World Bank to Triple Funding to Egypt to $US 1 Billion, Focus on Renewable Energy

The World Bank’s private sector lending branch of the International Finance Cooperation (IFC) has announced plans to triple its funding to Egypt from approximately $US 300 million, in the past year, to $US 1 billion during the current financial year, the National reports.

The boost in lending is part of a funding scheme comprising the wider Middle East region and totals $US 2 billion, representing a 20 percent increase from last financial year.

IFC’s decision to expand funding to Egypt comes against the background of the country implementing a large-scale IMF economic reform program that has helped the Arab world’s most populous nation secure a $US 12 billion loan from the IMF. The reforms include a currency float in November last year and the slashing of subsidies on energy products.

“What helped is the reform of the Egyptian government and the very strong IMF programme that was adopted and agreed to with the IMF,” Mouayed Makhlouf, IFC’s Mena director, said.

“The very strong reforms [in Egypt] we haven’t seen in any other government in the region and we hope others follow, especially in North Africa.”

The IFC is focusing on lending for infrastructure development projects with a particular interest in renewable energy in the Middle East region. Last year, the lender earmarked around half of its released funds in the Middle East to activities related to renewable energy and climate.

Of the $US 1 billion that IFC plans to invest in the Egyptian market, around $US 700 million will be dedicated to renewable energy initiatives.

The lender hopes to secure similar bonds to develop renewable energy projects in Lebanon and Jordan, where wind power and clean energy initiatives are being explored.

“Mena is a group of non-homogenous countries, but the one homogenous factor is the public sector dominance,” added Makhlouf.

“When you do make that switch from public to private, you are going to generate a lot of investment opportunities and that’s where we come in,” Makhlouf said.

The boost in funding comes as Egypt has become the target of several investment sources lately.

In September, the Asian Infrastructure Investment Bank declared its intention to invest $US 210 million in order to “tap” the renewable energy market potential of the country by the Nile.

“We are supporting this project because it contributes to Egypt’s renewable energy capacity, and it will help position the country as a regional energy hub, which will have economic benefits for the entire region,” D.J. Pandian, the AIIB’s vice president and chief investment officer, said in a statement to CNBC.

The Green Climate Fund members also announced in September that it will finance three Egyptian climate projects totaling $US 350 million, according to Al-Mal newspaper, including an initiative on renewable energy, climate change adaptation and private sector participation in climate-focused projects.