Unfunded portfolio risk-sharing facility to QNB Egypt marks the EBRD’s pilot project in Egypt and the SEMED region
By Nibal Zgheib
The European Bank for Reconstruction and Development (EBRD) is extending, for the first time in Egypt and the southern and eastern Mediterranean region, an unfunded portfolio risk-sharing facility for up to €35 million(US$37.5million) to QNB to support on-lending to Egyptian enterprises.
The EBRD’s facility will cover up to 50 per cent of credit risk on new financing of up to €70 million originated by QNB for small and medium-sized enterprises (SMEs) in Egypt. The facility offers an innovative solution to boost on-lending to local SMEs and reduce the financing gap that the segment faces.
The facility is supported by a guarantee provided by the European Union (EU) under the European Fund for Sustainable Development Plus (EFSD+), which enhances financing and investment operations in partner countries outside of Europe.
In addition, the Bank will roll out a pilot EBRD climate-risk assessment tool in Egypt, tailored to QNB. The tool and the associated technical cooperation will help QNB expand its climate-risk assessment toolkit to better evaluate, assess and monitor the climate-related risks in the bank’s portfolio, in line with international best practice.
The agreement was signed by EBRD First Vice President, Jürgen RQNB-Egypt Chief Executive Officer Mohamed Bedeir.
“We are proud of our longstanding partnership with the EU and QNB Egypt. Together we are committed to creating more impact through our cooperation and to building a more sustainable economy. The signing of this pilot facility is a testament to QNB’s leading role in the market in adopting innovative financial instruments and supporting local SMEs, a critical segment for the resilience of the Egyptian economy,” said Jürgen Rigterink.
Mohamed Bedeir said: “We are very pleased that this agreement with the EBRD and EU is the first of its kind in Egypt. We are proud of this partnership, which represents another great milestone in our joint endeavours towards a more resilient and sustainable future. With today’s signing, the significant impact we brought jointly to the SME ecosystem will be further empowered, and our efforts towards the mitigation of climate change will be further strengthened. Today, the cooperation portfolio between QNB Egypt and the EBRD will rise to about US$ 830 million, which reflects the depth of our strategic partnership.”
Director-General at the European Commission’s Directorate General for Neighbourhood and Enlargement Negotiations, Gert Jan Koopman said: “I am delighted to support the EBRD and QNB partnership on this innovative facility, which will have a tangible impact on Egyptian small businesses. By sharing the risk and providing access to finance, we are empowering local entrepreneurs to drive growth and create jobs, ultimately contributing to a more resilient and sustainable economy.”
QNB Egypt, an EBRD partner bank since 2015, is incorporated in Egypt and listed on the Egyptian stock exchange. QNB Egypt is the fourth-largest commercial bank and second-largest private bank in Egypt as of end of 2023.
Egypt is a founding member of the EBRD. Since the start of its operations there in 2012, the Bank has invested €12.5 billion in 187 projects in the country. The EBRD’s areas of investment in Egypt include the financial sector, agribusiness, and manufacturing and services, as well as infrastructure projects such as power, municipal water and wastewater services, and contributions to the upgrade of transport services.
The European Fund for Sustainable Development Plus (EFSD+) was established in June 2021 and offers EU partner countries support for key investments, using EU grants or financial guarantees. In this way, the EU mobilises additional financial resources for sustainable development from the public and private sectors. The EFSD+ has €39.8 billion in guarantee capacity for the period 2021 to 2027 globally, of which €22.5 billion will be used in the EU’s Enlargement and Neighbourhood regions.
