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Arab African International Bank's (AAIB) $500 Million Sustainability Bond

2024-11-25

Today, Arab African International Bank (AAIB) made a significant move by issuing a $500 million sustainability bond. This bond has attracted investments from major institutions like IFC, the European Bank for Reconstruction and Development (EBRD), and British International Investment (BII). The funds will be used to drive Egypt's green transition and support micro, small, and medium-sized enterprises (MSMEs).

Uniting Finance and Sustainability in Egypt

Investment Allocation and Green Initiatives

The sustainability bond is a groundbreaking achievement in Egypt. It is the first of its kind and the largest issued by a private bank in Africa. IFC has subscribed with $300 million, accompanied by $100 million from EBRD and $100 million from BII. A remarkable 75 percent of the bond's proceeds will be allocated to green financing, covering areas such as industrial energy-efficiency, small-scale renewable energy projects, and green buildings. The remaining 25 percent will be dedicated to social assets like inclusive finance and MSMEs. This allocation showcases the bank's commitment to both environmental and social sustainability.These investments will play a crucial role in Egypt's journey towards a greener and more climate-resilient economy. In 2023, Egypt's government set an ambitious goal of reducing greenhouse gas emissions by 37 percent by 2030. The sustainability bond will provide the necessary financial boost to businesses and projects that contribute to this reduction. It will also address the growing financing needs of MSMEs, which are the backbone of the Egyptian economy.

Financial Strength and Strategic Vision

Tamer Waheed, AAIB's Vice Chairman & Managing Director, emphasized the significance of this achievement. He stated that it underscores the international financial community's confidence in AAIB's exceptional financial strength and Egypt's attractive investment opportunities. This bond is not just a financial instrument but a strategic extension of the bank's core business model. By directing capital towards sustainable projects, AAIB is ensuring its position at the forefront of financial innovation and environmental stewardship.Responsible growth is the key to creating a sustainable future, and AAIB is committed to this principle. The bank's leadership understands that by integrating sustainability into their business strategy, they can make a positive impact on generations to come. This bond is a testament to their dedication and foresight.

International Collaboration and Impact

Sérgio Pimenta, IFC's Vice President for Africa, highlighted the importance of this investment. He called it a milestone in extending financial inclusion and unlocking the potential of sustainable finance in Egypt. As the largest investor in AAIB's first sustainability bond, IFC is empowering Egypt's transition to a greener future and contributing to the country's climate commitments.Francis Malige, EBRD's Managing Director for Financial Institutions, expressed pride in investing in this first sustainability bond. He believed it sets a benchmark for others to follow and will increase capital market flows towards green and social projects. This landmark investment demonstrates the significance of integrating green and social criteria into capital markets transactions. It also contributes to the resilience of the Egyptian economy by providing long-term hard currency funding.Sherine Shohdy, BII's Regional Director for North Africa, emphasized Egypt's importance as a key market for the company. As of 2023, BII's portfolio in Egypt was valued at $707.5 million, supporting over 91,000 jobs. The AAIB bond will provide a vital source of finance for businesses to embark on the transition. Over the past two years, BII has committed over £1.2 billion in climate finance and will continue to deploy its capital in support of the net zero and climate resilient economies.In conclusion, Arab African International Bank's $500 million sustainability bond is a significant step forward in Egypt's sustainable development journey. With the support of international investors and the bank's strategic vision, it is poised to make a lasting impact on the country's environment, economy, and society.