AfDB Approves $170M Loan for Egypt’s Private Sector Growth and Green Transition

Phase II of the Programme Focuses on Economic Diversification, Renewable Energy, and Empowerment of Women-Led Businesses.

The African Development Bank (AfDB) has approved a $170 million loan to support Egypt’s efforts to boost private sector development, economic diversification, and green growth initiatives. This funding, announced on 27 November 2024, represents the second phase of the Support Programme for Private Sector Development and Economic Diversification, covering the period 2024-2025.

The programme aims to transform Egypt’s economic landscape by improving the business environment, promoting renewable energy, and supporting small and medium enterprises (SMEs), particularly those led by women and young entrepreneurs.

Key Aspects of Phase II

The initiative builds on the success of the first phase, implemented during 2023-2024, which saw $131 million in AfDB funding, with additional contributions from Korea’s Economic Cooperation Development Fund (EDCF) and the Japan International Cooperation Agency (JICA). Phase II will be co-financed by the World Bank, reflecting a robust global partnership in advancing Egypt’s economic goals.

By fostering a conducive climate for private investment, Phase II seeks to catalyze growth in key sectors such as manufacturing and agribusiness while driving the country’s green transition through renewable energy and reduced carbon emissions.

Notable components of the programme include:

• Legalization of Informal Businesses: Simplifying the process for informal enterprises to transition into the formal sector.
• Support for SMEs: Streamlining legal frameworks to enable quicker settlement of small claims and provide legal recourse for small businesses.
• Focus on Gender Inclusion: Empowering women-led businesses by providing greater access to formal markets and legal protections.

Economic Diversification and Green Growth

A primary focus of the programme is advancing green growth by increasing investments in renewable energy projects, promoting eco-friendly industrial practices, and creating policies to reduce carbon footprints. These efforts align with global sustainability goals and Egypt’s commitment to combating climate change.

Abdourhamane Diaw, Head of the AfDB’s Egypt Country Office, expressed optimism about the programme's potential: “Egypt’s youthful and educated population, its improving competitiveness and attractiveness, and the potential of its private sector give us plenty of reasons to be confident. The Egyptian economy is poised for stronger, greener, and more sustainable growth,” Diaw said.

Support for Women and Youth

Special emphasis will be placed on creating employment opportunities for women and young people. The programme includes measures to:

• Enhance access to finance and training for women entrepreneurs.
• Foster youth employment through skills development and entrepreneurship support.
• Promote gender equity in traditionally male-dominated sectors like manufacturing and energy.

Impact of Phase I and Future Outlook

The first phase of the programme was widely hailed as a success, having laid the groundwork for economic reforms and improved competitiveness. Phase II aims to deepen these reforms, enhance investment flows, and strengthen debt sustainability for Egypt’s economy.

The project’s focus on transitioning to a green economy, combined with its efforts to support SMEs and marginalized groups, is expected to significantly contribute to Egypt’s long-term economic resilience and global competitiveness.

By leveraging international partnerships and innovative strategies, Egypt is setting a precedent for sustainable development and inclusive growth in the region.