By Nibal Zgheib
Arab African International Bank (AAIB) today (Nov 25) issued a $500 million sustainability bond, with investments from IFC, the European Bank for Reconstruction and Development (EBRD), and British International Investment (BII), to advance Egypt's green transition and micro, small, and medium-sized enterprises (MSMEs).
The sustainability bond is the first in Egypt - and the largest issued by a private bank in Africa - and will support green and sustainable projects in Egypt. IFC has subscribed in the bond with US$300 million alongside US$100 million from EBRD and US$100 million from BII - with 75 percent of the bond's proceeds allocated to green financing, such as industrial energy-efficiency, small-scale renewable energy projects, and green buildings; and 25 percent allocated for social assets including inclusive finance and MSMEs.
To support the move to a greener, climate-resilient economy, in 2023 Egypt's government announced its aim to reduce greenhouse gas emissions by 37 percent by 2030. The sustainability bond will help Egypt advance towards this target by increasing access to finance to businesses and projects that help reduce greenhouse gas emissions or otherwise protect the environment. The bond will also help address the country's growing financing needs for MSMEs.
This achievement underscores the international financial community's confidence in AAIB's exceptional financial strength, Egypt's attractive investment opportunities and the Egyptian economy potential at large said Tamer Waheed, AAIB's Vice Chairman & Managing Director. "This bond is more than just a financial instrument; It is a strategic extension of our core business model, designed to seamlessly integrate sustainability into our business strategy. We believe that responsible growth is crucial to create a sustainable future for generations to come. We are ensuring that AAIB remains at the forefront of both financial innovation and environmental stewardship by directing capital toward projects that advance ESG."
"This investment is a milestone in extending more financial inclusion, while unlocking the potential of sustainable finance in Egypt," said Sérgio Pimenta, IFC's Vice President for Africa. "As the largest investor in the country's first sustainability bond issued by AAIB, we are empowering a greener, more climate-resilient future for Egypt and contributing to the country's climate commitments."
"We are very proud to invest in this first sustainability bond in Egypt, which opens the path for more such issuances and sets a benchmark for others to follow," said Francis Malige, EBRD's Managing Director for Financial Institutions. "This landmark investment will increase capital market flows towards green and social projects and demonstrates the importance of ingraining green and social criteria in capital markets transactions. Moreover, this project contributes to the resilience of the economy by providing long-term hard currency funding."
"Egypt is a key market for BII. As of 2023, the company's portfolio in Egypt was valued at $707.5 million, with investments in 70 companies that support over 91,000 jobs. BII's current development focus in Egypt includes financial services, renewable energy, healthcare, and infrastructure," said Sherine Shohdy, BII's Regional Director for North Africa. "The AAIB bond will provide a vital source of finance to businesses to take steps towards the transition. Over the last two years BII has committed over £1.2 billion in climate finance and we will continue to deploy our capital in support of the transition towards net zero and climate resilient economies."
