Egypt’s sustainable finance initiatives propel growth – CBE

The Egyptian banks strengthened their efforts towards advancing the sustainable finance field through the expansion of financial and banking services that integrate environmental and social elements, the Central Bank of Egypt (CBE) reported on Tuesday.

In this regard, CBE has stepped up its efforts to promote sustainable finance by urging banks to fund sustainable economic activities and projects, such as renewable energy power plants and waste recycling projects, as well as providing financing for micro, small, medium-sized enterprises (MSMEs).

Additionally, the CBE has prompted banks to innovate products and services for citizens with low to middle incomes, and Persons with Disabilities (PWDs), according to the report.

In alignment with Egypt Vision 2030 and the United Nations’ Sustainable Development Goals (SDGs), the banks have innovated over 24 products and financing programmes. These innovations span across various sectors, including energy efficiency, renewable energy, agriculture, healthcare, and digital transformation.

Moreover, around 31 banks have made available products that have significantly supported the goal of fostering a Competitive and Diversified Economy. These products have contributed to sustainable economic growth, enhanced the resilience and competitiveness of the economy, and increased employment rates with adequate job opportunities. Additionally, they have improved the business environment, empowered entrepreneurial culture, and promoted financial inclusion.

Under the aforementioned, the banks have launched financing products that have substantially contributed to achieving 12 of the United Nations’ SDGs. These include offering targeted financial inclusion accounts for the most vulnerable groups, as well as financing schemes for farmers and smallholders, which have significantly enhanced the quality of life for marginalised communities.

Additionally, banks have introduced programmes to fund educational tuition fees in line with the UN’s goal of quality education. They have also developed tailored products and financing options for women, including services for women entrepreneurs to support gender equality.

Driven by the pursuit of clean energy and climate action goals, banks have launched a number of products, including green financing programmes and green bonds, as stated in the release.

The banking sector has demonstrated commitment to implementing the Principles for Responsible Banking by the United Nations Environment Programme Finance Initiative (UNEP FI), with a compliance rate of 75 per cent in the sector’s total portfolio.

These Principles aim to establish a sustainable banking system through the banks’ commitment to aligning their strategies with the SDGs, enhancing positive impacts on the environment and society, as well as mitigating risks.

They also promote responsible customer engagement to foster sustainability initiatives and stimulate economic activities that ensure prosperity for both current and future generations, while advancing society’s development goals.

In recognition of the CBE’s commitment to sustainable finance, the Sustainable Banking and Finance Network (SBFN) – a member of the International Finance Corporation (IFC), part of the World Bank Group – has upgraded Egypt’s rating in 2024 from Developing to Advancing in its annual report.

This report benchmarks the country’s progress and outlines member institutions’ efforts to develop and implement national and regional sustainable finance frameworks, in line with leading international trends and best practices.  Notably, Egypt’s rating has been upgraded four times since joining SBFN.

SBFN is one of the most prominent international platforms specialised in sustainable finance, as it represents 72 countries through 96 regulatory and governmental entities from emerging markets.

The network promotes the integration of sustainability principles into financial systems towards achieving the national goals and priorities, in addition to enhancing the stability of the banking sectors.

The Egyptian banking sector’s commitment to the Principles of Sustainable Finance is a vital step towards achieving the goals of both national and international sustainable development. This contributes to building a more diversified and sustainable economy that addresses the needs of both current and future generations.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser