As one of the largest sources of investment and financing to the Egyptian infrastructure sector, the European Bank for Reconstruction and Development (EBRD) has taken it upon itself to become one of the country’s biggest international partners in its underway economic reform plan. Invest-Gate meets up with Janet Heckman, the EBRD’s Managing Director in the Southern and Eastern Mediterranean (SEMED) to dig deep on the bank’s strategy, areas of interest, and the major challenges facing foreign investors in Egypt today.
Based in Cairo, Heckman is responsible for the formulation and delivery of the EBRD’s strategy and business plan in the region, covering Egypt, Jordan, Morocco, and Tunisia. She holds an MSc in Foreign Service from Georgetown University in Washington, D.C. and a BA in History from Kenyon College. She also studied at the American University of Beirut, Lebanon.
What tops the EBRD agenda in Egypt during the forthcoming period?
We are paying due attention to renewable projects in Egypt, especially those being carried out in the governorates of Upper Egypt. During the coming period, the EBRD will finance 15 renewable private projects worth USD 500mn. The contract will be signed this October, with the 15 private renewable projects in various areas.
The financing, approved by the EBRD’s Board of Directors on June 7, 2017, supports the development of private renewable energy projects under the Egyptian government’s feed-in-tariff program. That program aims to stimulate private investment in over 4 GW of wind and solar power. Over 50% of Aswan’s population falls below the poverty line. The EBRD’s solar projects located in Benban will bring a significant short-term boost to the economy and will provide benefits through the transfer of skills and the creation of long-term jobs in operation and maintenance.
How do you see Egypt’s investment climate?
There is a lot of growing optimism since the recent visit by President Abdel Fattah El Sisi to Germany, where most of German investors demonstrated their confidence in Egypt’s investment climate. The European Bank for Reconstruction and Development expects to invest about EUR 1bn (USD 1.1bn) in Egypt this year following a revival in investor confidence after Egypt floated its pound currency in November.
How do you see Egypt’s progress in upgrading infrastructure, especially in rural areas?
We have signed many agreements with the Egyptian government in the field of infrastructure. The most recent agreement is related to the wastewater treatment project in Fayyoum along with yet another in transportation. The EBRD has agreed to provide a loan of up to EUR 186 mn to the Fayyoum Water and Wastewater Company for the development and expansion of its services across the country.
The European Investment Bank is to finance the EBRD loan with EUR 172 mn while the EU Neighborhood Investment Facility (NIF) is extending an investment grant of EUR 30 mn and more than EUR 7 mn for technical assistance. The financing will be used for the construction of eight new wastewater treatment plants, the expansion of nine units, and the rehabilitation of 10 plants, as well as, the installation of 3,433 kilometers of pipes and 139 pumping stations.
Furthermore, 350 sewage removal trucks will be procured to serve remote rural communities.
EBRD said that the investment would increase the company’s wastewater treatment capacity by almost 300,000 cubic meters per day and provide sanitation services to almost 90% of the rural population in the Fayyoum governorate. We are proud to sign a project combining the strategic priorities of the EBRD with those of Egypt.
It is a vital investment for the country and will not only develop wastewater infrastructure, but also improve the environment and contribute to employment in a remote rural area substantially.
Meanwhile, a- EUR 290mn- loan- agreement to support Egyptian National Railways’ planned acquisition of up to 100 diesel locomotives through a supply and maintenance contract signed by the European Bank for Reconstruction & Development back in June 19.
The acquisition of new locomotives maintained by a private-sector partner would enable the state railway to provide a more reliable and higher quality service, thus generating additional revenue. The replacement of life-expired and inefficient locomotives would also reduce operating costs, fuel consumption, and carbon emissions.
Procurement of the locomotives is to be undertaken under the terms of EBRD’s rules for public-sector projects. It is not connected to the USD 575mn letter of intent for GE Transportation to supply 100 Evolution Series locomotives, which was recently signed between the Ministry of Transport and ENR.
EBRD is also providing technical assistance support to the ENR with the development and implementation of a comprehensive freight reform and commercialization plan. This includes the separation of freight and passenger operations, as well as, the introduction of track access charging. EBRD will additionally support the ENR in implementing a campaign making rail transport safer for women.
What are the current main challenges from your viewpoint?
In my opinion, I think the government cannot do everything on its own; there must be more engagement from the private sector side to help balance the gap in fund resources. This can be done through the concept of public-private partnership. Meanwhile, the banking sector has to find more tools that help utilize better financial plans.
What is the total investment of the EBRD in Egypt so far?
The EBRD has invested EUR 2.3bn in 42 projects in Egypt since it began operations back in 2012, making Egypt the bank’s third-biggest investment destination worldwide.
The bank, which works with companies to support market economies and develop the private sector, hoped to work on more projects last year but the foreign currency shortage in Egypt caused many investors to put their plans on hold.
There has been much investor interest in Egypt since the implementation of the currency reforms and economic reform program.