For the first time since the 1990s, Egypt hosted the annual meetings of the Islamic Development Bank (IsDB) Group over four days in Sharm El-Sheikh this week.
The meetings, held under the theme of “Beyond Recovery: Resilience and Sustainability” and concluding on Saturday, saw the 47th annual meeting of the IsDB’s board and the 29th annual meeting of the board of the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).
Other IsDB affiliates like the Islamic Solidarity Fund for Development (ISFD), the Islamic Corporation for the Development of the Private Sector (ICD), and the International Islamic Trade Finance Corporation (ITFC) also held their general meetings.
They concluded in the signing of 13 memoranda of understanding (MoUs) and letters of intention between a number of Egyptian institutions and the IsDB. Around 50 cooperation agreements were signed with private-sector companies from Egypt and other member countries during a three-day private-sector forum held on the sidelines of the meetings.
Supporting Egypt’s efforts ahead of hosting the COP27 meeting in November and extending greater support to the private sector and boosting foreign direct investments (FDIs) were the main areas the IsDB Group committed to as its focus in Egypt. It also announced plans to seize investment opportunities in the Suez Canal Economic Zone as well as expand its current investments.
The IsDB also announced the opening of a regional office in Cairo, a move that Minister of Planning and Economic Development Hala Al-Said said aimed at managing and following up on projects and cooperation with stakeholders in Egypt and neighbouring countries, fortifying cooperation between IsDB and the business community.
Speaking to Al-Ahram Weekly, President of the IsDB Group Mohamed Al-Jasser noted that since its inception in 1974 total IsDB funding in Egypt has amounted to $17.8 billion. The energy sector represents the bulk of this with a 60 per cent share, followed by agriculture (18 per cent), real estate (11 per cent), and mining (nine per cent).
The IsDB provided Egypt with $3 billion under the partnership strategy between the two parties (2019-2021) to promote comprehensive and sustainable economic and social development efforts in the country, as well as create jobs and carry out economic empowerment programmes.
Al-Jasser explained that the IsDB plans to increase these facilities to help the country address the ongoing economic challenges imposed by the war in Ukraine and the Covid-19 pandemic.
“One of our main goals is to overcome the challenges arising from the pandemic and the crisis in Ukraine, in order to help rebuild stronger economies for the member countries of the IsDB and to move effectively to boost investment and achieve growth,” he said.
“In the next few years, we aim to focus on developing infrastructure, investing in human capital, and achieving sustainable human development goals.”
On IsDB plans for Egypt, Al-Jasser said that supporting the private sector would be the bank’s top priority in its operational agenda for the country. “Any growth in the Egyptian economy will positively impact the Arab region and Africa. Egypt’s initiative of hosting the IsDB Group annual meetings is an indication of its desire to continue its regional role at all levels, foremost of which is economic development,” he said.
The bank’s cooperation with Egypt has focused on achieving the UN Sustainable Development Goals (SDGs) by creating sustainable infrastructure, providing energy sources, creating suitable job opportunities, supporting women’s empowerment, helping industry, and creating an environment for innovation and creativity, Al-Jasser said.
The Egyptian Agency for Partnership for Development, in cooperation with the bank, had played “an important role in exchanging knowledge and experiences, in addition to building technical and institutional capacities in member countries,” he added.
Egypt is the third-largest equity shareholder in the ICIEC, the insurance arm of the IsDB Group, with a (4.53 per cent) stake after the IsDB (51 per cent) and Saudi Arabia (20.29 per cent).
The ICIEC provides credit and political risk insurance to boost exports, sustain imports of strategic commodities, ensure investment protection, and minimise volatility, helping member countries achieve the SDGs and the transition to clean energy and net zero emissions under the provisions of the 2015 Paris Agreement on Climate Change.
Since its inception, the ICIEC has insured operations totalling $7.6 billion in Egypt. These include $3.1 billion to cover imports of strategic goods, $2.4 billion in exports credit insurance, $1.7 billion in insurance of foreign investments, and $0.4 billion for the cover of foreign investments, according to Oussama Kaissi, CEO of the ICIEC.
“This excludes the ICIEC’s insurance support for trade and investments in Egypt in 2021 amounting to $9.7 million, of which $7.5 million was in support for exports and imports, while $2.2 million was in support of foreign direct investments,” Kaissi said.
“Egypt features in the top six of the various trade and investment business metrics facilitated by the ICIEC in 2021,” he added.
He explained that despite the impacts of the ongoing Covid-19 pandemic, the fallout from the conflict in Ukraine, supply chain disruptions, and steep rises in inflation, the ICIEC has managed to balance its continued support for member states with a sound risk-mitigation strategy.
The Covid-19 pandemic and the Russian war in Ukraine have pushed it to shift its priorities in terms of supporting member countries, including Egypt, Kaissi said.
The ICIEC has developed partnership initiatives with IsDB Group entities to better serve member states and support their recovery efforts from the negative impacts of Covid-19. The IsDB Group was one of the first multilaterals to respond to the pandemic with a $2.3 billion emergency rescue package under the Strategic Preparedness and Response Programme (SPRP) to combat the health and socio-economic effects of Covid-19, Kaissi said.
“We contributed to the implementation of the SPRP with a total of $770 million in approved transactions in 2021. ICIEC cover facilitates the import of emergency goods and essential staples such as medical equipment, food, crude oil, and gas. In addition, the ICIEC provides insurance cover for critical infrastructure projects to support Covid-19 relief efforts, such as the construction of regional hospitals, clinics, and specialised facilities,” he added.
The ICIEC similarly collaborates with the IsDB and the ISFD to develop main emergency initiatives with a total of $2.4 billion between them. Egypt has been a beneficiary of both, according to Kaissi.
“We have excellent communications and cooperation with our line ministries and IsDB Governor for Egypt Minister al-Said, who are helping us with guidelines and feedback on how we can improve our operations and services in the country,” he noted.
CEO of the International Islamic Trade Finance Corporation (ITFC) Hani Salem Sonbol told the Weekly that the Corporation seeks further partnerships with the private sector to support Egypt’s development plans as well as support its economy, as “there is a large gap that it is trying to fill.”
“To date, we have successfully implemented five framework agreements with Egypt with total financing of $14 billion. During the annual meetings, we inked an agreement with Egypt’s planning minister to double the finance cap of the upcoming framework agreement (2022-2024) to $6 billion,” Sonbol said.
He said energy and food security were the main focus of the ITFC’s operations in Egypt over the coming two years.
The IsDB meetings also touched upon climate-adaptation efforts, with the Group signaling its support for Egypt’s efforts ahead of the COP27 meeting scheduled for November in Sharm El-Sheikh.
Al-Said, also chair of the IsDB board, told the Weekly that adapting to climate change has become a major priority for Egypt, adding that the Egypt Vision 2030 Strategy, launched in 2016, has clear goals to upgrade the share of renewable energy’s contribution to energy usage in Egypt and the total abandonment of coal.
The government is currently working on drafting an updated Strategy that aims at addressing climate change, water scarcity, and rapid population growth, as well as accelerating the green recovery in the light of the heavy implications of both the pandemic and the war in Ukraine, Al-Said said.
Regarding Egypt’s hosting of the COP27 meeting, Al-Said explained that Egypt aimed to achieve tangible progress in priority areas such as climate-financing, adaptation, loss, and damage, in order to reduce the burden on the state’s general budget in implementing climate-change adaptation activities.
The cabinet has also approved a new tax-incentive package aimed at encouraging the private sector to establish and increase green economy investments.
“This has been done through expanding the scope of companies and sectors that enjoy the incentives mentioned in the investment law. The priority sectors include the production, storage, and export of green hydrogen and green ammonia and the manufacture of plastic alternatives, including sustainable transport and energy-efficient projects,” Al-Said explained.
She added that these incentives are available for companies operating on a larger scale in renewable energy and industrialisation projects, and that they will receive deductions ranging between 30 and 50 per cent of total investment costs from taxable profits and see their customs due fixed at two per cent on imported machinery for sustainable projects, in addition to facilitating access to land and support for green exports.
*A version of this article appears in print in the 9 June, 2022 edition of Al-Ahram Weekly.