The African Development Bank has approved a loan of USD 170 million to the government of Egypt for the implementation of the second phase of a programme to foster private sector development and economic diversification, with special emphasis on green growth.

The loan for the Support Programme for Private Sector Development and Economic Diversification in Egypt, approved on 27 November 2024, will take the form of budget support, and is for the period 2024-2025.

The Bank had previously granted Egypt a loan of USD 131 million for the first phase of the programme, implemented in 2023-2024. Korea’s Economic Cooperation Development Fund (EDCF) and the Japan International Cooperation Agency (JICA) contributed to financing phase I of the programme, while the World Bank is contributing to phase II.

By improving the country’s business climate across areas such as manufacturing and agribusiness, and diversifying its sources of green growth through an emphasis on renewable energy and reduction of carbon emissions, the programme aims to catalyse private sector investment, creating employment opportunities, including for women and young people.

The programme will also prioritize the legalisation of informal businesses as well as changes to existing laws to provide greater legal recourse for settlement of small claims. Through these, it will benefit small and medium-sized enterprises, especially informal ones run or owned by women, by enabling a smooth transition to the formal sector.

The first phase of the programme was widely regarded as successful. This second phase will seek to build on its gains, advancing economic diversification and the green transition, and increasing competitiveness and investment flows, which are all key factors in improving the perceived debt sustainability of the Egyptian economy.

Abdourhamane Diaw, Head of the African Development Bank’s country office in Egypt, commented: “Egypt’s youthful and educated population, its improving competitiveness and attractiveness, and the potential of its private sector gives us plenty of reasons to be confident that the Egyptian economy will grow stronger and will be on a more solid, greener and sustainable path.”