Egypt - Mohamed Farid, Chairperson of the Financial Regulatory Authority (FRA), attended the launch of $500m in sustainability bonds issued by the Arab African International Bank (AAIB).

These bonds, backed by investments from the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and British International Investment (BII), are part of an initiative to support Egypt’s transition to a green economy while fostering the growth of small and medium enterprises (SMEs).

In his speech at the signing ceremony, Farid emphasized that the issuance of these sustainability bonds aligns with Egypt’s commitments under the Paris Agreement. He noted that this issuance represents one of the largest of its kind by an Egyptian financial institution, highlighting Egypt’s leadership in green financing.

Farid referenced Egypt’s pioneering role in the region, citing the issuance of the country’s first sovereign green bonds in 2020, valued at $750 million, aimed at funding projects that protect ecosystems and promote a low-carbon economy. He also underscored Egypt’s dedication to the Paris Agreement (signed in 2016) and its Egypt Vision 2030 sustainable development agenda.

Farid also noted that three non-banking financial institutions supervised by the FRA have issued social bonds to advance similar sustainability objectives. He described the sustainability bond issuance as the culmination of collaborative efforts between both banking and non-banking sectors, underscoring the role of integrated regulatory frameworks in advancing Egypt’s sustainability and decarbonization goals—efforts that are extending across the Middle East and Africa.

Farid highlighted the rapid growth of sustainability bonds in Africa, citing a remarkable 412% increase in the first half of 2024 compared to the previous year. Africa saw $6.6bn in sustainability bond issuances in 2024, up from $1.3bn the year prior, demonstrating strong momentum in sustainable financing across the continent.

He also outlined FRA’s initiatives to promote market transparency and sustainability, including the Egyptian Exchange’s collaboration with S&P to launch a sustainability index in 2010, which tracks the performance of listed companies based on sustainable development criteria. Additionally, the FRA has mandated that listed companies disclose environmental, social, and governance (ESG) metrics, tailored to their size and scale.

To further these efforts, FRA introduced amendments to capital market regulations in September 2022, establishing clear classifications for green bonds, sustainability bonds, and other related instruments. These amendments aim to ensure precision and inclusivity in supporting sustainability initiatives, not only in environmental matters but across the broader sustainability spectrum.

Farid also addressed the issue of global climate pollution, stressing the unequal contributions of developed and developing nations. He called for equitable solutions, arguing that developing countries, which contribute less to global emissions, should receive concessional financing to implement climate adaptation and mitigation projects. This support is crucial for achieving carbon neutrality and safeguarding the planet’s future.

He reiterated the importance of directing investments to African and emerging markets, which are particularly vulnerable to climate risks. Farid concluded by emphasizing the critical role of clear regulatory frameworks in driving sustainable development, calling for increased investments and collaborative efforts to promote decarbonization and sustainability across the economy, with a special focus on SMEs and underserved sectors.

Farid’s remarks underscored that through collective action, Egypt and other developing nations can confront climate challenges while spurring growth in green and sustainable investments.

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