Greening the Egyptian Economy: EBRD Backs SMEs with $175m in Sustainable Finance:
In a visionary move, the European Bank for Reconstruction and Development (EBRD) is championing the cause of environmental sustainability by backing small and medium-sized enterprises (SMEs) with an astounding $175 million in green finance. This monumental initiative aims to propel the Egyptian economy toward a greener and more resilient future. The recently allocated funds are set to revolutionize Egypt’s approach to climate change. These funds for SME loan will be channeled through local financial institutions, empowering them to lend to the private sector for transformative climate mitigation and adaptation projects.
This remarkable initiative marks the second phase of the renowned Green Economy Financing Facility (Geff) program, receiving support from the EU and the prestigious UN’s Green Climate Fund. The Geff program aims to bridge the gap between environmental pledges and tangible actions on the ground. The program strives to catalyze an environmentally conscious revolution by injecting green finance resources into these projects, steering the Egyptian economy towards a greener horizon.
Shifting Tides: Egypt’s Green Transition and the Role of Green Finance
Egypt has taken a momentous step by advancing its renewable energy goals, bringing forward the target to achieve 42% of energy from renewable sources by 2030, five years earlier than planned. Currently, the country has already reached an estimated 20% renewable energy capacity. To expedite the green transition, fostering international cooperation is of utmost importance. Green finance permeates the strategies, propelling the region toward a sustainable future. Notably, global investment in clean energy reached a historic milestone, surpassing spending on fossil fuels for the first time, totaling $1.1 trillion last year.
EBRD’s Eco-investing in Egypt: Driving Sustainability Across 25 Projects
Egypt witnessed significant investment last year, with the EBRD bank contributing €1.3 billion to 25 projects, of which nearly 60% were green initiatives. Since 2017, the Geff program has injected €240 million to support resource efficiency, climate adaptation, and circular economy efforts. With esteemed local partners like the National Bank of Egypt, Banque Misr, Ahli United Bank, and QNB Al Ahli, the program operates globally through a network of 170+ financial institutions. Together with co-financing partners, it has enabled 218,000+ green investments, avoiding 9.5 million tonnes of CO2 emissions annually. It has expanded its focus on SMEs and adaptation technologies in its second phase.
Central Bank of Egypt’s Sustainability Mandate: Driving Green Finance Transformation
Before Cop27, the Central Bank of Egypt introduced regulations mandating sustainable finance strategies for banks. It is now compulsory for all banks to establish dedicated sustainability departments and report on green finance to their chief executives. Furthermore, banks must disclose sustainability activities and involve environmental experts in assessing major corporate projects. Amidst economic challenges resulting from the Russia-Ukraine conflict, Egypt’s recently created lending facility aims to support vulnerable segments of the economy during this period of inflation, declining reserves, and a depreciating currency. Small and medium enterprises (SMEs) are vital to Egyptian society, encompassing a significant share of the population across formal and informal sectors.
