European bank does not increase Egyptian citizens' debt burden; lends directly to business, bears proper risk evaluation responsibility
Egypt-European Union, Economics, 5/23/2002

The European Investment Bank (EIB) is making available on behalf of the European Union up to EURO 25 million (1) in the form of a risk capital (2) facility for financing private Egyptian undertakings engaged in modernisation for enhanced competitiveness. The funds will be channelled as equity capital through the following local financial intermediaries: Export Development Bank of Egypt, EFG-Hermes Private Equity, CIIC, Industrial Development Bank of Egypt, Egycap and Capexcorp.

The purpose of this facility is to provide Small and Medium Enterprises (SMEs) in Egypt, wishing to modernise, develop their existing business, and operating in the industrial, agro-industrial and service sectors, including private health and education, with innovative equity and quasi-equity funding products. The funds will strengthen the financial base of the SMEs and allow them to grow and develop exports and jobs.

The remuneration of the facility will be based on the dividends paid to the shareholders by each beneficiary company or on its operating results. The loans will be repaid on the dates of disposal by the financial intermediaries of the underlying financial instruments, or on the expiry date of the facility at the latest. Repayment will be in euros, but the exchange risk will be borne by the EIB.

This is a follow-up EIB operation, for assuring continuity in equity capital funding of private Egyptian enterprises. A first facility of EUR 25 million, signed in 1998, has been fully and successfully utilised, proving existing demand from the private and banking sectors.

Since 1978, the EIB has lent some EUR 2 billion for investment in Egypt, with an emphasis on infrastructures, environmental projects and the support of industrial development through direct loans as well as global loans to the Egyptian banking sector for SME investment.

The EIB established in 1958 under the Treaty of Rome, finances capital investment projects, which further European Union policy objectives. It also helps implement the EU's cooperation policies towards third countries. In the Mediterranean region the EIB operates under the Euro-Mediterranean Partnership, which complements the EU Member States' own bilateral cooperation policies. Under the second financing mandate of the Euro-Med Partnership covering the period 2000-2006, the EIB is to provide EUR 6 425 million for projects in the 12 Mediterranean countries, which have signed cooperation or association agreements with the EU. The EIB is giving a particular focus to supporting efforts to develop a more open economy and to assist companies in preparing for market liberalisation, with a view to the progressive establishment of a free-trade area with the EU.

Further to the Barcelona European Council (15-16 March 2002), the EIB is set to increase cooperation with the Mediterranean Partner Countries by establishing a "reinforced Euro-Mediterranean investment facility"complemented by EIB representation in the region. Operational by Autumn 2002, this Facility foresees increased financial resources, leading the EIB to expand its annual lending from EURO 1.5 billion to EURO 2 billion.

Previous Stories:
  Egypt's debt burden to increase by $1.5 billion; economic modernization cited   (5/22/2002)
  Egypt's banks forced to achieve world standards in operation and service   (5/21/2002)
  Egypt's government debt to rise by $ one billion   (5/21/2002)
  Key economic legislations: cornerstone of Egypt's reform drive   (5/21/2002)
  Suez power station raises its own funds to increase capacity   (5/20/2002)
  Egypt's banks and stock markets to efficiently collect and direct all citizens savings into investment and new companies   (5/20/2002)

Please add a link on your webiste pointing to ArabicNews.com and bookmark ArabicNews.com & subscribe to our daily email news bulletin.

Search