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$3.4B out of $9.8B of development funds dedicated to private sector: MoICMin

Al-Mashat added that the development funds are long-term and low in interest compared to other financing from international markets

By: Business Today Egypt

Wed, Feb. 3, 2021

Egypt is still eager to increase the private sector to participate in development efforts in various sector, states the Minister of International Cooperation, Dr.Rania A. Al-Mashat.

Al-Mashat noted that her ministry is working to push forward in this particular direction through international partnerships with multilateral and bilateral development partners by securing development funds for state sectors, including private sector and small and medium enterprises (SMEs).

The minister said that the Ministry of International Cooperation (MoIC) secured $9.8 billion in development funds from multilateral and bilateral development partners.

Around 30 percent, or $3.2 billion, was dedicated to the private sector.

In 2021, the minister states that it will be the year to focus on a greater role for the private sector through development financing, especially with regards to green projects that promote sustainable growth.

While there was a decrease in development funds being offered alongside an increase in requirements from countries due to the global challenges faced by development cooperation, Egypt continued on its path to reform. Egypt has clear standards that govern procedures for concluding development financing agreements.

Al-Mashat added that the development funds are long-term and low in interest compared to other financing from international markets, and Egypt has many development partners, including the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB) and the International Finance Corporation (IFC).

The state also aims to promote the transition towards a green economy through the 2035 Integrated Sustainable Energy Strategy, which aims to increase the proportion of new and renewable energy being generated to 42 percent of the total energy, explained Al-Mashat.

This is an important factor in attracting development funds not only for government projects, but also for private sector projects, she added.

Al-Mashat shared that the current development financing portfolio covering the UN Sustainable Development Goals (SDGs) amounts to $25 billion directed to 377 projects, representing only 10 percent of the state's public debt and 25 percent of the external debt.

The minister explained that Egypt’s homegrown economic reform program initiated in 2016 within the framework of the agreement with the International Monetary Fund (IMF) contributed to strengthening the country’s economy and helped Egypt withstand the shock that came with the COVID-19 pandemic. Through structural reforms, enhanced private sector participation, economic growth, and increased job opportunities, the Government of Egypt was able to move forward.

The Ministry of International Cooperation is leading negotiations between the World Bank Group and a number of ministries and relevant authorities in Egypt, within the framework of financing development policies.

In November 2020, a delegation from the World Bank held several meetings to discuss the set of structural reforms that the Egyptian government intends to implement during the 2020/2021 fiscal year for access to finance.

The discussions that took place included preserving macroeconomic gains, enhancing women's access to economic opportunities, and increasing private sector participation to achieve sustainable growth.

On this note, H.E Dr. Rania A. Al-Mashat, Minister for International Cooperation, co-authored with Sérgio Pimenta, Vice President of the Middle East and Africa at the IFC, in the FDI Intelligence platform of the Financial Times, a joint article discussing Egypt's leadership in the transition efforts towards a sustainable green economy through partnerships with the private sector and international financing institutions.

This comes within the framework of the third pillar of Economic Diplomacy; Global Partnerships Narrative, to promote Egypt’s development stories in various sectors that are implemented through multilateral and bilateral development cooperation through “People at the Core, Projects in Actions, and Purpose as the Driver”.

The Ministry of International Cooperation released its annual report in 2020 under the title "International Partnerships for Sustainable Development: Writing the Future in a Changing Global Dynamic”, and it reported that $9.8 billion was secured; of which $6.7 billion was secured for financing sovereign projects and $3.191 billion went to support the private sector.