Egypt – Arab African International Bank (AAIB) has issued a US$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. It will support green and sustainable projects in Egypt.
IFC has subscribed to the bond with US$300 million, along with US$100 million from EBRD and US$100 million from BII.
Seventy per cent of the bond’s proceeds are allocated to green financings, such as industrial energy efficiency, small-scale renewable energy projects, and green buildings, and 25 per cent are allocated for social assets, including inclusive finance and MSMEs.
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To support the move to a greener, climate-resilient economy, Egypt’s government announced in 2023 its aim to reduce greenhouse gas emissions by 37 per cent 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.
Tamer Waheed, AAIB’s Vice Chairman & Managing Director, said:
“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.”
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Sérgio Pimenta, IFC’s Vice President for Africa, commented on this partnership. He said:
“This investment is a milestone in extending more financial inclusion while unlocking the potential of sustainable finance in Egypt. 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.”
Francis Malige, EBRD’s Managing Director for Financial Institutions, said:
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“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. This landmark investment will increase capital market flows towards green and social projects and demonstrate the importance of ingraining green and social criteria in capital market transactions. Moreover, this project contributes to the resilience of the economy by providing long-term hard currency funding.”
Sherine Shohdy, BII’s Regional Director for North Africa, said:
“Egypt is a key market for BII. As of 2023, the company’s portfolio in Egypt was valued at US$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. The AAIB bond will provide a vital source of finance for 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.”
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