2024/06/29

Al-Mashat: €5.5 billion EU funding boosts Egyptian private sector over 4 years

Minister of International Cooperation, Dr. Rania Al-Mashat, revealed on Saturday that the European Union has provided $5.5 billion in funding to the private sector in Egypt over the past four years. An additional $7.3 billion has been allocated to government sectors.

The announcement came during the Minister’s participation in the opening session of the Egyptian-European Investment Conference, entitled “Presenting the Economic Reform Agenda and the Investment Climate in Egypt.”

Participating in the session were: Dr. Hala Al-Saeed, Minister of Planning and Economic Development, Valdis Dombrovskis, Deputy Executive Director of the European Commission, Oliver Varhelyi, Commissioner for Neighborhood and Enlargement of the European Commission, Anna Berdi, Vice President of the World Bank Group for Operations, and Karim Awad, CEO of Hermes Holding Group.

During the session, the Minister of International Cooperation spoke about the role of economic relations between Egypt and the European Union within the Team Europe initiative, in attracting private sector investments, integration between European institutions and countries and other development partners in creating the investment climate in Egypt, and the models and examples achieved in this regard. She also discussed how Egypt's government reforms are improving economic ties with Europe and creating new opportunities for investment.

The Minister of International Cooperation highlighted the significant progress in economic relations between Egypt and the European Union since 2020. This progress is shown in three key areas:

-Improved Quality of Joint Projects: Both government and private sectors are working together on high-quality projects in various priority development areas.

-Multiple Financing Options: The European Union and European financing institutions offer various financing mechanisms for both government and private sectors through the Team Europe initiative.

-Stronger Collaboration: There's increased integration between the European Union and other financing institutions to invest in Egyptian private sector projects.

Over four years, the partnership funded projects exceeding $12.8 billion. This supported both government ($7.3 billion) and private sector projects ($5.5 billion) in Egypt and Europe. The funding attracted European investments in essential areas These include sustainable infrastructure, renewable energy and electricity, food security, health and education, sustainable transportation, water and sanitation networks, small, medium and micro enterprises, environment, solid waste management, women’s empowerment, and other sectors.

These investments benefitted a wide range of private businesses, from large corporations to small startups and individual entrepreneurs.

She explained that the European Union and its financial institutions offer various attractive options for private sector investment. These include: soft credit lines, as well as contributions to corporate capital, and soft financing for the private sector that is much lower than the cost of the local and external market, in addition to technical support and consultations, and feasibility studies for implementing projects.

She highlighted the success of the European Investment Bank (EIB), which invested €790 million in local and regional investment funds, provided €3.1 billion in credit lines to Egyptian banks, like Al-Ahly and Misr Alexandria and supported over 13,000 projects for medium-sized companies, creating 242,000 jobs.

Over 80% of the European Bank for Reconstruction and Development's (EBRD) investments in Egypt have been directed to the private sector. From 2017 to 2023, EBRD invested approximately $119 million in Egyptian companies operating in the European Union, primarily in the agriculture, manufacturing, and services sectors. During the same period, from 2014 to 2024, EBRD invested around $456 million in European companies operating in Egypt, focusing on sectors such as energy, agriculture, manufacturing, and services.

Rania Al-Mashat stressed that these developments did not come out of nowhere. They stem from government reforms and strategies, including setting the “electrical supply tariff” in 2014, launching the national strategy for green hydrogen development, and the implementation of plans to stimulate investment in renewable energy sources. These initiatives have fostered a more attractive environment for institutional investors, encouraging their participation in these key sectors within the Egyptian economy.