INTERVIEW: EIB’s Guido Clary highlights vision for Egypt's economic resilience

Doaa A.Moneim , Sunday 13 Oct 2024

The European Investment Bank (EIB) perceives Egypt as a market with great potential, mainly in the renewables, transportation, and small and medium-sized enterprises (SMEs) sectors, according to the head of EIB's regional office in Cairo.

Clary

 

In an interview at the European Investment Bank (EIB) headquarters in Cairo, Ahram Online spoke with Clary about Egypt's importance as an EIB market and the progress on the EU's $8 billion financing package committed to Egypt in March. The conversation also touched on key sectors where the EIB aims to expand its financing and investment activities.

Clary highlighted the EIB's crucial role in economic growth and sustainable development.

"As the bank of the European Union, the EIB recognizes the significant partnership between Egypt and the EU, particularly in the current geopolitical climate. This partnership strengthens economic collaboration and positions Egypt as a key player in the region's sustainable development efforts," Clary told Ahram Online.

Investment Landscape and Commitment
 

Clary emphasized that Egypt is a cornerstone of the EIB's global operations, representing its largest exposure outside the EU with a portfolio of approximately €7 billion (around $8 billion).

"This portfolio is highly diversified. Over half is allocated to the energy sector, a key focus for Egypt’s economic goals. Around 27 percent goes to transportation projects, with water and electricity initiatives making up about nine and five percent, respectively," Clary said. He added that the EIB focuses on expanding its investments in Egypt's electricity sector, underscoring its commitment to supporting the country's renewable energy ambitions.

"The EIB views its partnership with Egypt as vital to strengthening the country's resilience to external shocks, helping Egyptian businesses expand internationally, and attracting more foreign investment," Clary stressed. He noted that the long-term benefits of this partnership would foster sustainable growth.

Empowering the Private Sector
 

In response to a question about Egypt’s efforts to empower the private sector, Clary explained that the EIB is closely monitoring the government’s actions to increase private sector participation, in line with the country’s commitments to the International Monetary Fund (IMF) under the ongoing $8 billion Extended Fund Facility (EFF) program.

Clary described this as a major shift in the government’s approach to supporting the private sector. In addition, he noted that increasing the capabilities of private investment requires a robust public sector infrastructure, stressing that private enterprises are increasingly leading renewable energy production.

He also emphasized that the EIB is committed to using its financial and technical expertise to support infrastructure development in areas like electricity transmission and distribution, which are crucial for private sector growth.

"The bank’s experience in financing renewable energy projects across Europe uniquely positions it to contribute to Egypt’s green energy goals," he added.

Focus on Small and Medium-sized Enterprises (SMEs)
 

Clary highlighted the pivotal role of small and medium-sized enterprises (SMEs) in the Egyptian economy, noting that SMEs account for over 26 percent of private sector employment and contribute significantly to the country’s GDP.

"The EIB is committed to helping SMEs transition from the informal to the formal economy, enhancing transparency and compliance with fiscal regulations. Furthermore, approximately 55 percent of our portfolio in Egypt is dedicated to supporting SMEs," Clary said. He explained that the EIB's strategy involves working with local banks to identify and support growth-oriented SMEs, including financing small-scale renovations and upgrades, such as adopting green technologies and improving production capacities.

Progress and Initiatives from the Egypt-EU Investment Conference
 

During the Egypt-EU Investment Conference held in June, several announcements highlighted the ongoing collaboration between the EIB and Egypt. Clary pointed out the EIB’s commitment to the Green Sustainable Industry Initiative, which aims to provide €271 million in new investments across various industrial sectors. This initiative is designed to help Egyptian companies meet international environmental standards, boosting their competitiveness in European markets.

The EIB pledged €1.8 billion for new investments focusing on turning financial commitments into tangible projects to support Egypt’s development goals. This includes participation in a private sector investment fund, with an initial contribution of €350 million to support regional investments in Egypt, Tunisia, and Morocco.

Green Hydrogen: A Key Focus Area
 

Clary also discussed the potential of green hydrogen in Egypt, citing the country’s strategic location and abundant renewable energy resources.

"The EIB is involved in a pioneering commercial green hydrogen project in partnership with Skatek. The project centres on building a 100-megawatt electrolyzer for renewable energy plants, expected to produce 70,000 tons of green ammonia annually. This positions Egypt as a potential global green hydrogen production hub," Clary explained.

He added that the EIB's support for green hydrogen aligns with Egypt’s ambitions to capitalize on its renewable energy potential for domestic use and exports. Clary also noted the potential for cooperation with European markets, particularly through electricity interconnections, which could significantly enhance Egypt’s role in the green energy sector.

Challenges and Future Outlook
 

Despite ongoing geopolitical challenges, including tensions affecting key revenue sources like the Suez Canal and tourism, Clary expressed confidence in Egypt’s growth prospects. He emphasized the government's commitment to expanding the industrial sector’s contribution to GDP from 17 percent to 31 percent by 2027.

"This commitment is backed by efforts to attract foreign investments and establish joint ventures that tap into Egypt's skilled workforce," Clary said. He also outlined three key recommendations for the Egyptian government to support SMEs: streamline administrative and bureaucratic processes, facilitate the shift from the informal to the formal economy, and improve access to financing for SMEs with strong business plans.

"The EIB is committed to maintaining credit lines and collaborating with local banks to ensure that SMEs receive the necessary support to thrive," he added.

Clary expressed optimism about future partnerships as the EIB continues collaborating with the Egyptian government on various projects, including investments in the transport and food sectors. He mentioned that new announcements are expected by the end of the year, further demonstrating the bank's commitment to advancing sustainable development in Egypt.

"In summary, the EIB's partnership with Egypt is built on a shared economic growth and sustainability vision. As both sides work to overcome challenges and seize opportunities, the EIB remains steadfast in supporting Egypt's journey toward a sustainable future," Clary affirmed.

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