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Large share of foreign aid goes to private sector, government: International cooperation minister - Daily News Egypt

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Large share of foreign aid goes to private sector, government: International cooperation minister

Egypt is counting on an increase in loans and grants from international funding agencies to support implementation of government projects and increase growth rates in the coming period

A large percentage of the amounts agreed upon with international funding agencies will go to the private sector according to Minister of International Cooperation Naglaa El-Ahwany. She added that grants and loans obtained by the government were not for government projects funded by the state.

The main goal of the Ministry of International Cooperation is to provide international funding through international aid in the form of loans and grants to strengthen government investments.

Government investments do not operate in a vacuum and are utilised for the private sector’s benefit through contracts ratified with suppliers and contractors.

“The loans and grants come in through the Ministry of International Cooperation and most are directed toward the private sector,” El-Ahwany said.

The ministry is currently working to provide technical and financial support to private sector companies “and it is not limited to financial support”, she explained.

El-Ahwany said that most funding organisations work with the private sector in Egypt, as US aid programmes were valued at $140m last year.

El-Ahwany said that the Egyptian private sector accounts for 40% of the value of investments in the Mediterranean region through the European Development Bank.

She reported that international funding agencies affiliated with the bank have a portfolio of 22 projects worth $1.5bn.

“Egypt is a large market, cumulative knowledge, and a strong banking system. We have tourism and service resources and an investment capacity that requires a suitable investment requirement. This is the method that is being implemented by the government at the moment,” El-Ahwany said.

Alaa Ezz, Secretary General of the Federation of Chambers of Commerce, said that EGP 22bn are available to Egypt’s private sector through grants provided by various bodies.

Ezz explained that the Federation of Chambers of Commerce was able to collect EGP 14bn from companies for the Tax Authority, saying: “There are funding lines ranging from $100,000-$140m with repayment periods of 30 years and grace periods of 10 years.”

“The near future will witness economic reforms and we can see that the government has already begun doing so,” said Hans Peter Lankes, an official with the European Bank for Reconstruction and Development.

Lankes explained that the government should be working to enact changes that will sustain growth and also work to address financial issues like inflation.

According to the bank official EGP 600m is available to private sector companies.

He requested that the government improve transparency standards, adding that the coming period will witness intense banking activity in Egypt.

“We are optimistic regarding the achievement of these requests and are looking forward to participating in the economic summit to be held in February,” Lankes said.

“Small projects represent the cornerstone of the Egyptian economy, and the government has issued a law pertaining to financing for small- and medium-sized projects,” he added.

He also emphasised the importance of energy sector development in Egypt, as the bank is working to support this field.

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