Fresh funds from the EU, EIB, Germany, EBRD

We’re getting EUR 1 bn from the EU before the end of the year: Egypt and the EU inked an agreement that will disperse EUR 1 bn in macro-financial assistance during the second half of 2024 — the first of two packages of concessional loans that will total some EUR 5 bn — the International Cooperation Ministry said in a statement. The first tranche will be delivered in the form of soft-financing with long repayment terms and low interest, the statement said.

Remember: The total EUR 5 bn in concessional loans stems from a wider EUR 7.4 bnpackage of loans, grants, and investments through 2027 that was agreed to under a joint strategic and comprehensive partnership inked between the two sides back in March. In addition to the EUR 5 bn in macro-financial assistance, the EU pledged EUR 1.8 bn of “additional” investments under the Southern Neighborhood Economic and Investment Plan and EUR 600 mn in grants, including EUR 200 mn for migration management.

What about the rest of the concessional loans? The remaining EUR 4 bn will be disbursed between 2025 and 2027, the statement said. The packages aim to address Egypt’s external financing needs and “underpin the delivery of an ambitious policy program containing strong, immediate adjustment and structural reforms to help put Egypt’s economy on a sustainable economic path.”

What they said: “One hundred days ago we opened a new era in the relations between Egypt and the European Union, with our strategic and comprehensive partnership. Today, we deliver. We deliver for Egyptian businesses and entrepreneurs with EUR 1 bn in macro-financial assistance, which will incentivise the reforms that businesses and entrepreneurs in the private sector need,” EU Commission President Ursula von der Leyen said during her opening remarks to the conference.

We knew this was coming: Back in April, the European Council approved fast tracking the release of EUR 1 bn in short-term financial assistance as the first tranche of a wider EUR 5 bn package. The EU will deliver the short-term funds by applying an emergency funding mechanism that side-steps the EU Parliament’s approval as well as an evaluation of the funding’s effects.

THE EU ALSO UNVEILED EUR 300 MN IN GRANTS-

We’re in line for nearly EUR 300 mn in grants: The EU signed four financing agreements with Egypt that will see it provide almost EUR 300 mn (EGP 15.4 bn) to support the development of the country’s private sector, labor force, child protection systems, and medicine and vaccine manufacturing, according to a cabinet statement.

The majority of the funds will go towards the private sector: The EU will direct EUR 263 mn to Egypt’s private sector, as part of the third phase of its Cross-Border Cooperation for Mediterranean Basin Countries program. The funds will target private sector players operating in sustainable tourism, cultural heritage, digital transformation, agriculture, education and training, energy, and green construction as well as the blue and circular economy and creative industries, the statement said.

What about the rest? Some EUR 25 mn will go towards providing young Egyptians with technical and vocational skills to help them find fair income jobs and boost entrepreneurship, while EUR 8 mn will be used to bolster Egypt’s child protection systems, focusing on implementing child protection frameworks and combating child labor as well as ensuring children’s access to education, healthcare, nutrition, and housing. The remaining EUR 3 mn will support the local manufacturing and development of vaccines and medicines.

EIB INKS EUR 621 MN WORTH OF AGREEMENTS-

The European Investment Bank also got out its checkbook: The European Investment Bank (EIB) and the EU have inked a EUR 271 mn agreement with the government to back the transition to a green economy, according to a statement from the International Cooperation Ministry. The agreement will channel EUR 135 mn in soft financing from the EIB, with an additional EUR 30 mn grant from the EU administered by the EIB. The remaining funds will come from the French Development Agency and other financiers, the statement reads.

The how: The project aims to assist Egypt in transitioning to a green economy by reducing industrial pollution and carbon emissions. It will focus on key industrial zones across the country, addressing air, water, and soil pollution. It will also support the use of renewable energy, green hydrogen, and biogas, and enhance sustainable industrial practices through energy efficiency, resource management, and circular economy interventions.

The EIB also put its financial backing behind mid-cap companies in the region: The EIB has committed EUR 350 mn to support the SPE Capital-run SPE PEF III — an private equity fund that focuses on mid-cap companies in Africa, according to a statement from the International Cooperation Ministry. The funds will be used to invest in high-growth sectors, such as healthcare, pharmaceuticals, education, manufacturing, financial services, logistics, and consumer goods, aiming to create over 10k jobs and bolster economic development in the region.

Sludge fund: A Housing Ministry project to study sludge management will also get a grant worth EUR 2 mn from the EIB under an agreement inked at the conference.

FUNDS FROM GERMANY-

Egypt to see EUR 104 mn from Germany: Germany will deliver financing worth EUR103.5 mn (EGP 5.3 bn) to support three Egyptian development programs. Banque du Caire will receive EUR 65 mn in soft-financing for its fourth phase of on-lending to SMEs in addition to EUR 3 mnin supplementary grants. The Education Ministry will see EUR 20.5 mn in financial support for the third phase of its comprehensive technical education initiative and the Central Bank of Egypt will receive EUR 15 mn for the risk management mechanisms program.

Debt swap also on the menu: The two sides also discussed the latest phase of the Egyptian-German debt swap program worth some EUR 100 mn — the first EUR 50 mn tranche recently received parliamentary approval in Germany and the second tranche is currently under discussions between the two sides.

More from Germany soon: Joint Egyptian-German government negotiations will be held in Berlin in 4Q 2024 to discuss projects that will receive funding between 2024-2026, the statement added.

USD 60 MN FOR ON-LENDING FROM THE EBRD-

CIB secures EBRD funding: The European Bank for Reconstruction and Development (EBRD) will provide CIB with USD 60 mn for on-lending to local women-led businesses and green investments, the lender said on its website.

The breakdown: Some USD 50 mn will fund investments in climate change mitigation and adaptation, namely businesses operating in “agribusiness, manufacturing and services, logistics and distribution, and information and communications technology.” The rest of the funding will target women-led businesses, with a focus on those with less than 250 employees and deriving annual revenues of less than EUR 50 mn.