Arab African International Bank (AAIB) has launched Egypt’s first-ever US$500 million sustainability bond, aiming to boost the country’s green transition and support micro, small, and medium-sized enterprises (MSMEs). The bond, the largest of its kind issued by a private bank in Africa, is backed by investments from the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and British International Investment (BII).
Of the bond’s total proceeds, 75% will fund green projects, including energy-efficient industries, small renewable energy projects, and eco-friendly buildings. The remaining 25% will go towards supporting social initiatives, particularly inclusive finance and MSMEs, to help drive economic growth in Egypt. In 2023, Egypt’s government set a goal to reduce greenhouse gas emissions by 37% by 2030 as part of its push towards a greener, climate-resilient economy. The new sustainability bond will play a key role in reaching this target by providing financing for businesses and projects that reduce emissions or protect the environment. Additionally, the bond will help meet the country’s growing need for financing micro, small, and medium-sized enterprises (MSMEs), supporting both environmental and economic growth.
Tamer Waheed, AAIB’s Vice Chairman & Managing Director, said in a statement, “This achievement underscores the international financial community’s confidence in AAIB’s exceptional financial strength, Egypt’s attractive investment opportunities and the Egyptian economy’s potential at large. This bond is more than just a financial instrument; It is a strategic extension of our core business model, designed to seamlessly integrate sustainability into our business strategy. We believe that responsible growth is crucial to create a sustainable future for generations to come. We are ensuring that AAIB remains at the forefront of both financial innovation and environmental stewardship by directing capital toward projects that advance ESG.”
Sérgio Pimenta, IFC’s Vice President for Africa, mentioned, “This investment is a milestone in extending more financial inclusion, while unlocking the potential of sustainable finance in Egypt. As the largest investor in the country’s first sustainability bond issued by AAIB, we are empowering a greener, more climate-resilient future for Egypt and contributing to the country’s climate commitments.”
Francis Malige, EBRD’s Managing Director for Financial Institutions, also commented, “We are very proud to invest in this first sustainability bond in Egypt, which opens the path for more such issuances and sets a benchmark for others to follow. This landmark investment will increase capital market flows towards green and social projects and demonstrates the importance of ingraining green and social criteria in capital markets transactions. Moreover, this project contributes to the resilience of the economy by providing long-term hard currency funding.”
“Egypt is a key market for BII. As of 2023, the company’s portfolio in Egypt was valued at $707.5 million, with investments in 70 companies that support over 91,000 jobs. BII’s current development focus in Egypt includes financial services, renewable energy, healthcare, and infrastructure. The AAIB bond will provide a vital source of finance to businesses to take steps towards the transition. Over the last two years BII has committed over £1.2 billion in climate finance and we will continue to deploy our capital in support of the transition towards net zero and climate resilient economies,” stated Sherine Shohdy, BII’s Regional Director for North Africa.
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