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    Small businesses by the big river

    Egypt sets its sights on a million new small business entrepreneurs, less congestion in big cities, and more electric transport – as well as better use of the water carried down the Nile

    13 February 2024


    Rasha Mohamed’s friends and family warned her that opening a clothing store during times of economic trouble was too risky. But she had planned this move for several years. So, when her business loan was approved, she did not hesitate.

    “Many other people like me in Egypt want to do the same thing,” says Mohamed, who borrowed 100 000 Egyptian pounds, or €3 000, in 2022 to open a shop about 40 kilometres west of central Cairo, selling modern dresses, kids’ clothing and abayas, the long, wide dresses worn by Egyptian women and inspired by traditional cultural designs. “People are just waiting for this kind of support. Without financial help, it’s too hard to do something like this, especially when times are tough.”

    Egypt is one of the oldest countries in the world and has one of the largest and most diverse economies in Africa and the Middle East. Jobs at small and medium-sized companies contribute nearly 75% of total employment, so when there are economic problems, many livelihoods are threatened. The country is struggling in 2023 with rising debt, inflation, and a falling currency. The response has been to focus assistance on small companies. Egypt aims to create a million new male and female entrepreneurs this decade by offering training and financial advice to the young. This assistance is more urgent after large numbers of people lost jobs during the COVID-19 pandemic.

    Without financial help, it’s too hard to do something like this, especially when times are tough.
    Rasha Mohamed

    The land of Cleopatra, Tutankhamen and the Great Pyramid faces all the challenges of a big, developing country, from finding work for a growing, youthful population, to dealing with the impacts of climate change and the pollution that fuels it. Egypt is confronting these obstacles with investment in small businesses, as well as big infrastructure projects that improve water, sanitation, irrigation and agriculture and cut emissions from outdated factories and transport systems.

    The European Investment Bank has supported these projects with more than €15 billion in investments since 1979, much of it assisted by European Union grants or loan guarantees. In October 2023, the Cairo office of the EU bank became a regional hub, serving North Africa and the Near East. The office is a key branch of the Bank’s EIB Global arm, which handles operations beyond the European Union. The Bank’s investments range from big water systems to loans that Egyptian banks then lend on to small-business owners, like Rasha Mohamed, whose shop is backed by a much bigger loan that the European Investment Bank gave to a microfinance specialist, Banque du Caire.

    Disconnecting transport from pollution

    At the end of the day, we are all living on this planet.
    Mohamed Wael Nasser

    “We are helping many sectors in Egypt, but our transport projects alone improve the environment, the economy, people’s lives, jobs, education, and health care,” says Tarek Mohammed, a projects officer in the Cairo office of the European Investment Bank.

    Mohammed worked on the modernization of the Cairo metro and is assisting the improvements to commuter trains and trams in Alexandria, the country’s second-largest city. “Cairo is one of the most polluted cities in the world in terms of air quality, but our goal is to shift the mode of transport here and in other Egyptian cities,” Mohammed says, “to not use as many cars, to burn fewer fossil fuels, adopt modern methods of mobility, emit fewer emissions.”

    Egypt’s public and private sectors are also investing in the green transition, the circular economy, renewables and modern agriculture practices. Recycling containers are now common in parts of Egypt’s biggest cities. Even cash machines ask users not to print a receipt, for the benefit of the planet. At the 27th Climate Conference in Sharm el Sheikh, Egypt, in 2022, the country announced a Nexus of Water, Food and Energy programme to work more closely with global partners and funnel billions of dollars into protecting the environment and improving the future of the country. The Egypt Vision 2030 plan aims to help meet the United Nationals Sustainable Development Goals by fighting poverty and inequality, promoting technology, and reducing greenhouse gas emissions.

    “At the end of the day, we are all living on this planet, so we want to show the rest of the world that we care,” says Mohamed Wael Nasser, the head of product development at a big Egyptian printing company, Roto House, that made a large investment to reduce solvent emissions at its plant near Cairo with the backing of a €2.5 million loan from the Bank of Alexandria in 2020. Roto House’s financing was possible because the European Investment Bank approved a €20 million framework loan to the Bank of Alexandria in 2018 to help small businesses and supported a similar €15 million loan in 2023.

    “This type of investment is very expensive, but it’s a win-win for us,” Nasser says. “It helps our business when customers know we care about the environment, and it helps climate change. Today, we’re not hurting the ozone layer.”

    “Relying on gas for transport is not good for the future of Egypt.”

    Ahmed Beltagui

    Leaving cars at home

    Climate change and the environment are important topics in big Egyptian cities like Cairo. The capital is one of the most populated and congested cities in the world. Walking or driving around it, the amount of diesel fumes and traffic is alarming and confusing. Big infrastructure projects are planned to fight these problems across the city and the country, including more electric-powered metro lines, one of the longest electric monorail lines in the world, a high-speed electric train and a new city bus system. The goal: Move millions of commuters out of cars and into public transport.

    “Frankly, the metro is one of the greatest projects in Egypt,” Walid Al-Arif Billah, a swimming coach who recently graduated from university with an information systems degree, says, while waiting to catch a ride on Cairo’s metro line 3. This line is the most modern part of the network and was financed by a €600 million loan from the European Investment Bank. “The metro has been made very simple, safe and easy for everyone. And then you have the pricing. Tickets prices are still reasonable for most people.

    Kristeen Emad, who works in the accounts department at Cairo Tower, the best place for a panoramic view of the city from nearly 200 metres up, says the recent expansion and improvement of the Cairo metro makes life easier. There are too many cars and other vehicles on the roads, she says.

    “If there is a lot of traffic, I always take the metro, as I know it will save me a lot of time and effort getting from one point to another,” she says. “If a trip normally takes an hour in a car or bus, the metro may take half an hour.”

    Kristeen Emad says the expansion of the Cairo metro makes life easier for many people and cuts travel times in half.

    Cairo’s metro system opened in 1987 and was one of the first of its kind in Africa and the Middle East. Several metro lines cover a large part of the city and carry millions of passengers each day. The European Investment Bank helped to expand many parts of the metro and has been assisting other big transport projects for more than four decades. In 2021, the Bank announced it would invest more than €1 billion on metro and tram projects in Cairo and Alexandria over five years. Line 3 is as modern as any metro service in the world, with air conditioning, security and lighting, modern ticket booths and separate cars for women. In 2023, the Bank is working on a new investment to expand and modernize line 1 of Cairo’s metro.

    “Today in Cairo, many people can’t imagine not having a metro,” says Ahmed Beltagui, an engineer who works on energy and transport in the Cairo office of the European Union. “From an economic point of view, the metro is very important in cutting down on congestion and helping people get to their jobs. But it also saves people a lot of time. It’s hard to use a bus in Cairo.”

    “The metro is one of the greatest projects in Egypt.”

    Walid Al-Arif Billah

    Solutions for Alexandria

    Alexandria has similar congestion and pollution problems. Many streets in Alexandria are narrow and clogged with cars, three-wheel rickshaws, and yellow and black Russian Lada taxis. The train lines and tram network are old and deteriorating. This city of about 5 million people is often packed with tourists during the nicest months , making mobility more difficult.

    “Getting  around is not easy, especially in the tourist season, because cars are everywhere,” says Walid Maneb, a professional diver in Alexandria who was having tea at a restaurant near Shatby Beach, one of the city’s many long, golden stretches of sandy coastline. “Better trains and trams in this city would help everyone a lot.”

    Egypt is making big investments in water treatment to prevent pollution emptying into the Mediterranean Sea around Alexandria.

    The European Investment Bank approved a €750 million loan in September 2023 to rehabilitate nearly 22 kilometres of commuter train lines in Alexandria, adding new cars, improving the stations, installing new tracks and converting diesel engines to electric-powered systems. That follows a 2020 loan for €138 million to upgrade a 13.8-kilometre electric tram line in Alexandria that included new cars and engines. The city has more than 30 kilometres of tram lines dating to the 1860s, and many parts of this system need to be modernised.

    “We need to cut down on car traffic in Alexandria, but we also need to address the problems from many different angles,” says Fatma Rashad, director general of economic planning in Egypt’s Transport Planning Authority, who was giving a group of global development partners a ride in an outdated diesel train on an aging and bumpy commuter line that will be replaced over the next several years.

    Rashad, sitting in a seat just a metre from the cabin of the diesel locomotive, says transport officials invited visitors to illustrate how much needs to be improved in her city. “We have a long way to go, but I am optimistic that we will see big reductions in traffic and pollution in the near future.”

    “We have a long way to go, but I am optimistic.”

    Fatma Rashad

    The gift of the Nile

    Another big infrastructure issue in Alexandria and across the country is water.

    Population growth, climate change, pollution, and regional disputes are hurting the water supply. Egyptians rely on the River Nile for 90% of drinking and irrigation water. The country is sometimes called the “gift of the Nile,” because without this river, most of the land would be a desert. Today, Egypt is one of the most water-scarce countries in the world, with a level of water resources per person significantly below the global average.

    The European Investment Bank is one of the biggest investors in water projects worldwide, lending more than €1 billion in this sector in Egypt alone. In 2018, the European Union approved a €25 million grant and the European Investment Bank signed a €214 million loan with Egypt to reduce pollution in the Nile Delta and to improve water, sanitation and waste treatment.

    Walid Maneb, a diver in Alexandria, says the economy and tourism depend heavily on clean water.

    This investment is known as the Kitchener Drain clean-up project. The drain, one of the most polluted in Egypt, constitutes a long series of wastewater treatment plants running about 70 kilometres through towns not far from the Mediterranean Sea. The plan to clean up this drain and prevent pollution from emptying into the sea is part of a European Union programme improving water in many Mediterranean countries.

    “Water is important for everyone but especially in Alexandria,” says Maneb, the diver in Alexandria. “Just look around you — clean water gives us jobs, feeds us and attracts millions of tourists.”

    Just look around you — clean water gives us jobs, feeds us and attracts millions of tourists.
    Walid Maneb

    ‘We need to invest in the planet’

    Nasser, the product development manager at the Roto House printing company, located in an industrial zone of Giza, about 40 kilometres west of Cairo, says his colleagues sometimes get tired of how often he talks about the importance of clean water in Egypt, or about the environment and fighting global warming. Nasser was the company’s representative at the United Nations Climate Conference in 2022. He cares deeply, he says, because climate change can do a lot of damage to the future of his country. He sees that the quality of water in the Nile has been neglected, that the country imports most of its food, and that its economy and agriculture are at risk from climate change more than most other countries.

    “My hope is that other companies will follow our climate footsteps and that others believe in protecting the planet, too,” says Nasser, whose company is one of the largest package labelling and printing companies in Egypt. “We need to invest in the planet, too. We must make sure the planet is OK.”

    Nasser has packed the roof of Roto House’s factory with many rows of solar panels that supply more than 10% of the company’s electricity. Roto House’s operations use a lot of ink and chemicals that are easy to smell when walking around the sprawling plant, and that can hurt the environment and workers’ health if volatile chemicals enter the air. The company’s new scrubber system of tanks and tubes and ventilation pipes remove the harmful fumes before they are released. The system also reduces the smell of chemicals in the plant and helps prevent respiratory problems.

    The latest loan to Bank of Alexandria, a €15 million financing in 2023, is similar to the one that backed all Roto House’s environmental improvements. It’s made under a Green Economy Financing Facility to help Egyptian businesses embrace green energy. Both loans to the Bank of Alexandria included technical assistance grants from the European Union to accelerate green investments.

    Mohamed Wael Nasser at the Roto House factory in Giza.

    Promoting inclusion and microfinance

    An Egyptian bank trying to help smaller companies is Banque du Caire, one of the largest microfinance providers in the country. The firm promotes inclusion, community development and entrepreneurial empowerment. The European Investment Bank signed a €70 million loan with Banque du Caire in February 2023 to help the firm provide more loans to smaller entrepreneurs in areas of Cairo and Alexandria who have a hard time getting financing.

    Rasha Mohamed, who opened her clothing store near Cairo in 2022, received her micro-loan from Banque du Caire. The bank encouraged her to place the shop in a busy three-story complex full of bakers, houseware sellers, a tailor, a shoe store, a grocery, a café and other clothing stores in a part of the western Cairo metropolitan area called Sixth of October City.

    “My business is exactly what I wanted,” says Mohamed, whose shop walls are lined from floor to ceiling with all colours of clothing. She has a small counter to serve visitors Turkish coffee or tea. ”A lot of people are starting to visit my store and I’m also doing marketing on social media. But I couldn’t do anything without finance.”

    Close relationships with clients

    Small projects like mine are the seeds of big businesses.
    Sherif Sayed

    Banque du Caire employs hundreds of field officers around Egypt to review microfinance applications and visit people who are asking for small loans. Sometimes, a microfinance loan will be approved, even when the applicant isn’t fully qualified, as long as the field officer approves the deal. Field officers verify the quality of applicants by talking to friends and neighbours and reviewing a lot of paperwork.

    Sherif Sayed took out a loan worth 70 000 Egyptian pounds, or about €2 100, from Banque du Caire in January 2023 to open a bigger café. It’s also in Sixth of October City, a new city in the desert that is home to students, young adults and newcomers from countries such as Syria or Iraq. Sayed’s new business is called Mountain Wolves (Zeaab El-Gabal) Coffeeshop, named after a famous Egyptian television series illustrating life and traditions in the southern region of Egypt where Sayed grew up. It is hard for Egyptians from this Upper Egypt region to get loans, because they are considered riskier than people from bigger cities such as Cairo or Alexandria. This loan is Sayed’s second from Banque du Caire. His new café has four employees and seating for about five dozen people. He hopes to keep growing.

    “Small projects like mine are the seeds of big businesses,” says Sayed, who greets all customers with a big smile, while wearing a full-length jellabiya and a thick, checked woollen scarf. “If small companies can find financing, they will eventually turn into big ones, one day. We all start from zero. No one starts big.”

    Sherif Sayed received two microfinance loans to expand his café near Cairo and plans to keep growing his business.

    Working harder on green transition

    The energy and transport expert from the European Union’s Cairo office, Ahmed Beltagui, says Egypt and global development institutions need to intensify their partnerships over the next few decades to help the economy and climate action go in the right direction.

    “We need to work harder to help Egypt make the transition to sustainability,” he says. “Relying on gas for transport and to fuel industries is an easy thing to do, but it’s not good for the future of Egypt. The country’s gas fields are being depleted, but we have sun and wind here, so let’s use this and other technology for cleaner energy production.”