CDC, the UK's development finance institution, announced Tuesday that it has been granted approval by the Central Bank of Egypt to provide Tier 2 capital to the Egyptian banking sector. The approval could see CDC commit as much as $200 million to local banks to help increase their support for Egypt's ongoing economic development programme. CDC is the first bilateral development finance institution to be given clearance to provide Tier 2 capital to Egypt's banking sector. CDC is currently in discussions with a number of Egyptian banks with a view to providing funding that will support their loan book expansion, bringing new products to micro, small and medium-sized businesses (MSME) and export-orientated customers. CDC's chief executive Nick O'Donohoe said: “We welcome the decision of the Egyptian Central Bank to enable CDC to lend Tier 2 capital to the country's banks. Supporting Egypt's banking sector is a stepping stone for CDC to support the country's private sector, in particular small and medium sized businesses which are the bedrock of job creation and economic growth in the country. Today's decision will allow us to play a role in building a healthy, well-capitalised banking sector in Egypt." “CDC is committed to the country's economic development, so I am delighted to announce that we will appoint a country representative this year as we focus on building long-term partnerships and invest more in Egypt.” Meanwhile, UK International Trade Secretary Liam Fox, who is on a trade mission in Cairo this week, said: “The appetite of British companies to invest in Egypt's future is growing. Last year, we saw CDC support Benban Solar Park and this year it plans to commit millions to Egyptian banks to assist them in developing the country's economy. These investments clearly reflect the UK's commitment to Egypt and its people.” Last year, CDC announced its ambition to invest up to $4.5 billion across Africa over the four years up to 2022. CDC has invested in Egypt since 2003 and sees the country as an increasingly important focus for its investment activities. Its capital currently supports 20 companies in the country that employ over 9,000 people. CDC has provided over $115 million in investment to those companies. In late 2017, CDC provided a loan of $97 million to the 800MW Nubian Suns solar power project as part of a larger financing package that will help Egypt reach its green energy targets and create thousands of jobs. The Nubian Suns project is part of the Benban Solar Park which, when complete, will be the largest solar power installation in the world. In 2016, CDC committed $15 million to the Ezdehar Egypt Mid-Cap Fund, a first-time, locally-based investment fund that provides growth finance and knowhow to small and medium-sized family businesses. CDC has significant experience in supporting financial institutions across Africa and South Asia. In recent years, CDC backed commercial banks, microfinance institutions, non-banking financial institutions and other providers of financial services and insurance. In 2018, CDC committed $100 million to the Cairo-based Afreximbank in the form of a risk sharing guarantee programme to promote trade across the African continent.
