File Photo: African Development Bank (AfDB) headquarters building in Abidjan, Ivory Coast. Photo courtesy of AfDB website
The loan is specifically targeted at enhancing the business environment, fortifying competition frameworks, promoting key productive sectors such as manufacturing and agribusiness, and facilitating the transition to a greener economy, according to a statement released by the bank on Monday.
The injection of funds is expected to have a positive impact on private investment, raising it from 3.3 percent of GDP in FY2021/22 to 4.3 percent in FY2024/25.
Furthermore, the loan is anticipated to contribute to an increase in the value of Egypt’s manufacturing sector, from 14.2 percent of GDP in 2021 to a record 17 percent by 2025.
A key objective of the programme is to expand the area of state-owned lands dedicated to renewable energy investments to 30,000 square kilometres by 2025.
Egypt aims to secure $300 million from the AfDB through FY2023/24.
This will help Egypt achieve its goal of securing $3 billion in financing by the end of 2023 to bridge an estimated $17 billion gap over the next four years.
Minister of Finance Mohamed Maait stated in July that this financing is expected to be obtained through partnerships with the AfDB and the Asian Investment International Bank (AIIB), as well as through the issuance of Panda and Samurai bonds targeting Asian investors.
In October, the AfDB and AIIB provided guarantees to support the issuance of Egypt’s first Sustainable Panda Bond at a value of ¥3.5 billion ($500 million), which helped attract investors and secured competitive terms for the transaction.
In May, the AfDB mobilized $2.2 billion for Egypt's water desalination and treatment projects for agriculture. This funding formed part of the larger $14 billion financial mobilization for Egypt's Nexus for Water, Food, and Energy (NWFE) programme.
Egypt, as a founding member of the AfDB Group, has been a recipient of the bank's lending operations since 1974.
Over the years, the AfDB has financed crucial infrastructure development projects, including transportation, power, water supply, and sanitation, supporting Egypt's agricultural, communication, financial, industrial, social, and institutional sectors, as well as economic reforms and capacity-building initiatives.