Egypt’s Ministry of Finance is preparing to launch the Middle East and North Africa (MENA) region’s first sovereign government green bond issue on the global market.
Minister of Finance Mohamed Maait said that offering this type of bond on global markets will contribute to enhancing foreign investor confidence in the Egyptian economy.
It will support the country’s current and future growth levels, whilst attracting more investors interested in environmental and financial investment, and will also add to improving Egypt’s environmental rating.
Maait explained that Egypt has a portfolio of eligible green projects worth $1.9bn, of which 16% are in the field of renewable energy. A further 19% are in clean transportation, 26% in sustainable water and sanitation management, and 39% in pollution reduction and control.
He added that Vigeo Eiris, an affiliate of Moody’s, has conducted the independent review and evaluation of the framework in line with Egypt’s strategic sustainability priorities. The company has also obtained a strong second party opinion on the quality and framework of eligible environment-friendly projects.
It pointed out that the returns from the green bonds will be used to finance projects that reflect Egypt’s commitment to the UN’s sustainable development goals (SDGs).
Maait said that the framework for sovereign green financing was developed following several meetings and consultations with the relevant ministries in Egypt. These included the Ministries of Planning and Economic Development, Environment, Electricity and Renewable Energy, Transportation, and Housing, Utilities and Urban Communities.
As a result of the meetings, lists were created of eligible environment friendly projects and the required information. These were formed according to consultations with the offering advisors, Crédit Agricole, the Commercial International Bank – Egypt (CIB), and HSBC.
These were put together in light of the ambitious plan adopted by the Egyptian government, to modernise the country’s infrastructure in a way that contributes to raising energy efficiency and maximising the use of state resources.
The minister added that the National Council for Climate Change, headed by Prime Minister Mostafa Madbouly, is in charge of managing climate policies in Egypt. The council will ensure sustainable and effective coordination between state agencies in this regard.
For her part, Marina Weiss, Regional Director of the World Bank in Egypt, said that the global financial institution is ready to share knowledge and experience with the Egyptian government. It is also prepared to provide technical assistance for post-issuance allocation and preparing annual reports, to help develop new sustainable financing solution.
Crédit Agricole and HSBC have both expressed their pleasure at the opportunity to support Egypt in structuring the green finance framework in line with current market best practices. They added that the framework highlights Egypt’s leadership in sustainable development and sustainable finance in the MENA region.
Varnam Pedgoli, Head of Sustainable Bonds at HSBC, and Antoine Rose, Head of Sustainable Banking at CA-CIB, said that the framework for green bonds and sukuk in Egypt are in line with the International Capital Markets Association’s principles of green bonds. It includes the procedures that should be followed to ensure transparency and disclosure regarding the use of the return and the environmental impact, while maintaining international best practices.