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Sunday, 29 August 2021

Egypt in line to join Africa Finance Corporation, potentially unlocking fresh investment

Egypt is one step closer to becoming a member of the Africa Finance Corporation (AFC) after the cabinet approved plans to join the multilateral lender in its weekly meeting on Thursday. The Finance Ministry will represent Egypt at the corporation’s headquarters in Lagos. The AFC offers investment and other support to its 31 African member states in various sectors, most importantly energy, natural resources, transport, heavy industries, and communications. The lender has channeled more than USD 10 bn into projects in 35 countries since its founding, and while it hasn’t been that active in Egypt, that now looks set to change.

What can AFC membership do for us? Speaking with Enterprise in July, president and CEO Samaila Zubairu said that once Egypt’s membership is ratified, we can expect big-ticket investment that could see us receive over USD 1 bn — way beyond the AFC’s previous sub-USD 100 mn inflows to the country. It has already identified USD 400-500 mn worth of Egyptian projects in the private renewables, transport, logistics and natural gas sectors, and USD 250 mn to support public sector transport and logistics projects. Crucially, AFC capital can mobilize a project to secure up to 6x more in private funding, part of the AFC’s strategy of “derisking” projects to facilitate private sector involvement.

Next steps: The House of Representatives will hold a final vote on the decision when it comes back from summer recess. If passed, it will be shipped to President Abdel Fattah El Sisi for ratification. The House is due back in session no later than the first Thursday in October.

ALSO FROM THE CABINET MEETING-

ِِA gas-powered combined-cycle power plant in Luxor will be scrapped and replaced by a wind farm, the cabinet said. It approved a request from a consortium of Saudi Arabia utility developer ACWA Power, Hassan Allam Holding, and the Egyptian Electricity Transmission Company (EETC) to exit a 2018 power purchase agreement (PPA) for the 2.3 GW, USD 2.3 bn power plant under the government’s buy, own, operate (BOO) scheme. The cabinet has approved signing a new PPA with the consortium, which will see it switch the gas-powered plant for a 1.1 GW wind farm, also under the BOO scheme.

An incentive program for charter flights to Egypt was also extended through the end of April 2022: An earlier phase of Egypt’s incentive program offered unspecified benefits over two tiers, one for airlines flying 2-15 times per week, and other for those operating more than 15 weekly flights, and ran from January to April 2021.

Cabinet also doubled down on a program meant to boost domestic tourism, including a plan to link the coastal airports of Sharm El-Sheikh and Hurghada to Upper Egypt’s Luxor and Aswan. Current discounts on landing, docking, servicing and fuel prices at airports in the country’s tourist hotspots will also be extended until the end of April next year.

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