Egypt will be able to finance the equivalent of $500 million through the sale of Panda Bonds, which are Chinese yuan-denominated bonds issued by foreign borrowers, thanks to the Bank Group's partial credit guarantee.
The profits from the bonds will be utilized, among other things, for efforts in clean transportation, renewable energy, energy efficiency, sustainable water, and wastewater management, finance for MSMEs, and important health services. According to Egypt's Sovereign Sustainable Financing Framework (SSFF), certain areas are given priority.
"Egypt’s new agreement with the African Development Bank provides an additional dimension to the strategic partnership, which is focused on promoting the transition towards renewable energy and financing sustainable infrastructure projects. Issuing international bonds in an untapped new market, backed by the African Development Bank, helps diversify financing sources and builds on previous efforts, including the green bonds launched in 2020,” Egypt’s Minister of International Cooperation, Dr. Rania A. Al-Mashat, stated.
“Egypt will be the first African country to issue a Panda bond and, as the African Development Bank, it is our pleasure to provide support to Egypt to enable them to access the market. This partial credit guarantee will enable Egypt to enhance its credit rating and catalyze financing from international investors on competitive terms and pricing,” El Azizi said, AFDB’s Bank Director General for North Africa, summarizing the deal as historic.
Since 2020, when it issued the first green bond in the MENA area, Egypt has been involved in the sustainable and green bond markets. To further emphasize its support and commitment to using a variety of mechanisms for the financing of green projects, the Egyptian Ministry of Finance created the nation's SSFF in 2022, just before the COP-27 summit, which was hosted in the Red Sea resort of Sharm El Sheikh.
These instruments include sustainable, social, blue, Sukuk, and other debt instruments in addition to green bond issuances. According to worldwide best practices, the framework lays out protocols and guidelines for resource usage, project selection, monitoring, and assessment.
The initiative will enhance Egypt's social and environmentally conscious goals while fostering inclusive growth. The sectors included under the Sovereign Sustainable Financing Framework closely match the bank's High-5 operating objectives as well as its country strategy for Egypt.