In partnership with the AfDB, Egypt is readying itself for the issuance of the first African Panda Bonds. This is the first step in the AfDB’s efforts to facilitate the mobilization of climate financing for African countries.  

Thanks to the AfDB’s support, Egypt is about to become the first African country to issue Panda Bonds on the Chinese market. Last week, the AfDB validated a $345 million partial guarantee to support the initiative, President Akinwumi Adesina announced during the press lunch held in Sharm el-Sheikh last Monday, on the sidelines of the Annual Meetings of the AfDB.  

The partial guarantee aims to facilitate Egypt's access to the Chinese bond market to enable the Arab country to finance environmental and social projects. With this initiative, Egypt plans to raise the equivalent of $500 million to support priority sectors such as green transportation, renewable energy, energy efficiency, and sustainable water management.

The operation was initially planned for 2022, but, it was postponed due to uncertain global financial environments. At the time, Deputy Finance Minister Ahmed Kouchouk said the country was waiting for the right time. 

According to Mohamed El Azizi, AfDB Director General for the North Africa Regional Development and Business Delivery Office, the facility should improve Egypt's financial rating, allowing it to attract international investments on favorable terms. The success of this operation would potentially pave the way for other African countries, says Marie-Laure Akin-Olugbadé, AfDB Vice President in charge of Regional Development, Integration, and Business Implementation.

For Rania Al-Mashat, the Egyptian Minister of International Cooperation, the guarantee strengthens the country’s strategic partnership with the AfDB and diversifies Egypt's sources of financing. "This agreement with the African Development Bank adds a new dimension to our strategic partnership, geared towards the transition to renewable energy and financing sustainable infrastructure projects," she said.

Since 2020, when it issued the first green bond in the Middle East and North Africa (MENA) region, Egypt has demonstrated its commitment to sustainable and green bond markets. To further strengthen this commitment, the Egyptian Ministry of Finance established the country's Sustainable Finance Support System (SSFF) in 2022, just before COP-27 in Sharm el-Sheikh.

Fiacre E. Kakpo