The European Investment Bank, the European Union's financing institution, is signing over EUR 36.44 million(1) in financing facilities to support small and medium sized industry and technology projects and for environmental feasibility studies in Egypt. The financing arrangements are being concluded during an official visit by the EIB's Board of Directors to Cairo. As well as holding a regular Board Meeting, the Directors are in Egypt for discussions with officials in government, business and financial circles.
The financing arrangements include:
Global loan for the Export Development Bank of Egypt (EDBE)
An EUR 30 million global loan(2) has been arranged with EDBE to support investment by Egyptian small and medium sized enterprises (SME). The EDBE is a public sector financial institution specialising in medium to long-term funding for small companies expanding or developing new products and markets. The loan will allow EDBE to provide long-term finance for its Egyptian customers, particular in foreign exchange required for projects in the export and tourism sectors.
This is the second EIB global loan arranged with EDBE to support Egyptian SMEs. A previous global loan in the late eighties was financed with the EIB's own resources and risk capital operations(3). This new loan reinforces the development of a dynamic SME sector ready to meet the challenges of the creation of a Euro-Mediterranean free-trade area. It complements the on-going 1998 EIB global loan for the Competitive Upgrading of Egyptian Enterprises, in which EDBE participates, of EUR 25 million in risk capital to finance Egyptian undertakings engaged in modernising and restructuring.
Middle East Technology Fund (METF)
An EUR 6 million risk capital facility from the European Union's budgetary resources to METF will support the development of the region's information technology industry. METF will invest the finance in the equity of private companies in the information technology sector, including software, media, telecommunications and related industries in Egypt and Turkey. The facility could be later extended to other Mediterranean countries, including Jordan, Syria, and Lebanon. The fund is promoted by the Egyptian Financial Group (EFG) - Hermes experienced in equity finance in the region and in the software, telecommunications and information technology sectors.
This is the second EIB risk capital investment facility with an information technology focus in the Mediterranean region, following a USD 4 million participation in the Jordan Hi-Tech Fund in October 2000, also promoted by EFG-Hermes. This financing reflects the region's move towards establishing a new information technology based economy.
Feasibility study of the Abu Rawash wastewater treatment plant
An EUR 350 000 grant from METAP(4) funds will finance a feasibility study on the modernisation and extension of the Cairo West Bank wastewater collection and treatment infrastructure, and in particular the Abu Rawash wastewater treatment plant.
METAP grants have previously also financed studies on the Cairo wastewater master plan which led to works to improve and extend water and sewerage services in the Cairo East Bank area and which benefited from an EUR 90 million loan from the EIB, in particular the construction of sewer tunnels and the extension of the Gabal El Asfar waste water treatment plant.
Feasibility study of Agricultural Solid Waste Disposal
A grant of EUR 90 000 from METAP resources is to finance a study to examine the management of agricultural solid waste disposal. His Excellency Prime Minister, Dr Atef Obeid, has requested the study.
Disposal of agricultural waste is of particular importance for Cairo, and the study will focus on ways to reduce rice-straw burning. Solutions will be sought which are economically and technically viable and consistent with sustainable agro-economic practices. Better management of polluting emissions will help improve the quality of life for the 15 million inhabitants of Cairo.
EIB Directors visit seven EIB financed projects
Once a year, the EIB's Board of Directors holds a Board Meeting away from the Bank's headquarters in Luxembourg, to allow them to have direct contacts with EIB customers and discuss issues with local government, financial and business representatives. As well as holding their meeting on 10 April in Cairo, the Board, headed by EIB President, Philippe Maystadt, is making a fact-finding tour in Egypt of seven EIB financed projects. These are: the MIDOR oil refinery, the Alexandria Tyre Factory, Les Jardins du Nil, the Al Ahram printing works, the Winter Palace Hotel, the Egyptian Aluminium plant, and the National Drainage programme.
The EIB, established in 1958 under the Treaty of Rome, finances capital investment projects which further European Union policy objectives. It also helps implement the EU's co-operation policies towards third countries. In the Mediterranean region the EIB operates under the Euro-Mediterranean Partnership, which complements the EU Member States' own bilateral co-operation policies. Under the second financing mandate of the Euro-Med Partnership covering the period 2000-2006, the EIB is to provide EUR 6 425 million for projects in the 12 Mediterranean countries which have signed co-operation or association agreements with the EU. The EIB is giving a particular focus to supporting efforts to develop a more open economy and to assist companies in preparing for market liberalisation, with a view to the progressive establishment of a free-trade area with the EU.
Since 1978, the EIB has lent some EUR 2 billion for investment in Egypt, with an emphasis on supporting industrial development through large-scale schemes and through global loans to the Egyptian banking sector for SME investment. Infrastructure and environment and energy schemes have also benefited from EIB loans.
(1) Conversion rates on 30/3/2001, Euro 1: USD 0.88; DEM 1.95583; GBP 0.624100; EGP 3.47425.
(2) Global loan arrangements are made available to financing intermediaries for on-lending in smaller amounts, according to criteria established by the EIB, to support investment by small and medium sized enterprises.
(3) In addition to loans from its own resources (finance raised on capital markets), the EIB also deploys risk capital from EU budgetary funds. A long-term financing instrument, risk capital is a means of tailoring remuneration and repayment to the performance of the project financed, while at the same time consolidating the capital base of the promote.
(4) In addition to providing finance for environmental protection projects, in 1990 the EIB helped to launch the "Mediterranean Environmental Technical Assistance Programme" (METAP). Over ten years, the Bank has provided nearly EUR 15 million in the form of grants for technical assistance and the preparation of environmental protection project.