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As part of the Transforming Financial Systems for Climate (TFSC) program and with financial support from the Green Climate Fund (GCF), on 16 November 2020, the National Bank of Egypt (NBE) and Agence Française de Développement (AFD) signed a new EUR 100m loan agreement to finance projects to support the low-carbon and climate-resilient transition of Egyptian SMEs. This credit line to NBE aims to finance investments that are 100% climate-compatible in terms of both greenhouse gas mitigation issues and aspects related to adaptation to the impacts of climate change.

Under this program, AFD has also allocated NBE a EUR 1.5m grant to implement technical assistance to support NBE’s strategy to take greater account of the risks and opportunities related to the climate in its investment strategy and portfolio. Through NBE and its partner institutions, this strong partnership between the two institutions will help disseminate innovative financing mechanisms for sustainable development, especially for the development of climate finance.

The Arab Republic of Egypt is highly vulnerable to climate change and faces a number of threats to its economic, social and environmental sustainability. The population has risen from 36 million in 1973 to over 100 million in 2020. The rapid population growth combined with ambitious development and industrialization policies have put a significant strain on Egypt’s natural resources in the form of air, water and soil pollution. Over time, the scale of these environmental and social costs is likely to undermine some of the gains of economic growth.

However, the existing national strategies in Egypt show that there is a remarkable awareness of the value of a “green transformation” for Egypt’s competitiveness and future development prospects. In this respect, the stakeholders (public authorities, private sector, financial sector, population, etc.) are converging towards a common agenda that recognizes the need to build a model with a low-carbon footprint. Among these stakeholders, local financial institutions have a key role to play in accelerating climate finance.

In this context, NBE has expressed its interest in strengthening its capacity for climate finance in order to further mainstream climate issues into its operations and increase its climate investments. AFD Group is expected to support NBE through its loan and grant facilities under the Transforming Financial Systems for Climate in Egypt (TFSC Egypt) program.

The financing agreements were signed by the Chairman of the National Bank of Egypt, Mr. Hisham Okasha, and Dr. Fabio Grazi, Director of AFD’s office in Egypt.

On this occasion, Dr. Grazi said “Today’s agreement reaffirms AFD’s and NBE’s commitment to propel the strategic partnership between our two institutions to new heights in support of sustainable and inclusive economic development in Egypt. The signing of these new agreements is based upon the shared vision of mainstreaming climate change in order to tackle the challenges ahead and seize the opportunities available on the Egyptian market.”