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Egypt stands at a pivotal juncture in its economic evolution, facing several deep crises hugely exacerbated by Russia’s invasion of Ukraine as well as a deteriorating situation across the Middle East, and the country’s food security lies right at the core. Agriculture is the cornerstone of the Egyptian economy, forming around 12% of the country’s GDP and a massive 25% of its workforce. With such figures, it is undeniable just how significant of a role agriculture has to play in the nation’s economic well-being.
Despite its importance, the sector faces significant challenges, not only geopolitically but also in terms of water scarcity, land degradation, and ever-worsening impacts of climate change. With access to finance for Egyptian agribusinesses often obstructed, the impact is hindering growth and innovation in addressing and adapting to such challenges.
Agriculture has its own sectoral dynamics and financing needs, which cannot be met simply through conventional and traditional financial schemes and systems. Financing the sector without proper know-how and institutional capacity is considered very high risk.
Addressing the critical finance gap will allow for an innovative approach to tackling such existential challenges, allow Egypt to harness the significant potential of its agriculture sector, decrease its reliance on volatile export markets, and assure its own internal food security.
Recognising this critical gap between financial institutions and agribusinesses, GIZ Egypt launched the ‘Strengthening Access to Finance for Agribusiness in Egypt’ project together with Frankfurt School of Finance & Management, with the aim of equipping financial institutions with the necessary tools and know-how to bolster their service provisions for agribusinesses, to foster an environment in which they can thrive and ultimately have a lasting impact on economic growth and stability.
The first stride towards achieving such objectives was the initiation of a comprehensive series of online sessions designed to demystify the world of agri-financing, shedding light on its unique challenges but also its abundant opportunities. By bringing together agri-finance experts, both from international and Egyptian backgrounds, the series provided a robust platform for knowledge exchange and capacity building. Participants were equipped with the necessary tools and insights to navigate the agricultural finance landscape, facilitating a more informed and supportive financing ecosystem for agribusinesses in Egypt.
The series took a real practical approach, teaching directly transferable skills and knowledge in areas such as credit risk assessment and management, as well as the specificities of agricultural lending and the value chain.
Building upon the foundational knowledge disseminated through the online sessions, the project’s second work package focused on providing direct technical assistance to financial institutions seeking to build or initiate their agricultural portfolio.
This involved tailor-made assistance packages aimed at enhancing the banks’ capabilities to serve agribusiness clients effectively, based entirely on the institution’s specific needs. By addressing specific challenges faced by financial institutions in lending to the agricultural sector, such as international best practices in sustainable farming, the project facilitated a paradigm shift towards more agri-friendly lending practices. This bespoke assistance not only empowers banks to unlock new opportunities within the agricultural sector but will also ensure that agribusinesses can access the critical financial resources needed to thrive.
The culmination of the project efforts was realised through the organisation of matchmaking events, the cornerstone of the third work package. These events served as a dynamic platform for agribusinesses, banks and other relevant bodies to converge, interact and forge meaningful partnerships. By facilitating direct dialogue and collaboration, the gap between financial institutions and agribusinesses was bridged, ensuring a deeper mutual understanding and alignment of goals. These events will be instrumental in sparking new financing opportunities, paving the way for innovative solutions and projects that set the pathway for the future development of the agricultural sector in Egypt.
Through a meticulously designed approach encompassing education, technical assistance and collaboration, the groundwork for a more inclusive and supportive financial ecosystem for agribusinesses has been laid.
Upon reflection, it is clear that the path forward requires a sustained commitment from all stakeholders involved. The synergy between financial institutions and the agricultural sector must continue to evolve, driven by innovation, mutual understanding and a shared vision for a prosperous Egypt.
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