Small and medium-sized Egyptian businesses have received a boost with the news that the Egyptian government is to sign a $200 million loan agreement with the World Bank, with the funds to be allocated to small projects through a Social Development Fund to create jobs for Egyptians.
Planning and International Cooperation Minister Ashraf al-Araby will sign the agreement with Inger Andersen, the World Bank’s vice president for the Middle East and North Africa region. Araby has also confirmed that a strategy to double national income will be finalised by next week.
It is the latest show of support for Egypt by the World Bank, who have also agreed to give the country another $200 million to fund the upgrade of sanitation and sewage infrastructure in four governorates in the Nile Delta and Upper Egypt. It is not just international financial organisations that are showing renewed interest in the recovering economy, however. The news that BNP Paribas is to seek preliminary bids for its Egyptian retail banking business in a bid to quit non-core operations and raise over $400 million has top regional banks in the Gulf Arab region on standby.
“BNP has a relatively small market share in Egypt but with good potential for growth. They are still examining any potential expressions of interest for the operation there that may arise,” a source close to the bank said. The lender operates nearly 70 branches in Egypt. The sale is set to attract the likes of the National Bank of Abu Dhabi (NBAD) NBAD.AD and Qatar National Bank QNBK.QA, who are looking to expand in Egypt and see the country as a long-term play. Gulf banks are on the hunt as European lenders put profitable businesses from Turkey to Egypt on the auction block, at a time when valuations are near multi-year lows due to volatility in financial markets.
NBAD, the largest UAE lender by market value, would be keen to buy the Egyptian operations of French banks, its Chief Executive Michael Tomalin said in July. Now the Gulf banks may have their opportunity, as BNP has sped up asset sales and slashed jobs in the wake of the Eurozone crisis.
“BNP is moving in with a formal sale plan for its Egyptian retail business. The big question will be whether it attracts enough serious buyers given the prevailing situation in Egypt,” the source said.
