors more confident in the country while tourism revenues hiked.
Egypt witnesses a real recovery of tourism which is good news. We are able to invest more in Egypt now because policy context has been improving very well.
Over my meetings in Egypt, I also touched on EBRD’s future pipeline. As long as Egypt continues its reforms, we will have more investments in the market. I hope the bank can invest in the green economy and green cities because this is very important for Egypt as the country is moving toward sustainable green municipalities.
What about your plans to open new offices in Egypt?
We have two offices in Cairo and Alexandria. We will open a new office in Ismailia by the end of this year, and another one in Assiut next year. We will have four offices in Egypt by 2020.
EBRD’s new offices aim at reaching the small and medium enterprises (SMEs). Alexandria office has been very successful in reaching the SMEs in the Nile Delta region, and I hope the new ones will be similarly successful. We won’t only focus on offering big loans, but also provides advices, credit lines, and help SMEs grow.
Many Egyptians are entering the labour market every year, so SMEs are one of the ways to create jobs for youth.
Will Egypt repeat its last year achievement as first country of EBRDs operations?
The newly signed €340m agreements in the Africa Investment Forum 2019, are taking Egypt very much closer to more than €1bn, which was achieved last year and made it as our first country of operations compared to other countries.
Egypt’s opportunity to continue on the lead is high, yet it still competes with Turkey and Ukraine. We still have five weeks left in the year.
I signed some agreements with Egypt’s Minister of Investment and International Cooperation, Sahar Nasr, one of the agreements aims at supporting the modernisation of Egypt’s oil industry with a $50m loan to upgrade the oil refinery owned by Suez Oil Processing Company (SOPC).
The funds will be invested in improvement of the refinery’s operational efficiency and will enable the SOPC to produce cleaner fuel. The measures will reduce carbon dioxide emissions by 289,000 tonnes, contributing to a better air quality in Egypt. This loan follows a $200m loan by the EBRD signed in May 2018.
In recent years, Egypt has struggled to balance the country’s production, consumption and export of both oil and gas. The bank’s support to SOPC will help realign the supply and demand of higher value-added oil products and reduce the need for imports.
The EBRD is one of the first international financial institutions involved in the reform of the Egyptian oil and gas sector and has been supporting the country’s attempts to reduce greenhouse gas emissions and air pollution.
The bank is also supporting Egypt with the implementation of international best practices and standards, helping to increase the competitiveness of the sector and contributing to the country’s energy security.
I also signed an agreement with Nasr to strengthen Egypt’s electricity grid with €182m loan in addition to another agreement with Banque Misr on Saturday.
Will you invest in Africa’s southern countries soon?
During our meeting with the Egyptian President Abdel Fattah Al-Sisi on Saturday, we discussed the situation of the Egyptian economy, the EBRD’s current operations in Egypt with $6bn investments in 102 projects since 2012, and the future of the EBRD in Africa.
The Egyptian president called on the EBRD to invest in Africa’s southern countries. We are studying this proposal and the shareholders will decide on the issue during their meeting in May 2020.
Does the EBRD has any facility credit line for promoting industrialisation in Egypt and Africa?
Actually, we don’t have because we only operate in North Africa. If the EBRD does go to the Sub-Saharan Africa, and then we will have to develop ways to open Egyptian companies and state-owned enterprises that are going to invest in the southern countries of the continent.
How does the EBRD help Egypt to secure its water needs through desalination projects?
The EBRD is paying big attention to the water projects through offering the needed finance, yet we usually implement desalination projects through municipalities not separately.
I knew from some sources that the EBRD’s negotiations to implement New Administrative Capital’s monorail project, is it true?
No, but we’re in talks over the project. I am very proud of this project as it is an inclusive one and will offer safe transportation for women. Every project in the world has ups and downs. May be there were some issues but overall the progress is going well.
What about the main pillars of EBRD’s strategy in Egypt?
Given the size of the Egyptian economy and the development gaps still need to be filled, the EBRD will continue to expand its presence in Egypt and boost its funds in infrastructure projects.
Our strategy for the next five years will focus on municipalities, energy efficiency, renewable energy, supporting equity, IPOs, and PPPs, as the EBRD has very strong experience in the privatisation area.
The EBRD will invest more in Egypt’s private sector as it makes us different and it’s our focus. About 29% of our projects in Egypt are for the public sector while the other 71% are for the private sector.
Why do you see it’s important to increase your activities in equity and IPOs?
Equity is very important in turning a company that is successful locally only to a company that can be a regional champion and even international. For that, a company needs to adopt the best management methods. When the EBRD has an equity in a company, it’s a sign that the bank is much involved in the strategic direction of the company by improving its governance and management practices, thus having bigger impact than just giving loans. We have done this in Turkey and Poland before.
Egyptian companies are still facing some challenges to have IPOs or PPPs, how would the EBRD help them?
We always take equity stake of the company before IPO or privatisation to give a chance to the strategic investors to also take a share of the company, and then we work with the company to improve its performance to get ready for IPO. That’s our approach.
Can you please elaborate on EBRD’s financial support to Egyptian banks?
We provide credit lines for Egyptian banks to support SMEs and other areas like female entrepreneurs and energy efficiency. The EBRD will announce new support for the Egyptian banks in due course.