The Arab African International Bank (AAIB) has issued a $500m sustainability bond, backed by investments from IFC, the European Bank for Reconstruction and Development (EBRD), and British International Investment (BII). This initiative aims to advance Egypt’s green transition while supporting micro, small, and medium-sized enterprises (MSMEs).
This landmark sustainability bond is the first of its kind in Egypt and the largest ever issued by a private bank in Africa. It will fund green and sustainable projects across the country. IFC has subscribed $300m, with EBRD and BII each contributing $100m. Of the bond’s proceeds, 75% will be directed towards green financing initiatives, including industrial energy efficiency, small-scale renewable energy projects, and green buildings. The remaining 25% will focus on social assets, such as inclusive finance and MSME development.
Egypt’s government, in its efforts to transition to a greener and climate-resilient economy, announced in 2023 its goal to reduce greenhouse gas emissions by 37% by 2030. This sustainability bond will play a key role in advancing this target by increasing financial access for businesses and projects that help mitigate greenhouse gas emissions and protect the environment. The bond also addresses the growing financing needs of MSMEs, which are vital to the economy.
“This achievement underscores the international financial community’s confidence in AAIB’s exceptional financial strength, Egypt’s attractive investment opportunities, and the Egyptian economy’s potential at large,” said Tamer Waheed, AAIB’s Vice Chairman and Managing Director. “This bond is more than just a financial instrument; it is a strategic extension of our core business model, designed to seamlessly integrate sustainability into our business strategy. Responsible growth is crucial to creating a sustainable future for generations to come. By directing capital toward projects that advance ESG principles, we are ensuring that AAIB remains at the forefront of financial innovation and environmental stewardship.”
“This investment is a milestone in extending financial inclusion while unlocking the potential of sustainable finance in Egypt,” said Sérgio Pimenta, IFC’s Vice President for Africa. “As the largest investor in Egypt’s first sustainability bond issued by AAIB, we are empowering a greener, more climate-resilient future for the country and contributing to its climate commitments.”
“We are very proud to invest in this first sustainability bond in Egypt, which sets a benchmark for future issuances and demonstrates the importance of integrating green and social criteria in capital market transactions,” said Francis Malige, EBRD’s Managing Director for Financial Institutions. “This landmark investment will increase capital market flows towards green and social projects, contributing to economic resilience by providing long-term hard currency funding.”
“Egypt is a key market for BII. As of 2023, the company’s portfolio in Egypt was valued at $707.5m, with investments in 70 companies that support over 91,000 jobs,” said Sherine Shohdy, BII’s Regional Director for North Africa. “The AAIB bond will provide critical finance to businesses advancing the green transition. Over the last two years, BII has committed over £1.2bn to climate finance, and we remain committed to deploying capital in support of net-zero and climate-resilient economies.”
