EU investment guarantees boost FDI in Egypt

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Egypt - Minister of International Cooperation Rania Al-Mashat and Director-General of the European Commission, Gert Jan Koopman, have convened a high-level roundtable. The focus was on introducing an investment guarantee mechanism valued at €1.8bn, provided by the European Union (EU) to Egypt. This guarantee is part of a larger €7.4bn financing package under the strategic partnership between the EU and Egypt.

The discussions centred around activating these guarantees in collaboration with various European development partners. Technical workshops involving relevant stakeholders will prioritize utilizing the investment guarantees within areas of mutual interest for both Egypt and the EU.

Minister Al-Mashat emphasized the significance of these EU guarantees, which enhance the investment partnership with Egypt. They attract foreign direct investments and stimulate investments from local and international private sector companies. Importantly, these guarantees are accessible not only through European financial institutions but also through other international bodies.

The expected impact is substantial: these guarantees are projected to enhance foreign direct investment flows by €11bn in priority sectors of mutual interest. These sectors include energy, climate action, water, food security, and investment in human capital.

Director-General Gert Jan Koopman reaffirmed the EU’s commitment to supporting Egypt’s private sector. The focus is on priority sectors, particularly those promoting a transition towards a green economy and reduced carbon emissions.

In related efforts, Minister Al-Mashat engaged in discussions with the World Bank and the International Finance Corporation (IFC). The goal was to introduce the “Joint Capital Markets Program (J-CAP)” implemented by the IFC across 18 countries worldwide. The program aims to develop Egypt’s capital market.

During these meetings, proposed areas of cooperation were explored. Topics included the local debt market, liquidity enhancement, investment diversification, and the role of state-owned enterprises and small projects in supporting Egypt’s financial market.

Additionally, Minister Al-Mashat met with Susan M. Lund, IFC’s Vice President for Economics and Private Sector Development. Lund discussed the institution’s targets for expanding equity investments and venture capital funds across member states. Notably, the IFC collaborates with the Egyptian government on public offerings and water desalination projects, working alongside the European Bank for Reconstruction and Development and The Sovereign Fund of Egypt (TSFE).