The African Development Bank (AfDB) has provided a substantial loan of US$170 million to Egypt to support the second phase of its two-year private sector development and economic diversification programme. This initiative, which will run from 2024 to 2025, aims to strengthen the business climate in Egypt and accelerate the transition to a greener and more competitive economy.
The loan was approved on November 27, 2024 by the AfDB Board of Directors. This financing comes after an initial loan of $131 million for the initial phase of the program, carried out between 2023 and 2024. This program also benefits from the support of international partners: the Korean Economic Development Cooperation Fund (EDCF) and the Japan International Cooperation Agency (JICA) helped finance the first phase, while the World Bank is supporting the current phase.
Program objectives: support private investment and the green transition
The Private Sector Development and Economic Diversification Support Program is based on two main components which aim to transform the Egyptian economy:
Improving the business climate: The objective is to stimulate private investment by improving the regulatory framework, in particular by promoting fair competition and strengthening the commercial justice system.
Economic diversification and green transition: This component aims to support the transition towards more sustainable economic sectors, particularly in manufacturing, agro-industry and renewable energies. By reducing carbon emissions and encouraging investment in green technologies, the program seeks to strengthen the country’s economic resilience in the face of global environmental challenges.
Expected impact on employment, women and young people
-One of the main priorities of this program is to generate new employment opportunities, particularly for women and young people. By improving the business climate and encouraging the integration of Small and Medium Enterprises (SMEs) into the formal economy, the program will also promote the inclusion of these groups in the private sector. A crucial point is the legalization of informal structures and easier access to commercial dispute resolution mechanisms for SMEs led by women.
Women-owned businesses are expected to benefit indirectly from the implementation of legal reforms that will facilitate their transition to a formal sector, thereby strengthening their access to finance and markets.
Previous success and optimistic outlook
The first phase of the program was considered very positive, particularly in the response to recent economic shocks. The ADB considers that diversifying the economy, increasing investments and transitioning to green growth are essential levers to improve the sustainability of Egypt’s debt.
Abdourhamane Diaw, head of the African Development Bank country office in Egypt, expressed confidence in the country’s economic prospects. “Egypt’s young and educated population, the country’s growing competitiveness and the potential of its private sector give us strong reasons to believe that Egypt is on the path to a more resilient, greener and more sustainable economy “.
Moctar FICUU / VivAfrik
