Egypt is speeding up its efforts in terms of green transition and climate adaptation ahead of its hosting of the upcoming UN Conference of Parties on Climate Change (COP27) that will be held in the Red Sea city of Sharm El-Sheikh on 8 November.
Hassan explained to Ahram Online the GEFF programme's role in scaling up Egypt’s efforts in transitioning to a green economy, as well as supporting small- and medium-sized enterprises (SMEs) in the country.
The €140 million GEFF was launched in Egypt in 2017 with a focus on climate mitigation, followed by the Green Value Chain facility in 2021 with €70 million directed to SMEs and adding climate adaptation.
Recently, the EBRD launched the GEFF II facility in Egypt with €150 million for SMEs to cover both mitigation and adaptation.
These programmes receive support from the European Union (EU) and the Green Climate Fund (GCF) in the form of the incentive grant (funding from EU), technical assistance (funding from EU and GCF) and concessional co-financing (funding from GCF).
Ahram Online (AO): How do you perceive the green financing scene in the Egyptian market, especially for SMEs?
Emad Hassan (EH): I believe that the next decade will see a persistent growth in green financing due to the gap that keeps widening between the desired level of activities to face the threat of climate change and the available financing options.
However, growth will not be limited to the amount of funding, but also in having a variety of options to meet market needs. Whether local financing sources will start appearing or not remains to be seen, but I think that its crucial to the equation as development partners and the donor community can only do so much.
AO: What is the key role the GEFF plays in this regard?
EH: The GEFF offers access to finance and financing institutions knowledgeable of climate change impacts and how to achieve economic sustainability, which are critical elements necessary to move the market towards a greener economy.
The GEFF experience in Egypt is a success story for building the capacity of the banking industry and having examples of actual implemented green projects on the ground.
It is critical for bank professionals to be able to identify and qualify green projects, but without having a portfolio of implemented projects applying relevant solutions that are geographically distributed, public awareness will remain limited.
AO: What are the total finances the facility dedicates to boosting green finance in Egypt?
EH: To date, the EBRD has allocated about $650 million under different GEFF facilities, of which $450 million are dedicated to SMEs.
AO: How could such a facility support Egypt’s efforts ahead of the COP27 it will host in November?
EH: The presence of a financing platform like the GEFF programme with participation from multiple banks to reach out to the market — and with a variety of donors and development partners backing it up — is a testimony that Egypt is moving towards greening its economy.
It is also a statement of confidence that the donors and development partners community see the Egyptian market as ripe and ready to transition towards a sustainable existence; the message is stronger when results are tangible and present for people to see.
AO: What is the main mission the facility is expected to do in the Egyptian market vis-a-vis the COP27?
EH: The COP27 is not a destination — it’s one stop in a journey that started a few decades ago. So, while we are very excited about using the COP27 as a base to communicate the success of the GEFF programme to the world; we see the event as an opportunity to increase awareness of the business community and the general public of the main mission, which is the need to find financial resources to complete the job. It’s going to be a long journey.
AO: In your opinion, what are the main challenges SMEs in Egypt face in terms of their green transition?
EH: SMEs, by definition, are small entities in the economy in terms of size and revenues, and as such, they need all the help they can get — financially and technically — in their green transition. Some of the existing GEFF facilities are designed specifically for SMEs, which are the backbone of any sustainable economy.
AO: During Egypt’s Corporate Social Responsibility (CSR) Forum that was held in January, you said that Egypt has $700 million dedicated to green project finances from both public and private sector, $400 million of which represents the share of the banking sector while only $100 million are utilised… Could you please clarify that further?
EH: To date, the EBRD has allocated about $650 million under different GEFF facilities for lending to private sector borrowers, but $450 million of those are channelled through private banks and $200 million through one public bank. Despite the impact of the pandemic and recent turbulance on the market, over $100 million have been signed into loans in about 100 projects.
AO: Do you plan to cooperate with the government in achieving your mission?
EH: Building Egypt’s climate resilience cannot practically work if proper coordination and cooperation with the country’s relevant player are not there. The GEFF programme is an initiative introduced mainly to support Egypt’s efforts in transitioning to a greener economy; it’s part of the puzzle and not an independent initiative.