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Banque Misr receives USD 130 mln of credit from African Development Bank

Tuesday 15 November 2022 15:05 CET | News

The African Development Bank has loaned the Egyptian state-owned Banque Misr a USD 130 million line of credit.

 

The African Development Bank has loaned the Egyptian state-owned Banque Misr a USD 130 million line of credit.

There is an additional USD 30 million from the Africa Growing Together Fund. The Africa Growing Together Fund is sponsored by China and administered by the African Development Bank.

The purpose of the loan is to provide extra liquidity to Banque Misr so it can extend loans to small- and medium-sized businesses (SMBs) and corporations. Banque Misr is to provide the loans to entities operating in industry, information, and communications technology, and agriculture.

The loan’s focus on smaller businesses could help Egypt’s blossoming startup scene. Most recently, more Egyptian investors are targeting climate-focused startups.

The African Development Bank has loaned the Egyptian state-owned Banque Misr a USD 130 million line of credit.

 

The loan also represents continued Chinese interest in the Egyptian economy. The Chinese tech giant Huawei signed a cooperation deal with Egypt’s Information Technology Industry Development Agency in August to help support Egyptian startups.

Egypt additionally announced in August it would start issuing bonds denominated in China’s currency, the yuan.

What’s happening in Egypt

Egypt is in the midst of an economic crisis marked by high inflation, a shortage of dollars, and supply chain disruptions related to the Russian invasion of Ukraine. Egypt is seeking help from abroad as a result and has attracted a large amount of investment from Gulf states in 2022. The North African country is also selling state-owned firms. 

For Egypt, digital transformation can play an invaluable part in development. It has the potential to transform businesses regardless of industry or size and contribute to economic growth, job creation, human capital development, poverty, and social inequality reduction.

Egypt aims to attract foreign direct investments (FDI) of USD 10 billion annually over the coming four years. The government also plans to exit from some of the economic activities to support the role of the private sector in industrial and exporting activities to boost its contribution to implemented investments to 65% and to create million job opportunities annually.

China’s investment in Egypt

Chinese investment in Egypt has dramatically increased during the past ten years. In 2017, China rose to become the sixth-largest investor in Egypt. A Report from the Arab Investment and Export Credit Guarantee Corporation states that between 2013 and 2019, China invested USD 28.5 billion in the Arab region and created 23,930 jobs, making Egypt the recipient of the most jobs overal.

Trade between China and Egypt runs in favor of China. Over the past 25 years, China’s exports to Egypt have expanded at an annual rate of 14.4%, reaching USD 13.3 billion in 2020. On the other hand, Egypt’s exports to China have grown at an average rate of 17.9% over the same period, reaching USD 754 million in 2020.

Egypt is the first Middle Eastern nation to get financial assistance from the Asian Infrastructure Investment Bank (AIIB). Up to USD 210 million in loan funding was announced by the AIIB in September 2017 to assist the construction of 11 solar power projects in Egypt.


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Keywords: banks, fintech, SMEs, startup, digitalisation
Categories: Banking & Fintech
Companies: African Development Ban
Countries: China, Egypt
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