Mobilising Financing and Investment for Quality Infrastructure in Egypt

4. Mobilising investment and finance in quality infrastructure

Abstract

Egypt continues to prioritise large‑scale, sustainability‑oriented infrastructure development as a core driver of economic growth, focussing on mobilising public and private investment to modernise essential services, strengthen domestic and international connectivity, and enhance long‑term resilience. Through the Green Investment Plan, the government is increasing the share of public investment allocated to climate‑resilient sectors – such as sustainable transport, renewable energy, water and wastewater management, and desalination – while advancing regulatory reforms, expanding the pipeline of public‑private partnerships, and diversifying financing through concessional loans, blended finance, and sovereign thematic bonds. These efforts are complemented by improved engagement with development partners and targeted institutional reforms to attract private capital. Yet challenges persist in scaling private participation, ensuring bankability, and addressing sector‑specific constraints.

Egypt has been actively pursuing large‑scale infrastructure development as a cornerstone of its national strategy for economic growth and sustainable development. While sustainability remains an important pillar in the country’s national development strategy, the government is focussing on mobilising investment – both public and private – towards projects that modernise essential services, boost connectivity domestically and internationally, and promote long-term resilience.

A central component of the Egyptian Government’s investment strategy has been increasing the share of public investment into green, environmentally friendly, and climate resilient infrastructure through Egypt’s Green Investment Plan. The investment plan prioritises sectors such as sustainable transportation, renewable energy generation, solid waste management, water desalination, and sewage treatment. According to MPED, the plan has set investment targets, namely raising green investments from 15% of total public investments in FY 2020/21 to 40% in FY 2023/24, 50% in FY 2024/25, and eventually to be 55% by FY 2025/26 and 60% by FY 2026/27.

To attract greater private sector participation and achieve its infrastructure priorities, the government has introduced reforms to improve the regulatory environment, expand the number of PPP projects, and diversify its use of alternative finance instruments. Although public investment has been a key driver of infrastructure development in Egypt, the government increased efforts to leverage private financing as seen through the use of blended finance models, public-private partnerships (PPPs), and collaboration with multilateral development banks.

This chapter draws on insights and exchanges with high-level officials and technical experts from relevant ministries, multilateral development banks, and private sector stakeholders, as well as responses to a questionnaire1 distributed among government entities, development agencies, private enterprises, and investors involved in infrastructure financing. Section 3 considers the barriers that private investors face when entering Egypt’s infrastructure market, the policy measures that could be taken to support greater private financing, as well as the challenges the Government of Egypt encounters in mobilising private capital for projects that are part of the country’s Green Investment Plan.

4.1. Existing mechanisms for funding national projects

Over the past five years, Egypt has pursued a diversified approach to financing its infrastructure investment needs, drawing on public and private sector funds through mechanisms and instruments like PPPs, concessional loans, and funding from international development agencies in the form of grants and long‑term soft loans. According to responses received from several Egyptian ministries, PPPs have emerged as the preferred financing scheme, particularly for long-term projects where private sector expertise and investment are needed. Key projects benefiting from investment under this model include power plants, sewage and water treatment facilities, and transportation projects such as railways and ports, which have attracted significant private investment. Under PPP arrangements, ministries (e.g. the Ministry of Transport) typically implement projects and cover expenses, while the private sector, identified as the operator, oversees the superstructure and related investment requirements. This model has gained popularity due to its ability to distribute risks and investment costs between the public and private sectors.

A Joint Committee created by the PPP amended Law no. 153 of 2021 and its Executive Regulations have enabled a level of co-ordination between ministries and localities.

Looking ahead, critical sectors such as energy generation, waste disposal, information technology and communications (ICT), transport and logistics (including ports), and water and sewage management are expected to garner substantial private sector financing. Social infrastructure projects, such as schools and healthcare facilities, as well as logistics infrastructure like sea and dry ports, are also set to benefit from PPP arrangements, supported by Egypt’s PPP Law (Law No. 67/2010). A driving force behind the growing reliance on PPPs is the government’s strategic focus on enhancing private sector participation in infrastructure development.

In addition to PPPs, concessional loans have played a critical role in Egypt’s infrastructure projects, often secured through bilateral agreements and facilitated by bilateral development agencies. The Ministry of Transport, for example, has successfully attracted diverse financing from development partners and multilateral development banks (MDBs). These include global and regional institutions like the World Bank, the European Investment Bank, the African Development Bank and the European Bank for Reconstruction and Development (EBRD), alongside large development agencies and funds like the Japan International Co‑operation Agency (JICA) and the Saudi Development Fund.

In terms of financing sources, Egypt has tapped into domestic commercial banks, MDBs and DFIs. While Egypt has relied on traditional financing mechanisms for infrastructure, the country has, in recent years, turned to more innovative approaches to financing. The issuance of sovereign green bonds, for instance, set an important benchmark, particularly Egypt’s 2020 Sovereign Green Bond Issuance. The sovereign bond issuance was shortly followed by Egypt’s first corporate green bond, issued in 2021 by Commercial International Bank (CIB) in partnership with the International Finance Corporation (IFC), which mobilised investment in renewable energy. The experience with green bond issuances also paved the way for other sovereign bond issuances in the years following the 2020 offering, notably foreign currency-denominated bonds (e.g. Samurai and Panda bonds).

Egypt’s Samurai bond issuance was first launched in March 2 022 followed by a subsequent issuance in November 2023. These bonds, denominated in Japanese yen, each amounted to approximately JPY 75 billion (USD 500 million) (OECD, 2024[1]). The November 2023 issuance featured a five‑year term with an annual yield of 1.5% which was relatively low compared to Egypt’s USD-denominated bonds, where interest rates have ranged from 3.875% to 10.875% (Egypt Today, 2024[2]). The JPY-denominated bonds provided Egypt with access to Japan’s investor base and offered an investment opportunity without exposure to foreign exchange risks. Moreover, support from the African Finance Corporation (AFC) as a re‑guarantor along with a guarantee provided by SMBC not only broadened the appeal of Egypt’s Samurai bonds but also allowed Egypt to extend the average maturity of its public debt portfolio and reduce external borrowing costs (AFC, 2023[3]).

While USD-denominated Eurobonds still represent the largest share, the Egyptian portfolio now includes Euro-denominated Eurobonds, JPY Samurai bonds, RMB Panda bonds, Sukuk, green and sustainable bonds, gradually reducing reliance on USD instruments and broadening funding sources across currencies, markets, and investor profiles.

While the examples above illustrate the mechanisms Egypt has employed, the country’s efforts to diversify its financing mechanisms appear to remain ongoing. The Government of Egypt has made significant strides in combining traditional approaches with innovative and alternative solutions to address the nation’s infrastructure needs and priorities. The use of PPPs, concessional loans, and sovereign bond issuances has allowed Egypt to tap into domestic and foreign capital resources.

Box 4.1. Thematic bond issuance for sovereign issuers

Capital markets have always been among the main sources of long-term funding for bond issuers, and of steady revenue and risk diversification for investors, thus matching different economic interests and creating value. Even though capital markets offer heterogeneous products, as all types of bonds matching different needs can be found, the issuance of specific types of debt instruments is largely driven by investor demand, that in turn reflects current market preferences.

That is why, in the last decade, investment instruments designed to help the transition to sustainable development and climate mitigation and adaptation have seen developments in terms of both volume and structure (IOSCO, 2020[4]). This reflects a globally widespread requirement that capital markets align with political and social concerns and help in achieving related goals.

At the issuer’s level, the challenge has been to offer investors products that, on top of raising capital and diversifying risk at the same rate as traditional products do, also direct funding towards financial instruments and projects that contribute to the achievement of climate and social goals. Such capital raising instruments are often generally referred to as sustainable bonds. Lower-middle and low-income countries faced particularly challenging funding conditions, with many struggling to access global bond markets. With the number of countries with high credit risk close to record levels, large refinancing needs and high borrowing costs threaten to further constrain fiscal space. Countries relying on foreign markets are especially vulnerable. Accelerating the development of local currency bond markets is crucial for ensuring sustainable and resilient sovereign financing for these countries.

Certain types of sustainable bonds, such as green bonds, are characterised by what is called the “greenium”, i.e. a lower yield and volatility in secondary markets if compared with “vanilla” bonds (Amundi, 2020[5]). This secondary market negative yield is heterogeneously present across green bond issuance, evolves over time and depends on various characteristics of the issuers and the bond’s subscribers (Pietsch and Salakhova, 2022[6]). In terms of effect size, many studies find a primary market negative premium for green bonds between ‑5 and ‑2 basis points on average, and a lower volatility of green bonds portfolios compared to conventional ones.

While the momentum of sovereign thematic (specific purpose) bond issuance has strengthened, structural challenges remain. At the same time, sovereign issuance can have a positive impact on general bond market development by establishing best practices in verification and reporting.

Sovereign green bond issues stand out in terms of their reliance on external reviews. Importantly, all sovereign issuers solicit a seal of approval from at least one, and often a variety of, specialised service provider(s). By contrast, as many as a fifth of corporate green bonds are self-labelled as green by the issuer without any external review. This will be an important consideration given the transaction and administrative cost that can accompany some thematic bonds.

Source: OECD (2023[7]), Green, social and sustainability bonds: Multilateral development banks and infrastructure financing, https://one.oecd.org/document/DAF/CMF/AS(2023)3/REV2/en/pdf; BIS (BIS, 2022[8]), Sovereigns and sustainable bonds: challenges and new options, https://www.bis.org/publ/qtrpdf/r_qt2209d.htm; OECD (2025[9]), Global Debt Report 2025: Financing Growth in a Challenging Debt Market Environment, https://doi.org/10.1787/8ee42b13-en.

4.2. Egypt’s national infrastructure priorities

In an effort to achieve Egypt Vision 2030, Egypt has prioritised well developed infrastructure across several key sectors, including energy, social housing, utilities, transportation, roads, irrigation, and agriculture, with various ministries overseeing projects in their respective areas. Water and wastewater treatment have emerged as a cross-ministry priority, involving multiple stakeholders in tendering and managing projects. These initiatives aim to ensure the safe reuse of treated wastewater, reduce non-revenue water, promote water conservation, build capacity through technical training, create opportunities for private operators, and achieve financial sustainability while ensuring effective asset management to preserve long-term investments.

Several ministries have an important role in addressing Egypt’s infrastructure development needs, according to the Ministry of Planning and Economic Development. The Ministry of Transport oversees road, bridge, and Nile axis projects to enhance connectivity, while the Ministry of Housing, Utilities and Urban Communities focusses on new urban communities, social housing, slum redevelopment, and expanding water and sanitation infrastructure. The Ministry of Water Resources and Irrigation manages canal lining and rehabilitation to improve water efficiency, and the Ministry of Electricity and Renewable Energy works on securing energy for agricultural and other projects and electrical interconnection with Europe to boost energy security and integrate renewable energy generation.

Of these ministries, the Ministry of Transport has highlighted several key projects it oversees that align with Egypt’s sustainable development strategy. As part of the broader strategy to attract investment and position Egypt as a regional trade and logistics hub, the ministry has prioritised infrastructure development across multiple sub-sectors over the ten‑year period from 2014 to 2024, with a total budget of EGP 2 trillion. These projects, which encompass roads, railways, metro systems, seaports, dry ports, and river transport, are outlined as follows, each contributing to sustainable economic growth and national development:

• Roads and Bridges: The National Road Project aims to enhance economic integration and improve the efficiency of Egypt’s transportation network. With a budget of EGP 175 billion, the construction of new roads (7 000 km) and the development of existing roads (10 000 km) are key components of the plan. The primary objective is to connect Egypt’s road infrastructure with industrial, agricultural, and tourism areas, enabling the transport of goods and reducing operating costs through improved traffic flow. New roads with a total length of 7 000 km were planned at a cost of EGP 175 billion, with 6 300 km completed at a cost of EGP 155 billion. Work is underway on 700 km. Additionally, the development, expansion, and upgrading of 10 000 km of the existing road network has been planned at a cost of EGP 130 billion, with 8 400 km completed at a cost of EGP 110 billion. Work is underway on 1 600 km.

• A plan has been devised to construct 35 new Nile axes, bringing the total number of Nile crossings/bridges to 73, up from 38 axes/bridges This will save the state USD 8 billion annually in energy costs and mitigate environmental damage from traffic congestion. With regards to funding mechanisms the road sector has a stable stream of funding, relying entirely on the public budget and adhering to a policy of avoiding foreign loans unless critically necessary. This strategy ensures that road construction and maintenance are shielded from external financial pressures, enabling consistent investment within the sector.

• The construction of elevated bridges and tunnels includes removing road-level crossings with railway lines through the construction of bridges over level crossings, as well as elevating bridges for vehicles over windstorms instead of ferries. A plan has been set to build 1 000 bridges and tunnels at a total cost of approximately EGP 140 billion, increasing the overall count to 2 500.

• Railways: The railway sector is undergoing a significant transformation, with plans to modernise rolling stock, signalling systems, production workshops and infrastructure to improve both passenger and freight transport and increase transport capacity, maximise passenger and freight movement across the network, improve safety and security rates, and reduce carbon emissions. The target is to increase daily passenger capacity from 1.2 million in 2014 to 2 million by 2030. Freight transport will also increase from 5 million tonnes annually in 2014 to 13 million tonnes by 2030, significantly reducing the carbon footprint of Egypt’s logistics sector by shifting the transport of goods away from road-based trucking. The expansion in freight capacity also aims to generate financial resources to help balance the subsidised more costly passenger transportation. It was noted that overcapacity issues due to high demand, however, continue to impede significant expansion (see Box 4.2 for relevant country experience). To address this challenge pending more structural measures to increase capacity, the ministry is restructuring operational schedules to maximise the network’s efficiency, upgrading signalling systems to reduce journey times and establishing new lines to expand capacity and ease congestion on existing lines.

While Egypt has focussed on expanding its rail capabilities, the sector faces high costs of maintenance and reliance on international commercial loans for the purchase of parts and goods – due to limited local manufacturing capabilities – which pose barriers to development. Key international financiers include MDBs such as the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the Arab Bank. Recent advances include “green financing,” as seen through loans provided by KfW (Kreditanstalt für Wiederaufbau), Germany’s development bank. These green loans, secured in July 2023, feature certain criteria to support sustainable projects and extended tenors of 20 to 24 years. The ministry aims in its new strategy to involve the private sector in the operation of railways, the metro and electric traction.

• Metro and Electric Traction: Urban expansion is driving investment in mass transit systems, particularly in Greater Cairo. Major projects include the development of new metro lines and the construction of electric mass transit systems. For example, the Light Rail Transit (LRT) (Electric Train), now operational over 70 km, is set to expand to 105 km, while additional metro expansions (Lines 3 and 4) are enhancing urban mobility. The construction of a high-speed electric train network spanning 2 000 km is also underway, with three major lines: the Ain Sokhna – El Alamein – Matrouh line (675 km), the October – Aswan – Abu Simbel line (1 100 km) and the Qena – Hurghada – Safaga line (225 km). These projects aim to reduce congestion, enhance economic and tourism development, and provide safe, energy-efficient transportation for Egypt’s growing population. Additionally, VIP trains and luxury services represent a potential avenue for privatisation, with retail spaces at stations also identified as a revenue source. Under current models, the government retains ownership of rolling stock and tracks, while private firms lease operations, paying rent and a percentage of revenues back to the government.

• Seaports: Egypt’s seaports are being transformed into integrated international logistical corridors to enhance the country’s trade capacity. The plan includes adding 67 km of new berths with depths ranging from 18 to 22 metres, accommodating the growth in trade volumes, and boosting container capacity to 40 million 20‑foot equivalent units (TEUs) annually by 2024. Significant upgrades are planned for ports such as Safaga, Sokhna, Port Said and Alexandria, which are strategically located on key international trade routes. Furthermore, the construction of wave barriers and the deepening of navigational channels will enable Egypt to accommodate larger vessels and increase its annual cargo capacity from 185 million tonnes to an estimated 400 million tonnes. The ministry has been working with private sector partners to manage and maintain ports through concession agreements to ensure efficient operations and investments for operation and maintenance. Ports under concession agreements with local and international private sector operators include Sokhna, Safaga and Alexandria. The government handles the infrastructure of ports while bringing in the private sector for the superstructure and managing operations.

• Dry Ports and Logistics Centres: Egypt is establishing 31 dry ports and logistics centres to support the efficient movement of goods and reduce port congestion. These include major facilities in strategic locations like the Sixth of October, New Administrative Capital, Borg Al Arab and New Damietta. The dry ports will reduce the costs of transporting goods, improve logistics services, and contribute to sustainable trade flows while mitigating the environmental impact of transport congestion. These dry ports are being developed through public-private partnerships (PPPs) in collaboration with the Ministry of Finance and the EBRD, and the Ministry of Planning and Economic Development. Through the expansion of dry ports, the Ministry of Transportation aims to streamline freight logistics and reduce congestion at seaports.

• River Transport: River transport is a key component of Egypt’s plan to reduce logistics costs and environmental impact. The government is enhancing navigational routes along the Nile, improving links between Cairo and major ports like Alexandria and Aswan. Projects include developing the Cairo-Alexandria route via the Nubaria Canal, removing bottlenecks on the Cairo-Aswan and Cairo-Damietta routes, development of the Aswan-Sudan navigational route and modernising navigational systems like the River Information System (RIS). River transport’s low operational costs and reduced environmental footprint make it a vital part of Egypt’s infrastructure strategy.

To address the reliance on foreign partners for financing of the railway network, ongoing efforts to localise the manufacturing of railway components in co‑operation with the Arab Organization for Industrialization (AOI) and local private sector companies is taking place, with the aim of gradually reducing reliance on imports. (Voestalpine – NERIC – Alstom – Colas Rail – Suez Rail Production). In addition, partnerships with global companies to transfer technical know-how and train Egyptian personnel in maintenance and local manufacturing is taking place.

In light of the scale and scope of these transportation projects, the Ministry of Transport could consider incorporating “transit-oriented development” (TOD) in the nation’s transportation strategy, co‑ordinating with other modernisation and urbanisation projects spearheaded by relevant ministries. TOD presents an approach to ensure sustainable development by strategically linking transit infrastructure with urban centres, thereby facilitating access to economic hubs. This wholistic integration could drive economic growth, create new employment opportunities, and stimulate private investment, as increased land value brought about by these infrastructure projects can attract private capital inflows (see Box 4.2).

Box 4.2. Transit-oriented development

Transit-oriented development (TOD) is a planning concept that promotes urban compactness, mixed-use, and pedestrian- and cycle‑friendly development organised around a transit station (e.g. train station, metro station, tram stop) (ITF, 2023[10]; OECD, 2023[11]). One of TOD’s defining characteristics is having public and civic spaces near transit stations, which themselves can act as community hubs. By promoting greater use of transit systems, TOD approaches seek to create inclusive access to resources such as retail and housing, employment, and other amenities as well as reduce reliance on motorised travel. Since its inception in the 1970s, TOD has gained traction among G20 countries as a framework for sustainable urban development.

This approach not only supports sustainable living but also offers significant economic opportunities. Infrastructure projects around transit hubs often attract private investment by enabling cities to capture rising land values, which can then be reinvested into public capital projects. TOD provides private developers with stable revenue streams from transit operations, increased property values, and improved commuter efficiency, making it a compelling model for long-term investment. Additionally, developers are often incentivised to enhance the broader built environment, contributing to the creation of parks, green spaces, and other community amenities, further enhancing the area’s liveability and appeal.

Hudson Yards: New York City, the United States

Before redevelopment in 2012, New York City’s Hudson Yards was a largely underutilised area dominated by railyards and modern structures but lacked significant residential or commercial development. Limited public transit access and low population density further isolated it from the city. The Hudson Yards project became a prime example of TOD through public-private collaboration.

The Hudson Yards project involved co‑ordinated efforts between the municipal government, developers, and other stakeholders to transform land use in the area (e.g. transferable development rights (TDRs) or air rights) and attract private investment. By revising land use guidelines, including zoning, building heights, and development density, the city established a clear investment vision for the neighbourhood, boosting confidence among investors. The municipal government also worked closely with developers to address legal, financial, and regulatory challenges while negotiating development agreements with private partners.

To finance infrastructure improvements and urban development, the government leveraged mechanisms like “land value capture” (LVC) mechanisms. By working closely with real estate developers, the City of New York employed various financial instruments to generate revenue from rising property values. These included “tax increment financing” (TIF), which redirected property tax revenues from increased land values towards public infrastructure and services, as well as bilateral agreements requiring developers to contribute payments in place of future property taxes. Additional property taxes were also imposed on owners in the area to support the funding of public projects.

This strategy helped the Metropolitan Transportation Authority (MTA) secure over USD 1 billion in private investment for future capital projects, including a new metro line to serve the area. Through public-private partnerships (PPP), private developers took on the responsibility of financing and constructing public infrastructure in return for long-term leases of revenue‑sharing agreements. This collaborative approach allowed for the large‑scale development of urban areas while reducing the fiscal burden on the municipal government.

Shibuya Station: Tokyo, Japan

Japan has long embraced TOD as a core principle of its urban planning. Early 20th-century pioneers like Ichizou Kobayashi, followed by Eiichi Shibusawa and Keita Gotou, integrated rail construction with real estate development, creating high-density areas around transit lines in cities like Kansai and Tokyo, respectively. Private transit operators have played a pivotal role in shaping these developments, designing neighbourhoods with essential services within walking distance of stations and linking them through rail and bus systems. The connectivity offered by TOD stations provides residents with access to most recreational activities via mass transit, supported by feeder buses, rail lines, subways, and efficient transport demand management measures, such as high fuel costs, limited parking, and narrow roads, which discourage car use.

The redevelopment of Shibuya Station in Tokyo stands as a modern example of TOD at work. As one of Tokyo’s busiest transit hubs, Shibuya integrates eight rail lines and surrounding urban spaces into a cohesive city-station complex. In 2005, Shibuya Station and its surrounding area were designated an Urban Renaissance Urgent Redevelopment Area, easing regularity frameworks and restrictions around urban redevelopment. The project, which was shaped by public-private co‑operation, has touched on several major upgrades to Shibuya station and infrastructure developments in the district. New facilities and areas within and around the station have integrated pedestrian systems, thereby enhancing accessibility and transforming the station into a multifunctional urban hub. This approach illustrates how Japan’s TOD model blends transit efficiency with private sector-driven mixed-use development, creating vibrant, accessible communities.

Note: Land value capture (LVC) is a public financing mechanism where the increase in land value resulting from public investments (in infrastructure for example) or regulatory changes is recovered by the government. The idea behind LVC is that public actions enhance land values, and capturing this “unearned” increment allows for investment into community services or further infrastructure. Tax increment financing (TIF) is a value capture tool that enables municipalities to promote economic development in designated zones. When a TIF district is established, the current property tax base is frozen. Once development occurs and property values rises, the tax revenue (the increment) generated by the increase property value is used to finance the initial development costs (e.g. infrastructure improvements). In other words, future gains in taxes help subsidise current improvements.

Source: ITF (2023[10])Transit-Oriented Development and Accessibility: Case studies from Southeast Asian cities, https://www.itf-oecd.org/sites/default/files/docs/transit-oriented-development-accessibility-southeast-asia.pdf; OECD (2023[11]), Financing Cities of Tomorrow: G20/OECD Report for the G20 Infrastructure Working Group under the Indian Presidency, https://doi.org/10.1787/51bd124a-en; Reggiani (2021[12]), Urban regeneration strategies and place development in contemporary Tokyo: The case of Shibuya Station area, https://doi.org/10.1108/JPMD-04-2021-0046; GI Hub (2021[13]), Hudson Yards air rights monetisation, https://www.gihub.org/innovative-funding-and-financing/case-studies/hudson-yards-air-rights-monetisation/.

In line with Egypt Vision 2030, the Ministry of Communications and Information Technology (MCIT) reported that the Government of Egypt has invested USD 3 billion in internet infrastructure upgrades as part of its development strategy and digital transformation goals via MCIT’s Digital Egypt Strategy. The investment addresses the growing demand for remote work, digital payments, and e‑commerce platforms since the COVID‑19 pandemic. This effort is guided by four core pillars: fostering collaboration for efficient operations, expanding internet access through upgrading infrastructure, empowering citizens to participate in the digital economy, and promoting entrepreneurship and innovation in the ICT sector. To achieve these advancements, MCIT has concentrated on three areas: fixed broadband, mobile voice and data services, and global information infrastructure.

Egypt has expanded its international infrastructure cable network, constructing an additional 2 600 km of new routes in one year, nearly doubling the Trans-Egypt corridor to 5 350 km as of June 2022. In addition, Telecom Egypt have extended into the east bank of the Suez Canal within Egypt’s Asian territory in the Sinai Peninsula, providing access to the subsea systems landing in Egypt, with seven to eight subsea systems planned to land in Sinai. This is achieved by integrating more than 21 in-service and planned subsea cable systems that traverse the Red Sea and Mediterranean over 10 diverse trans-Egypt terrestrial crossing routes and five landing stations located on each coast. MCIT invested over USD 3 billion to enhance fixed internet services to replace outdated copper infrastructure with fibre‑optic cables with broadband speed expected to reach 86.06 Mbps in March 2025 as part of the Digital Egypt Strategy. Complementing these efforts, the government has prioritised improvements to cell tower infrastructure and is employing innovative technologies through a USD 2 billion allocation to bolster its mobile network operators’ capabilities.

In addition to Egypt Vision 2030, MCIT plays a significant role in Egypt’s Haya Karima (“Decent Life”) initiative, aimed at improving the quality of life in rural areas. As part of this initiative, MCIT is developing telecommunication infrastructure to develop services and facilities for all 4 500 target villages by installing a fibre‑optic cable network and extending mobile phone network services. MCIT’s initiative seeks to link government buildings, homes, hospitals, schools, and service centres to modern digital infrastructure, directly benefitting over 58 million citizens across 3 million households. During the first phase of the Haya Karima initiative, a fibre‑optic cable network is planned to be installed in 1 400 villages, connecting an estimated 1 million buildings within a year. Subsequent phases will extend these upgrades to all target villages over a three‑year period.

MCIT has also launched a mobile towers project to improve essential infrastructure and increase mobile phone service provision, including internet and mobile communication, in underserved areas. This project employs an infrastructure‑sharing model, allowing service providers to share telecom infrastructure (i.e. mobile towers), thereby reducing investment costs and improving service provision to enhance connectivity in targeted villages. While this initiative aims at improving communication services and living conditions in these communities as part of Haya Karima, it also serves as an investment opportunity for the construction and manufacturing of mobile towers in these areas.

In relation to water management, including desalination, the Government of Egypt has designated certain desalination and sludge management plants to be assigned to and operated by the private sector. This is in line with the country’s State Ownership Policy (SOP), the general divestment plan to be implemented within three to five years of its launch in end‑2022. Private sector participation is being promoted in areas such as potable water pump stations and distribution networks, sewage pump stations and networks, and wastewater purification plants (WWTPs). This includes service areas such as in the reuse of treated wastewater and the collection, treatment, and recycling of sludge and solid waste. Activities such as bill collection, metre installation, and the management, operation, and maintenance of potable water and sanitation services will also be opened up to private sector involvement. The Ministry of Housing, Utilities and Urban Communities highlighted several opportunities for private sector involvement, including sludge treatment and utilisation in four WWTPs with a combined capacity of 3.89 million cubic metres per day, six WWTPs with a total capacity of 395 000 cubic metres per day, and a project focussing on the reuse of water supernatant from sludge treatment and backwash water from filters.

Between 2025 and 2030, the Ministry of Housing, Utilities and Urban Communities plans to include the construction of 23 desalination plants with a total capacity of 2.56 million cubic metres per day, which is to be facilitated through private sector participation. The Government of Egypt is also preparing the second phase of the Haya Karima (Decent Life) initiative, targeting 52 sub-governorates (markaz) across 20 governorates to enhance services such as health, education, electricity, water, and sanitation. This mega project is financed by the government but is executed by the private sector. The Haya Karima initiative’s second phase is planned to encompass approximately 1 680 villages and their satellite communities. Additionally, 27 projects are under construction, including water purification plants and WWTPs, sludge treatment facilities, desalination plants, and safe water reuse projects are under construction, alongside feasibility studies with the 14 development partners (Arab Funds – World Bank – European Development Partners – African Development Bank – Asian Infrastructure Investment Bank) with a total investment of USD 3.6 billion.

4.3. International lending in infrastructure financing

According to the Ministry of Planning and Economic Development’s (MPED) 2024 Annual Report, total Official Development Assistance (ODA) directed toward public sector development from 2020 to 2024 amounted to USD 14.5 billion in total (MPED, 2024[14]). These funds have been instrumental in driving substantial advancements across various sectors.

Over the past four years, Egypt has signed country programmes with multilateral development banks (MDBs) and bilateral development partners, including comprehensive development strategies and sector-specific projects. These agreements are aligned with Egypt’s national priorities and presidential initiatives. For example, the Agence Française de Développement (AFD) Country Strategy for Egypt (2021‑2025), the World Bank Country Partnership Framework (2023‑2027), the United Nations Sustainable Development Co‑operation Framework (2023‑2027) and the EBRD Country Partnership Framework (2022‑2027) all outline medium- to long-term commitments by partners across various sectors.

MPED supports these efforts through a country-led multi-stakeholder engagement framework. This framework maps Official Development Assistance (ODA) to Sustainable Development Goals (SDGs), ensuring that partner interventions align with national objectives and improve the effectiveness of development co‑operation in accordance with the Global Partnership for Effective Development Co‑operation (GPEDC). These strategic engagements and financial mechanisms underscore the vital role of MDBs in advancing Egypt’s infrastructure development and sustainability goals, facilitating both large‑scale investments and capacity-building efforts.

Although foreign and domestic private actors, such as commercial and investment banks alongside development funds, have played an active role in funding certain projects, a significant portion of private engagement, however, comes from MDBs – notably the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD), and the International Finance Corporation (IFC).

In this regard, MPED plays a pivotal role in securing and managing foreign investments through various schemes involving multi-stakeholder partnerships, concessional finance, and grants. As Table 4.1 illustrates, since 2020, through MPED, the Egyptian Government has secured a total of USD 38.8 billion in financing – USD 28.5 billion for public sector development and USD 10.3 billion for private sector development – specifically allocated for sustainable development projects. These investments have been directed towards critical sectors such as electricity, renewable energy, water management, transportation, and social infrastructure. For instance, the transport sector received a total of USD 7.28 billion between 2020 and 2023, followed by energy, renewable energy, and petroleum with USD 1.96 billion, and housing and utilities with USD 1.77 billion. The government’s strategic approach has focussed on both enhancing existing infrastructure and developing new projects that align with Egypt’s sustainable development goals (SDGs).

Egypt has worked on mobilising development financing tools beyond PPP arrangements, including debt, trade finance, risk guarantees, blended finance, and technical assistance, with USD17 billion in development financing deals since 2020 (MPED, June 2025[15]). Private sector development financing has expanded and diversified, reflecting the state’s strategy of strengthening private sector participation in priority development areas, most notably renewable energy and logistics, comprising 33% of total private sector development financing since 2020.

Since the launch of the NWFE (Nexus of Water, Food, and Energy) in partnership with development partners – most notably the European Bank for Reconstruction and Development (EBRD) as lead partner for the energy pillar – approximately USD 4.5 billion has been mobilised toward a USD10 billion financing target for the energy sector for the private sector to support the deployment of 10 GW of renewable energy capacity, significant progress has been achieved. To date, approximately 8.25 GW of power capacity has been secured through long-term Power Purchase Agreements (PPAs) between the Egyptian Electricity Transmission Company (EETC) and private sector developers. In addition, USD 4.5 billion in concessional financing has been mobilised to support clean energy projects, enabling the development of renewable energy capacity of 5.2 GW. At the same time, measures have been undertaken to phase out thermal power plants totalling up to 1 200 MW, as part of a wider strategy to decommission 5 000 MW overall, generating annual fuel savings estimated at USD 1.2 billion.

Additional strategic projects include the Gulf of Suez Wind Farm (1 100 MW) with an investment of USD 1.1 billion, cofinanced by EBRD, the African Development Bank (AfDB), British International Investment (BII), the German Investment Corporation (DEG), the OPEC Fund for International Development (OFID), and the Arab Petroleum Investments Corporation (APICORP, now the Arab Energy Fund). In addition, the Abydos Solar Power Plant in Kom Ombo (500 MW), with an investment of USD 500 million, is funded by the International Finance Corporation (IFC), the Dutch Development Bank (FMO), and the Japan International Co‑operation Agency (JICA). In addition to renewable energy projects such as the Ras Ghareb Wind Farm (200 MW), developed by Masdar and Infinity, with financing from EBRD and partners totalling USD 215 million; the Obelisk Solar Power Plant, led by SCATEC Norway, integrating solar capacity with a 200 MW Battery Energy Storage System (BESS), backed by EBRD, BII, AfDB, and the U.S. International Development Finance Corporation (DFC) at a cost of USD 600 million; and the Dandara Solar Power Plant, also developed by SCATEC Norway, offering 1 000 MW of solar capacity and a 200 MW BESS, financed by EBRD, the European Investment Bank (EIB), and AfDB, with an equivalent investment of USD 600 million.

Egypt’s logistics and transportation sectors have benefited from development financing of USD 1 billion, since 2021. Among the most prominent projects is the Second Container Terminal at Damietta Port, financed through a partnership with EBRD, IFC, the Asian Infrastructure Investment Bank (AIIB), DEG and Proparco. The project has secured a USD 455 million financing package under a public-private partnership (PPP) framework with the aim to boost the port’s annual container handling capacity to 3.3 million (Twenty-Foot Equivalent Units) TEUs, while creating over 2 200 direct and indirect jobs. In addition, Beko Egypt benefited from USD 50 million concessional development finance from EBRD, enabling the establishment of its first regional industrial complex in 10th of Ramadan City. The facility includes an R&D centre and production lines with a total annual capacity of 1.1 million units.

In addition, MPED developed the Hub for Advisory, Financing and Investments for Enterprises platform, HAFIZ Platform, which is an integrated platform that links development partners, international institutions, the government, the business community and the private sector to enhance the benefit of international partnerships (Government of Egypt, Ministry of International Cooperation, 2023[16]). It provides a single, transparent entry point to financial tools, business support services, and tenders and opportunities from Egypt and worldwide, offered with international development partners. HAFIZ is designed to significantly reduce transaction costs, accelerates matchmaking with development partners, and enables companies to identify bankable financing and technical assistance opportunities.

Table 4.1. ODA directed to finance public and private sector development, Egypt

TOTAL ODA DIRECTED TO FINANCE PUBLIC SECTOR DEVELOPMENT THROUGH MULTILATERAL AND BILATERAL DEVELOPMENT PARTNERS FROM 2020‑2023
Sector	Development Partners		Amount (USD Million)
Transport	KFAED, AFDB, China, Austria, AIIB, Japan		7 289
Budget support	WB, AIIB, AMF, Japan, AFDB		3 922
Agriculture, supply, and irrigation	United States, IFAD, EU, Germany, Canada, Spain		3 346
Energy, renewable energy & petroleum	SIDA, AFD, Germany, ITFC		1 966
Housing and utilities	EU, EIB, Germany, AFD, AFESD, KFAED, WB, Switzerland		1 776
Gender and social protection	Spain, AFD, WB, EU		1 111
Education	Spain, AFD, WB, EU		490
MSMEs	United States, Germany, Japan, Switzerland		456
Environment	EU, AFD		440
Governance	United States, Germany, EU		276
Health	WB, United States, Canada, China		136
Local Development	EBRD		90
Trade and Industry	Germany, Italy, EU		53
Framework Agreements	ITFC, China, Spain, AFD		7 187
TOTAL: USD 28.5 billion
OTAL ODA DIRECTED TO FINANCE PRIVATE SECTOR DEVELOPMENT THROUGH MULTILATERAL AND BILATERAL DEVELOPMENT PARTNERS FROM 2020‑2023
Development Partners		Amount (USD Million)
European Investment Bank (EIB)		2 803
European Bank for Reconstruction and Development (EBRD)		2 122
International Finance Corporation (IFC)		1 660
OPEC Fund for International Development		1 278
JBIC		521
United Kingdom (CDC)		420
French Development Agency (AFD)		331
Credit line between JICA & Mitsubishi Financial Group		200
Japan International Co‑operation Agency (JICA)		188
Asian Infrastructure Investment Bank (AIIB)		150
Netherlands		115
MIGA & EBRD		100
Abu Dhabi Exports Office		100
African Development Bank		51.5
World Bank Group		50
Arab Fund for Economic and Social Development (AFESD)		50
AFREXIMBANK		44
Islamic Co‑operation for the Development of the Private Sector		30
Saudi Fund for Development		27
Green Climate Fund		24
European Union		15
KFW		7
Switzerland		5

Source: MPED (2024[14]), Annual Report 2024: MACROECONOMIC STABILITY, STRUCTURAL REFORMS & ECONOMIC DIPLOMACY TO ADVANCE SUSTAINABLE ECONOMIC DEVELOPMENT, https://mped.gov.eg/adminpanel/sharedFiles/annual-report-2024_496.pdf.

MDBs have used concessional financing, which has helped Egypt catalyse private sector investments, particularly in strategic sectors like renewable energy, through loans with lower interest rates and extended repayment terms. In addition to financial support, MDBs offer technical assistance through grants, which aid in project preparation activities such as feasibility studies, risk assessments, and capacity building (see Box 4.4 on SOURCE, an infrastructure project platform supported by several multilateral institutions that enhances project planning and financing which will now be introduced in Egypt).

A prime example of MDB involvement in Egypt can be seen through Egypt’s Country Platform for the Nexus of Water, Food and Energy (NWFE), which integrates multilateral co‑operation to leverage diverse sources of financing, including concessional loans, debt swaps, guarantees, and private investments. Over 30 stakeholders contribute to the platform, with a focus on ensuring that climate finance is supplemental rather than replacing traditional development finance. The EBRD, in particular, plays a central role in the Energy Pillar of the NWFE, leveraging its substantial experience in clean and renewable energy projects. EBRD’s private sector engagement in Egypt, where more than 80% of its portfolio is directed towards private‑sector partnerships, aligns with Egypt’s ambitious goal to mobilise USD 10 billion in private capital for renewable energy projects.

Box 4.3. NWFE Program (Nexus of Water, Food, and Energy)

The NWFE Program (Nexus of Water, Food, and Energy)1 serves as a strategic platform launched by the Egyptian Government to mobilise climate finance and accelerate infrastructure development in three critical sectors: water, food, and energy.

Introduced in 2022 under Egypt’s Country Platform for the NWFE, the initiative is designed to translate Egypt’s climate commitments – particularly its Nationally Determined Contributions (NDCs)–into actionable, investment-ready infrastructure projects. By focussing on the interdependence of these sectors, the programme addresses key national priorities related to sustainability, resource efficiency, and climate resilience.

NWFE plays a central role in infrastructure financing by adopting a blended finance model that combines public funds, concessional finance, technical assistance, grants, debt swap and private sector investment. This approach enhances the bankability of infrastructure projects, reduces financial risk, and encourages greater participation from international partners such as the European Bank for Reconstruction and Development (EBRD) and the African Development Bank (AfDB). The programme includes a pipeline of flagship projects such as renewable energy development, sustainable agriculture modernisation, and water infrastructure upgrades. By linking policy with finance and implementation, NWFE represents a replicable model for climate‑smart infrastructure investment in emerging economies.

1. NWFE+ refers to the expanded version of Egypt’s Nexus of Water, Food, and Energy (NWFE) climate‑action program, now including a sustainable transport pillar to integrate low‑emission mobility into the country’s broader green growth and climate strategy.

Similarly, the African Development Bank (AfDB) is a Key Partner within the NWFE’s Water Pillar. The AfDB provides financial and technical support for sustainable water management practices, such as solar pumps for irrigation, which directly contribute to Egypt’s green transition. These efforts align with the AfDB-Egypt Country Strategy 2022‑2026, which aims to foster food, water, and energy security in Egypt while promoting private‑sector participation in sustainable development (NWFE, 2024[17]). At its midterm review, the implementation of AfDB’s Egypt’s Country Strategy Paper (CSP) 2022‑2026 has made strong progress, with overall portfolio performance remaining positive. The portfolio covers key sectors including finance, energy, governance, agriculture, transport, and water and sanitation, with infrastructure accounting for 52% of investments. The Results Measurement Framework tracks progress in enhancing private sector engagement and building resilience in food, water, and energy security. The CSP’s two priority areas remain relevant for 2025‑2026 and aligned with national priorities. The Bank also integrates cross-cutting themes such as gender, climate, and youth employment across its operations.

The European Investment Bank (EIB) plays a prominent role in NWFE+, focussing on financing infrastructure in the transport sector. The EIB’s deep experience in national and international infrastructure projects helps ensure effective implementation of critical transport initiatives. Additionally, the EIB also serves as the largest implementation partner for the EU’s European Fund for Sustainable Development Plus Guarantee (EFSD+)–a key financing tool of the EU’s Global Gateway Initiative. As of late 2024, the EFSD+ has earmarked EUR 1.8 billion in investment guarantees, as part of the Strategic and Comprehensive Partnership between the European Union and Egypt, to support Egypt’s infrastructure financing needs and encourage private sector engagement.

The Investment Guarantee Mechanism between the European Union and Egypt was officially launched in June 2025 as a financing platform to support Egypt’s green transition and sustainable development, with a value of EUR 1.8 billion. The mechanism is integrated into the “HAFIZ” platform to mitigate investment risks and provide financial and technical support to the private sector. Through the EFSD+ mechanism, the EU seeks to mobilise both public and private capital via risk-sharing instruments – such as guarantees, credit facilities, and blended finance. The mechanism reduces investor risk through blended finance tools (partial credit guarantees, risk-sharing arrangements, and technical support for projects), thereby facilitating the mobilisation of financing for green projects.

For the Water and Food Pillars, these MDBs provide advisory services and technical assistance to national stakeholders, enhancing institutional capacity for project planning and execution. Grants from development partners fund these efforts, which include comprehensive feasibility studies covering economic, social, and environmental dimensions.

Box 4.4. The SOURCE platform

SOURCE is the multilateral infrastructure project platform implemented by the Sustainable Infrastructure Foundation (SIF). Several MDBs, including ADB, IADB, EIB, World Bank, and EBRD, provide key inputs into SOURCE, and since 2018, the strategic and financial management of SOURCE is under the supervision of the SOURCE Council, which is composed of representatives from MDBs. SOURCE provides a structured approach to the investment cycle through sectoral templates, thereby enabling:

1. the provision of a standardised and comprehensive map of all aspects to take into account the development of high quality, sustainable infrastructure

2. delivery of MDB tools, reference notes, and best practices to project managers at the right juncture in the decision making process

3. monitoring whether projects meet their intended outcomes and benefits during the implementation period

4. collection of structured and standardised project data at a global scale to assess performance of projects against standards, and generate analytics and benchmarks (for example, unit costs).

SOURCE has been designed as a public good, to be used by government agencies and MDBs.

Source: OECD (2021[18]), OECD Implementation Handbook for Quality Infrastructure Investment, https://doi.org/10.1787/479131b2-en.

In terms of blended finance, the NWFE platform also serves as a model for blending public and private capital to finance climate‑related infrastructure projects. Egypt has committed to the equitable allocation of blended finance by ensuring that funds reach regions and sectors that may face challenges in attracting private investment. This commitment is reflected in initiatives like the Sharm El Sheikh Guidebook for Just Financing, launched during COP27, which offers a roadmap for mobilising climate finance in an equitable manner.

4.4. Public-private partnerships in Egypt

PPPs are emerging as a strategic approach to leveraging private capital and expertise to deliver public goods and services. Egypt’s engagement with PPPs dates back to 2006, when it established a dedicated PPP Central Unit (PPPCU) within the Ministry of Finance (MoF) (OECD, 2020[19]). The PPPCU was later formalised under the 2010 PPP Law (Law No. 67/2010), which the World Bank recognised as the best PPP law that same year (OECD, 2020[19]).

While the institutional framework is in place, Egypt has faced several challenges in executing PPPs over the years. These include limited financial and staffing resources at the PPPCU relative to project flow, lengthy approval procedures around the endorsement and implementation of PPP projects, and limited PPP support from line ministries (OECD, 2020[19]). Between 2010 and 2020, Egypt facilitated 35 projects through PPP contracts that reached financial closure, totalling approximately USD 9.5 billion (World Bank, 2024[20]). Of these projects, 29 were in the electricity sector, while the remaining six spanned various sectors, including ports, railways, waste treatment and disposal, and water and sewage. To improve execution, the Government of Egypt amended the PPP Law 153 of 2021, followed by its executive regulations in 2022, easing implementation of the law, allowing better private sector participation, and facilitating the process for government entities.

A PPP Unit at the Ministry of Planning and Economic Development (MPED) co‑ordinates with the MoF’s PPPCU on the choice of projects to be directed to the PPP route for financing and execution taking into consideration technical ministries’ requests. A number of ministries, including the Ministry of Transport and Ministry of Housing, Utilities and Urban Communities, have also established PPP units to follow up on implementation of PPP projects. Centralisation of technical capacity at the MoF PPP unit has created the need for more capacity building on technical aspects of PPP projects at other ministries. Technical ministries require further capacity building to better understand how to structure projects to be eligible for PPPs, and to clarify the merits of executing projects via the PPP track versus the state budget financing track to direct more projects towards private financing.

The PPP Comparator is conducted for all infrastructure projects submitted by line ministries that fall within the scope of the PPP Law and its amendments and meet the applicable criteria for consideration under the PPP framework. In line with the provisions of the PPP Law and its executive regulations, such projects are subject to formal appraisal under the PPP system by the Ministry of Finance and the Joint Committee, which comprises representatives of the Ministry of Finance, the Ministry of Planning and Economic Development, and the relevant line ministries. Following the Joint Committee’s consideration that a project is appropriate for implementation under the PPP framework, the PPP Comparator is undertaken by the PPP Central Unit within the Ministry of Finance to verify that the project offers stronger value for money under the PPP modality. The Comparator therefore serves as an analytical basis for confirming whether the project should proceed under the PPP route or be implemented through conventional budget financing and public procurement.

Better understanding of the technical and financial assessment of PPP projects within the different ministries is key to fully engage the private sector and ensure timely and successful implementation of the projects. It is recommended to review all infrastructure investment projects potentially costing EGP100 million, the legal threshold to consider a PPP project, and above by the Joint Committee for PPP to increase the number of projects financed by private investment compared to financing from the state budget. Smaller infrastructure projects costing below EGP100 million could be reviewed by a sub-committee affiliated with the Joint Committee to expand on opportunities for SMEs to finance medium sized infrastructure projects. Both committees’ mandates need to be officially decreed by the Prime Minister to remove subjective review of projects financing by ministries and expand on private investment and financing of infrastructure projects.

The need for capacity building extends beyond national ministries to local governments. While the MoF’s PPPCU primarily collaborates with national ministries, its direct involvement with local government on the governorate level is limited. Strengthening PPP implementation, at both national and local levels, requires the PPPCU to expand its capacity-building efforts among local authorities and establish clearer frameworks for direct collaboration with local government entities. As illustrated in Box 4.5, central PPP bodies can play a pivotal role in supporting local development through training, capacity building, and feasibility studies.

Box 4.5. The PPP Centre in the Philippines

The 1991 Local Government Code (Republic Act No. 7160) in the Philippines devolved the provision of local infrastructure to local governments, stipulating the institutional mechanisms for formulating and implementing local plans. The PPP Centre in the Philippines is the central co‑ordinating and monitoring agency for PPP projects within the country, and primarily responsible for monitoring and evaluating local governments’ PPP projects. The main objective of the Centre is to assist local governments in preparing projects, clarifying procedures, and evaluating PPP projects as well as providing training and capacity building programmes, and financing for pre‑investment process for potential PPP projects. The Centre launched a PPP strategy for local governments including the preparation and dissemination of a PPP manual for local governments. The PPP subcommittee assisted the local development council in drawing action plans and strategies for the implementation of PPP projects at local levels. In addition, local governments have access to the Local Government Unit Guarantee Corporation (LGUGC), which offers guarantees for municipal bonds as a private risk guarantor for PPP projects in the Philippines. The country has been proactive in streamlining the business environment for PPPs over the last decade.

Source: OECD (2021[18]), OECD Implementation Handbook for Quality Infrastructure Investment, https://doi.org/10.1787/479131b2-en.

As part of the PPP process, the MoF provides a sovereign guarantee to secure payment of the financial obligations to investors in case where the off-taker is a government-owned entity. The cost is reflected as a contingent liability. To manage fiscal exposure, the MoF has started identifying an annual cap for contingent liabilities as part of its fiscal consolidation and ongoing discussions with the IMF. This would ultimately cap the number of PPP projects that can be processed annually. Continued improvement in the sovereign credit rating of Egypt and ongoing clear signs of stability in the foreign currency market would allow projects to move forward without the need for sovereign guarantees.

With the move to expand and increase the number of projects financed through the PPP track, centralisation of the decision making process could be reviewed at the Cabinet level to expedite the process and expand it to most infrastructure projects, and be supported by more workshops and training in line ministries and authorities. This could thereby reduce the reliance on commercial and development funds’ financing and expand the role of the private sector in such projects. Projects in the telecommunications, international trade, logistics and maritime sectors, among others could benefit from increased private sector investment through the PPP track.

In early 2025, the Government of Egypt, alongside the MoF, signed two agreements with the European Bank for Reconstruction and Development (EBRD) to establish a EUR 10 million (about EGP 531 million) Egypt Project Preparation Facility (EPPF) within the MoF’s PPPCU. The fund aims to expedite project development by significantly reducing approval times for study funding – from one year to two months. By streamlining relevant contracting processes, PPPCU’s initiative is expected to increase private investment.

Moreover, the signing of the memorandum of understanding (MoU) between MPED and EBRD seeks to enhance co‑operation with the multilateral development bank through technical support in the form of capacity building and assistance in developing and implementing PPP projects across key sectors. The partnership is expected to support Egypt’s upcoming infrastructure projects. For instance, nine projects worth EGP 53.9 billion – spanning transformer stations, electricity distribution, water desalination, wastewater treatment, technical and language schools, and service centres – are currently in the tendering phase. An additional ten projects in electricity distribution and wastewater treatment, valued at EGP 37 billion, are under preparation and awaiting approval from Egypt’s Supreme Committee for Public-Private Partnership Affairs

Box 4.6. Egypt Project Preparation Fund (EPPF)

Egypt and the European Bank for Reconstruction and Development (EBRD) have established the Egypt Project Preparation Fund (EPPF) to provide support to the Egyptian Ministry of Finance through the PPP Unit to boost private sector involvement in infrastructure projects. This initiative aims to accelerate investment in key sectors and enhance private sector participation in Egypt’s development efforts.

EPPF established a joint fund of EUR 10 million, which will be managed by the EBRD to provide all means of support to maximise private sector participation in infrastructure projects by reducing the time required to obtain funding for feasibility studies and appoint technical, financial, and legal consultants for PPP projects from development partners from one year to just two months.

At the local level, discussions have focussed on enabling governorates and municipalities to participate more effectively in PPPs, particularly in alignment with initiatives like “Haya Karima” (Decent Life). Capacity-building efforts, supported by development partners such as the World Bank and EBRD, have targeted local authorities to enhance their ability to structure, manage, and oversee PPP projects.

The Ministry of Planning and Economic Development has signed a memorandum of understanding (MoU) with EBRD to enhance co‑operation in implementing public-private partnership (PPP) projects. The agreement aims to provide institutional support, capacity building, and technical assistance for these projects across various sectors. The co‑operation will focus on priority sectors such as transportation, ports, healthcare, electricity, energy, and water desalination, with the goal of expanding Egypt’s PPP model and boosting private sector involvement in national projects.

Table 4.2. Signed and tendered PPP projects, Egypt

Project signed	Sector	Tendering Authority	Contract Duration	Investment Capital
New Cairo Wastewater plant	Water and Sanitation	Ministry of Housing, Utilities & Urban Communities (MHUUC) New Urban Communities Authority (NUCA)	20 Years	USD 140 million
New Schools PPP project (Phase 1)	Social and Commercial	The Ministry of Education and Vocational Education	30 Years	USD 40 million
Benban solar park	Energy	Egyptian Electricity Transmission Company, S.A. E	25 years	USD 2 billion
6th of October Dry Port PPP Project	Transport and Logistics	Ministry of Transport – General Authority for Land and Dry Ports (GALDP)	30 years	USD 220 million
Three Strategic warehouses for Strategic Commodities	Transport and Logistics	Internal Trade Development Agency – Ministry of Supply and Internal Trade	35 years.	4 EGP 200 million
Container terminal 2 (Tahia Misr 1) New Damietta	Transport and Logistics	Ministry of Transport – Damietta Port Authority	30 years.	USD 200 million
8 Waste to Energy plants PPP Project	Energy	Ministry of Local Development	30 years	USD 110 million
10th of Ramadan Dry port and Logistics Center	Transport and Logistics	General Authority for land and Dry Ports (GALDP)	30 years	USD 220 million
Sub Station S13	Energy	MHUUC – NUCA	30 Years	EGP 250 million
El-Alamein Electricity Grids	Energy	MHUUC – NUCA	25 years	-
Sub Station (for Booster No. 3)	Energy	MHUUC – NUCA	25 years	EGP 800 million
Tora Cement Sub Station	Energy	MHUUC – NUCA	25 years	-
International Technical School “Ta’heal International Academy”	Social and Commercial	The Ministry of Education and Vocational Education	25 years	EGP 168 million
Electrical networks for the industrial zone between A1‑A6 in 10th of Ramadan City	Energy	MHUUC – NUCA	25 years	–
Projects being tendered
6th October Wastewater Treatment Plant	Water and Sanitation	Ministry of Housing, Utilities & Urban Communities (MHUUC) – New Urban Communities Authority (NUCA)	20 years	USD 95 million
The Development of Desalinated Potable Water Plants powered by Renewable Energy sources in Different Locations Across Egypt	Water and Sanitation	NUCA, Holding Company for Water and Wastewater, Suez Canal Economic Zone (represented by the Sovereign Fund of Egypt)	30 years	USD 3 billion
Phase 2 for the PPP new Schools Project	Social and Commercial	The Ministry of Education and Vocational Education	30 years	USD 30 billion
Investors Services Center in Maadi “Shaa El Tebaan”	Social and Commercial	Cairo Governorate	25 years	EGP 450 million
SCZone Desalination Plant	Water	SCZone – General Authority For Suez Canal Economic Zone.	25 years	EGP 18.5 billion
Abu Rawash Wastewater Sludge Treatment Plan	Energy	MHUUC – Construction Authority for Potable Water & Wastewater (CAPW)	20 years	EGP 7 000 million
Back-wash water recyclying plant	Water	MHUUC – CAPW	20 years	EGP 1 100 million
Sub Station (for Booster Dahshour building)	Energy	MHUUC – NUCA	–-	EGP 900 million
Al-Motawrin Substation and the Electricity Networks in Sadat City	Energy	MHUUC – NUCA	25 years	EGP 400 million
Sadat City Electricity Network Project	Energy	MHUUC – NUCA	25 years	EGP 1 000 million
Al-Ayyat Water Intake Substation and the Electricity Networks in 6th of October City	Energy	MHUUC – NUCA	25 years	EGP 200 million
Operation and maintenance project of the new October Industrial Transformer Station and electricity networks.	Energy	MHUUC – NUCA MHUUC – NUCA	25 years	–-
New Mansoura City Electricity Network Project	Energy	MHUUC – NUCA	25 years	EGP 550 million
New Aswan City Electricity Network Project	Energy	MHUUC – NUCA	25 years	EGP 100 million

Source: Information provided by the Ministry of Finance of Egypt.

Table 4.3. PPP Project Pipeline, Egypt

Project Pipeline
Project	Sector	Tendering Authority	Contract Duration	Investment Capital
Establishing a technical school for hotels and tourism and an international school in partnership with the private sector. (Kafr El-Sheikh Governorate)	Education	The Ministry of Education and Vocational Education	30 years	EGP 160 million
Treatment and recycling of organic waste	Waste	Qalyubia Governorate	15 years	EGP 3 000 million
Sludge treatment plant generated from Al-Baraka Wastewater Treatment plant	Water	Holding Company for Water and Waste Water (HCWW)	20 years	EGP 1 200 mln
Sludge treatment plant generated from Al-Belqas Wastewater Treatment plant	Water	Holding Company for Water and Waste Water (HCWW)	20 years	EGP 1 300 mln
Amreya/Alexandria Industrial Wastewater Plant	Water	General Authority for Investment and Free Zones	–	–
Sub Station in the industrial area (270 feddans) in October city	Energy	MHUUC – NUCA	–	EGP 900 mln
Sub Stations to supply the area of decree No. 77 in Sheikh Zayed city	Energy	MHUUC – NUCA	–	–
Substation for the Intake Pumps of the 10th Ramadan in the Abu Samran Area, Belbeis, and the Right to Utilise the Substation, Its Connection Lines, and the Power Supply Networks Feeding the Intake.	Energy	MHUUC – NUCA	25 years	EGP 900 mln
Substation for the Eastern Industrial Zone and the Right to Utilise the Substation, Its Connection Lines, and the Power Supply Networks in New Borg El Arab City.”	Energy	MHUUC – NUCA	25 years	EGP 1 500 mln
Beni Suef Industrial Wastewater Plant	Energy	MHUUC – NUCA	–	EGP 500 mln
Extension of Rashid Domestic Wastewater Treatment Plant	Water	Holding Company for Water and Waste Water (HCWW)	–	EGP 800 mln
Extension of Serabeum Domestic Wastewater Treatment Plant	Water	Holding Company for Water & Wastewater (HCWW)	–	EGP 1 400 mln
Extension of Zenein Domestic Wastewater Treatment Plant	Water	Holding Company for Water & Wastewater (HCWW)	–	EGP 1 500 mln
Gharbia Domestic Treatment Plant	Water	Holding Company for Water & Wastewater (HCWW)	–	EGP 320 mln
Sadat Dry port	Transport	Ministry of transport – General authority for land and dry ports (GALDP).	–	EGP 7 650 mln

Source: Information provided by the Ministry of Finance of Egypt.

4.5. Private sector involvement in infrastructure financing

Attracting private capital towards the financing of infrastructure projects remains a key component and challenge towards Egypt’s infrastructure development strategy. Over the past few years, Egypt has demonstrated a growing commitment to expanding private sector involvement in infrastructure financing, particularly through public-private partnerships (PPPs). Plans are underway to expand the scope of PPPs, as evidenced by the pipeline of upcoming projects (Table 4.2 and Table 4.3), and Egypt has already seen numerous infrastructure developments take place through these mechanisms. Both domestic and foreign developers play a role, often forming consortia that combine local knowledge with international expertise. This approach has been particularly useful in large‑scale projects, allowing Egypt to tap into a broader pool of capital and technical capabilities.

Although private sector involvement in economic infrastructure is growing – particularly through PPPs – there still remains much scope to advance their role (IMF, 2023[21]). For example, while the private sector has been able to engage in the telecommunications sector, its engagement has been limited to network development and service provision. Telecom Egypt, with 70% government ownership, controls the legacy cable network and remains the primary provider of cable services to end-users, while the country’s regulator acts as a key investor in network expansion and installation in underserved areas (IMF, 2023[21]). As a result, the private sector has an important role to play to bridge the supply-demand gap. According to the State Ownership Policy in 2022 the government would partially exit and reduce ownership in some services in the Communication and Information Technology sector including programming, IT consulting and mobile services while maintaining or increasing its ownership in other services. A 10% stake in Telecom Egypt was offered on the stock market in May 2023.

Similarly, the energy sector has attracted private investment through Independent Power Producers (IPPs) and Power Purchase Agreements (PPAs), yet the rate of private sector participation is minimal, and commercial incentives are very limited. This is largely due to the monopolistic position of the Egyptian Electricity Transmission Company, which acts as the sole off-taker and seller of electricity to distributors (IMF, 2023[21]). While private investment in electricity generation and distribution is permitted, the private sector accounts for 2% of the distribution volume, with the bulk of production and distribution coming from the Egyptian Electricity Holding Company via its subsidiaries, the Egyptian Electricity Production Corporation and the Egyptian Electricity Distribution Corporation (IMF, 2023[21]).According to the State Ownership Policy in 2022 the government would partially maintain and reduce ownership while allowing more private sector involvement in power generation, distribution networks, air conditioning and gas networks, and increase ownership while allowing private sector involvement in power transmission.

The broadness and depth of the financial sector have a direct relationship on the types of financing available, a robust regulatory regime, protections to investors and availability of professional services that can support a variety of financing. Having a strong, competitive and well capitalised banking sector lends itself to having financial intermediation that can support complex and long-term financing, as well as providing enabling the development of counterparties in a transaction. A strong capital market allows diversification of financing through access to a broad range of investors, as well as a wide range of instruments that are available both in the market as well as in a structured manner.

Having the backbone of an active and stable banking sector and/or capital market serves infrastructure financing by providing choices on the types of financing that is available, for both the government, as well as financial institutions and investors. This is particularly important when a government wants to mobilise private capital to infrastructure, as it will permits more diverse parties with different risk tolerance to take part. It also serves to diversify investors’ choices.

In addition, institutional investors and savings provide a potential source of infrastructure financing, that could serve as domestic private capital mobilisation, if the regulatory regime can be aligned and financial instruments that create infrastructure as an asset class are available.

Liquid and robust financial markets will also provide opportunities for innovative financing approaches such as asset securitisation and risk mitigation measures to be deployed. This will facilitate risk management of projects, as well as take advantage of value of existing assets.

Beyond PPPs, to further close its infrastructure gap and enhance private sector involvement in infrastructure financing, Egypt can draw from a diverse range of instruments designed to leverage private investment in urban areas (see Table 4.4). These instruments include regulatory measures like development levies, fees, and charges, which enable municipalities to capture a share of the value generated by private developments. Collaborative strategies, such as strategic land management and the transfer of development rights, create a conducive environment for private capital, encouraging investments in commercial, residential, and public infrastructure. Subsidies and tax incentives can also direct private investment towards priority areas like green infrastructure and affordable housing. Partnership models between cities and private entities offer comprehensive frameworks for jointly planning, designing, and executing urban projects, thereby enhancing service delivery and local economic development. Global examples – such as the Mayoral Community Infrastructure Levy in the United Kingdom and Transfer of Development Rights in Chongqing – demonstrate the effectiveness of these measures (see Box 4.7).

Table 4.4. Types of instruments to leverage private investment in urban areas

Categories	Development levies, fees and charges	Strategic land and building rights and management	Subsidies and tax incentives	Partnership models between cities and the private sector
Type of public sector engagement	🡸 (Regulatory)			(Collaborative) 🡺
Suggested action	Take advantage of development opportunities of developers to gain funding for public urban infrastructure investments that increase the value of private developments	Create a conducive investment environment to attract private capital in urban space	Use incentives to direct private investment towards local policy priorities, such as the green transition or affordable housing development	Explore comprehensive partnership agreements across levels of government, the private sector and communities to plan, design, and implement urban development
Type of development/infrastructure leverage by private investment	Local infrastructure (e.g. streets, parks, schools). City infrastructure (e.g. metro networks)	Offices, commercial, and residential buildings in urban areas	Affordable housing, green buildings	Local infrastructure, urban services (e.g. street maintenance), investment in real estates
Types of private sector to be engaged	Developers, individual, landowners	Developers, individual landowners, institutional investors	Developers, individual landowners, institutional investors	Local business owners, landowners, enterprises, etc.
Main instruments	Infrastructure levies Charges for building rights Biodiversity offsetting	Land banking Land pooling Transfer of development rights (TDR) Charges on underused land	Floor Area Ratio bonus	Local Green Deals Business Improvement District (BID) Payment for eco-system services
Examples	Mayoral Community Infrastructure Levy (UK) Biodiversity offsetting in Paris (France)	TDR in Sao Paulo (Brazil) TDR in Chongqing (People’s Republic of China)	Density bonus in Vancouver (Canada)	Mannheim Local Green Deal (Germany) Cape Town Central City Improvement District (South Africa)

Source: OECD (2023[11]), Financing Cities of Tomorrow: G20/OECD Report for the G20 Infrastructure Working Group under the Indian Presidency, https://doi.org/10.1787/51bd124a-en.

Box 4.7. Case studies: Leveraging private financing for urban development

Green urbanism: Punggol Eco Town, Singapore

Once a rural fishing village with farmland, Singapore’s Punggol district was transformed into the country’s first eco-town through long-term planning and sustainable urban development alongside public-private financing. Led by Singapore’s Urban Redevelopment Authority (URA) and the Housing and Development Board (HDB)–Singapore’s public housing authority, the Punggol Eco Town initiative was launched in the early 2000s, with a comprehensive master plan introduced in 2007. Through an ongoing multi-stage approach, Punggol Eco Town has grown from a rural village to a town of 187 800 residents in 2019.

Punggol Eco Town’s development plan has been predicated on four pillars: economic vitality, smart technology integration, community-focussed living, and environmental sustainability. The town incorporates energy-efficient designs, green spaces, and advanced waste management systems. It also serves as a Singapore’s testing ground for innovative technologies such as solar photovoltaic systems, smart lighting, energy-regenerating lifts, and real-time smart energy metres.

To promote sustainable mobility, Punggol Eco Town features an extensive network of cycling paths, pedestrian walkways, and well-connected public transport links, reducing reliance on private vehicles. Its development has been financed through a combination of public funding and private sector investment, with the Singaporean Government and HDB contributing significantly to the financing of the project through the national budget. While the government has played a key role in financing the project, private developers have funded and developed some areas of the eco town – ensuring a balance between government-led initiatives and market-driven contributions.

Zoning: HafenCity Hamburg, Germany

HafenCity in Hamburg, Germany has served as an example of how zoning can be used to redevelop brownfield sites into sustainable and liveable urban districts. HafenCity was once an industrial area and seaport with docks, warehouses, and shipping facilities that played a key role in maritime trade; however, the need to expand container terminals and changes in shipping methods led to a relocation of port activities.

The redevelopment process began in 1997 with an urban design competition to generate innovative plans for the transformation of HafenCity while maintaining its historical landmarks and buildings. A dedicated development company and subsidiary of the city government, HafenCity Hamburg GmbH, managed sales of city-owned land, which financed most of the public infrastructure, including roads, parks, and promenades. Private sector collaboration was central to the project’s success, specifically the financing, construction, and property management, with developers purchasing land parcels and adhering to strict master plan guidelines and regulations.

A unique site tendering process prioritised development concepts (70%) over price (30%), ensuring high-quality urban design that included multi-generational living and commercial spaces while preserving historical buildings. Since 2010, at least 20% of housing has been publicly subsidised, rising to one‑third in 2011. Sustainability was a key focus, as new buildings were required to abided by environmental and energy efficient standards, incorporating green roofs, solar panels, and energy-efficient designs.

By 2020, HafenCity’s redevelopment had attracted EUR 13 billion in investment, with EUR 10 billion coming from private sources, transforming the former industrial hub into a mixed-use urban district.

Infrastructure levies: London, United Kingdom

Urban development can be supported by national governments by granting cities and local governments by empowering them with the ability to deploy innovative instruments to leverage private investments and determine and collect fees, levies, and charges from the private sector to finance urban infrastructure and essential services. The use of mechanisms like infrastructure levies in London illustrates of how urban governments can finance local infrastructure developments.

In 2012, the Mayor of London introduced the Mayoral Community Infrastructure Levy (MCIL) to help finance the city’s Elizabeth Line (Crossrail), connecting central London with its western and eastern suburbs. Established under UK legislation in 2010, the MCIL is calculated based on net additional floorspace, with exemptions for medical, educational, affordable housing, and charitable developments. Local planning authorities assessed and collected payments on behalf of the Mayor, with charges determined at the planning application stage and payments – which can be made in instalments – due upon project commencement. In 2019, the infrastructure levy was later updated (MCIL2) to support both the Elizabeth Line and the proposed Crossrail 2, linking southwest London to the city.

Between 2012 and 2022, the MCIL generated over GBP 1 billion, which was allocated to Transport for London – London’s government body responsible for most of the city’s transport network. The mechanism highlights how targeted levies can provide cities with flexible funding solutions for strategically important infrastructure projects.

Transferable development rights: Chongqing, China

Launched in 2010 and completed in 2018, the redevelopment of Chongqing’s Shapingba Railway Station – built in 1979–transformed an ageing transport hub into a modern, multi-modal transit centre. The project, jointly led by the Chongqing Transportation Hub Group and China Railway Chengdu Bureau Group, aimed to improve connectivity by integrating high-speed rail, metro, buses, taxis, and private vehicles while also revitalizing the surrounding commercial district.

The City of Chongqing introduced a development right on the levels above of the development site. Following a “layered transfer” development model, the railway infrastructure was placed underground (Phase I), while commercial and residential spaces were constructed above (Phase II). Covering 760 000 square metres, with 500 000 square metres allocated for commercial use and operated by developers, the renovation project leveraged air rights to generate revenue for its estimated USD 1.2 billion cost, primarily financed through project loans.

Strong inter-agency co‑ordination by the local government played a crucial role in ensuring the project’s success. While the renovation of Shapingba Railway Station is an example of how transferable development rights (TDR) can be used to finance infrastructure projects, it also serves as a successful example of transit-oriented development (TOD). The renovation project demonstrates how integrating transport infrastructure with commercial development can enhance urban functionality and boost the economic sustainability of the railway system.

Source: OECD (2023[11]), Financing Cities of Tomorrow: G20/OECD Report for the G20 Infrastructure Working Group under the Indian Presidency, https://doi.org/10.1787/51bd124a-en.

A notable example of private sector involvement in infrastructure financing in Egypt is the USD 2 billion Benban Solar Park. The photovoltaic power station, spanning 36 km², was developed by a consortium of 32 companies from 12 countries, including EDF, CHNT, Total Eren, Acciona, and Enerray. According to the MPED, the project has not only created upwards of 10 000 jobs but also seeks to reduce harmful gas emissions by 200 000 tonnes. The Benban Solar Park demonstrates the impact of several policies, particularly the 2014 Renewable Energy Law (Law No. 203/2014), in stimulating private sector engagement in renewable energy investments and introducing mechanisms such as competitive bidding, Feed-In-Tariff (FIT), Build Operate Own (BOO), and Independent Power Plant (IPP). Additionally, the allocation of over 7 600 km² for wind farms and reforms to the New and Renewable Energy Authority further underscore Egypt’s commitment to attracting private sector investments in renewable energy.

Building on the momentum generated by projects like the Benban Solar Park, Egypt has also explored innovative financing mechanisms to support its infrastructure ambitions. Although Egypt has not yet executed infrastructure‑specific bond issuances, it has made significant progress in using green bonds for infrastructure. For instance, the proceeds from Egypt’s 2020 Sovereign Green Bond issuance were allocated to green infrastructure projects such as clean transport and sustainable water and wastewater management.

Another example is Egypt’s inaugural sovereign Panda bond issuance in October 2023. The bonds, valued at RMB 3.5 billion (about USD 480 million), benefited from partial credit enhancement guarantees from two multilateral development banks: the African Development Bank (AfDB) and the Asian Infrastructure Investment Bank (AIIB)–leveraging their triple‑A ratings (OECD, 2024[1]). The AfDB provided a partial credit guarantee of up to USD 345 million equivalent in Renminbi, while the AIIB extended a partial debt guarantee of up to USD 200 million, collectively covering up to USD 545 million, including the bond’s principal and any accrued but unpaid interest (AIIB, 2023[22]). The Panda bonds, denominated in Chinese yuan, were issued with a three‑year maturity and a 3.5% coupon rate, which the Egyptian Minister of Finance noted was lower than the rates for comparable USD-denominated bonds (Reuters, 2023[23]).

The proceeds from Africa’s first Panda bond offering were committed to achieving Egypt’s green and sustainable development objectives (see Chapter 5), particularly in transportation and digital infrastructure as outlined in its Sovereign Sustainable Financing Framework (AfDB, 2023[24]). The projects financed by these funds integrate both social and environmental goals, marking steps towards exploring new avenues for infrastructure financing in Egypt, especially as the country continues to expand its pipeline of sustainable and green infrastructure projects.

As Egypt continues to diversify its financing sources, private capital is expected to play a key role in financing the nation’s infrastructure needs and has been leveraged for sewage, irrigation, and water treatment facilities, renewable energy plants, and transportation infrastructure (e.g. railways). For example, over the past decade, Egypt and its development partners have pooled USD 5.9 billion, including USD 925 million in grants and a significant share in soft long-term loans, to fund and finance 56 water and wastewater projects. This can be seen in specific projects such as the Bahr El-Baqar water and sludge treatment plant – considered one of the largest agricultural wastewater treatment plants in the world – as well as the rehabilitation and lining of the Suez Canal.

Box 4.8. Considering hybrid annuity models for infrastructure financing

Hybrid Annuity Models (HAM) are a public-private partnership approach commonly used in infrastructure projects, particularly in the road sector. HAM blends elements from traditional engineering, procurement and construction (EPC) and build-operate‑transfer (BOT) models. Unlike BOT, where the private sector assumes demand risk, HAM contracts create a balanced financial risk-sharing framework between government and private investors which reduces the fiscal burden of infrastructure networks on the government budget.

Under this model, the government injects a portion of project costs in the form of disbursed payments during the construction phase, typically covering a sizeable portion (e.g. 40‑50%) of the project costs. These contributions are disbursed in instalments (annuities) linked to the achievement of specific project milestones over the lifetime of the project. This structure can reduce the financial risk on the private partner during this phase. The remaining construction costs are then borne by the private partner through a combination of equity investment and debt financing. To mitigate risks and ensure stability, construction costs and operation and maintenance (O&M) payments are indexed to inflation, while the government handles revenue collection risk.

HAM contracts encourage innovation by focussing on performance‑based outcomes. Concessionaires are rewarded for early completion through bonuses and earlier annuity payouts, while delays result in penalties and deferred payments. Payments are tied to specific milestones, so the private partner only receives funds for work completed up to that point. Over the long term, capital costs, interest, and O&M expenses are paid semi‑annually, contingent upon meeting performance standards.

This model has successfully boosted private sector participation in infrastructure projects, particularly in India, where HAMs have been implemented across major road projects since 2016. The Asian Development Bank (ADB) co-financed several key projects, including the Karnataka State Highway Improvement Program, Rajasthan State Highway Investment Program and Madhya Pradesh Road Sector Project. These projects have attracted significant private sector interest due to the predictable revenue stream and shared risk approach. The National Highway Authority of India (NHAI), which oversees these projects, has played a crucial role in their success, benefiting from special provisions to streamline implementation and bypass bureaucratic hurdles.

Given its success in the road sector, HAM is now being considered for use in other infrastructure areas, including water infrastructure. The expansion to other infrastructure sub-sectors demonstrates HAM’s adaptability in addressing various infrastructure challenges while maintaining a balanced risk-sharing framework between the public and private sectors.

Source: Peri, Chen and Dey (2019[25]), Hybrid Annuity Contracts for Road Projects in India, https://www.adb.org/sites/default/files/publication/546641/swp-068-hybrid-annuity-contracts-india-road-projects.pdf; Shiwakoti and Dey (2022[26]), The Hybrid Annuity Model for Public-Private Partnerships in India’s Road Sector: Lessons for Developing Asia, https://www.adb.org/sites/default/files/publication/820206/sawp-094-ham-ppps-india-road-sector.pdf.

A promising avenue for financing infrastructure projects in the country is the adoption of Hybrid Annuity Models (HAM), a PPP model that combines aspects from engineering, procurement and construction (EPC) and build-operate‑transfer (BOT) models. This method, although widely used for road projects, could also be applied to networks in sectors like water and sanitation and electricity, which require large capital investments in upgrading and extending the networks. HAM offers a balanced risk-sharing framework between public and private parties. This model has already proven successful in financing national highway projects as well as clean water initiatives in India, as seen through the country’s National Mission for Clean Ganga (NMCG) (GI Hub, 2022[27]). HAM could be adapted to address Egypt’s infrastructure needs and help achieve its sustainable development goals (see Box 4.8 for more details).

4.5.1. Private sector challenges

A significant challenge for investors in infrastructure projects in Egypt is the incurrence of foreign currency debt. In some cases – according to one stakeholder – up to 70% of the revenue generated by a project needs to be in USD or its equivalent value to cover for imported materials and equipment. Interviews with the private sector flagged payment in USD as an issue when companies must convert EGP to USD to service debt and dividend payments. The Central Bank of Egypt had previously introduced FX hedging tools in October 2022, allowing banks to:

• Carry out two‑way FX forward operations with corporate clients to hedge commercial needs (exports, imports, and foreign stakeholder profit repatriation) to manage their FX risks, excluding speculative purposes.

• Execute FX swaps with corporate clients to cover FX liquidity risks resulting from the above‑mentioned commercial needs.

• Conduct NDFs with corporate clients to hedge commercial positions, with settlement in EGP only.

These hedging instruments remain available and continue to provide additional risk management tools for investors, though the need for such mechanisms has diminished considerably given the improved FX market conditions.

In March 2024, Egypt carried out its exchange rate liberalisation, which as a result resolved foreign currency shortages significantly. The improved FX liquidity and market-based pricing have largely addressed these conversion challenges, making USD more available for private sector investors.

Responses from private stakeholders highlight opportunities to further enhance the framework supporting PPPs and attract greater private sector participation. One key area is improving visibility into the pipeline of potential PPP projects. Stakeholders highlighted the absence of a clear, centralised system for identifying and budgeting for PPP projects, which creates a degree of uncertainty and discourages private sector engagement. Establishing a centralised system for project identification and budgeting could provide a clearer roadmap for private investors and development finance institutions (DFIs) to engage effectively. While Article no. 4 of the PPP Law no. 153 for the year 2021 amending law no. 67 for the year 2010, created the Joint Committee headed by the Ministry of Finance Deputy Minister with membership of Ministry of Planning, PPPCU, Ministry of Transportation, Ministry of Housing, and Ministry of Local Development mandate to identify PPP Projects. This Joint Committee should ensure a clear roadmap and mechanism to promote co‑ordination among the various ministries.

Regarding PPPs, private stakeholders have noted that some government officials appear to perceive PPP financing models as more costly than engineering, procurement and construction (EPC) contracts. This observation has been attributed to the public sector’s preference for direct state funding for infrastructure projects over PPP models due to the latter’s perceived complexity, longer timelines, detailed financial planning, long-term commitments, step-in rights, and arbitration provisions. Traditionally, ministries prefer the direct route of budgetary spending on infrastructure projects, having more control of finances, rather than the PPP or other private financing routes that take more time and involve more direct financial obligations on government entities as off-takers. Private stakeholders emphasised the long-term potential advantages associated with PPPs such as private sector expertise, risk-sharing, technology transfer, and cost-efficiency. More capacity building at line ministries is needed to explain and emphasise the importance of using private sector investment as an alternative source of financing and clarifying the merits of the Public Sector Comparator exercise to help boost PPP financing versus direct budgetary financing (see Box 4.9 on prioritisation for building robust project pipelines in the European Union). Formal review of all public infrastructure projects could be decreed by the Prime Minister by a sub-committee of the Joint Inter-ministerial Committee to decide on private or public financing for infrastructure projects. This would limit infrastructure projects financed by the state budget and enhance the efficiency of public and private investment.

Streamlined land allocation and project bankability were also identified as challenges to PPPs. Reforming land allocation processes can improve the delays and projects overruns, while bankability concerns can deter private sector participation in PPP projects. Centralisation of the PPP process at the Cabinet level would support ensuring the development of bankable project models in different sectors to increase private sector participation.

Enhancing operational expenditure (OPEX) planning for public entities, including state‑owned enterprises and holding companies, will be critical to maintaining infrastructure assets and preventing their deterioration and increased ad hoc pressure on state budget. Private stakeholders have noted that the lack of sufficient budgeted operational expenditure (OPEX) by public entities, including state‑owned enterprises and holding companies involved in infrastructure has contributed to the deterioration of assets. While strained funding for OPEX has led to limited opportunities for private sector engagement post construction, exploring operations and maintenance (O&M) agreements and asset management arrangements with the private sector (concessional leasing for example) could improve asset management of infrastructure assets and preserve the asset lifecycle. Financial structuring of each asset to account for OPEX and CAPEX needs would also improve budgeting.

Box 4.9. Prioritisation for building robust project pipelines: Infrastructure investment in the European Union

The members of the European Union face diverse country infrastructure capacity and gaps. To expedite and prioritise investment in low-carbon technologies and network infrastructure, the European Union provides institutional access and public guarantees and funds. Lessons emerging from this prioritisation process include:

• Incorporate infrastructure priorities into national and regional strategic planning that is aligned with long-term climate objectives and promote suitable investments.

• Overcome non-financial barriers by placing prioritisation mechanisms within existing regulatory and institutional arrangements rather than separate from or in conflict with them.

• Employ experienced institutions with high capacity and expertise to assess project eligibility, determine strategic value, and bridge investment gaps by allocating funding and other policy tools.

• Use prioritisation as a means to feed into policy processes and align project pipeline development to changing investment requirements.

Source: OECD (2021[18]), OECD Implementation Handbook for Quality Infrastructure Investment, https://doi.org/10.1787/479131b2-en.

4.5.2. Egypt’s banking sector challenges

According to the banking sector representatives consulted, Egyptian banks generally have excess liquidity in the local currency (EGP). Most of the businesses in Egypt are small and medium enterprises (SMEs) which face challenges when dealing with commercial banks. Lending to SMEs has increased exponentially in recent years, with 25% of bank loans being directed to SMEs as stipulated by the Central Bank of Egypt (CBE). However, high interest rates which have been prevalent since 2016 with the consecutive cycles of monetary tightening affiliated with high inflation have challenged SMEs credit growth. As inflation and interest decline the more systemic challenges facing SMEs in dealing with commercial banks need to be addressed to spur credit growth. These regulations allow commercial banks to extend foreign currency loans to companies that generate foreign currency revenue to avoid risks related to currency mismatches in loans. In recent years, international finance institutions such as the IFC have been working with Egyptian banks to secure foreign currency financing for projects that do not necessarily generate foreign currency proceeds, to avail FX on one hand, and to reduce the cost of funds on the other.

The Central Bank of Egypt has implemented wide‑ranging reforms to support MSME financing and financial inclusion. These include: i) mandatory MSME lending quotas 25% (10% to small segment), counting microfinance lending in this quota; ii) the establishment of dedicated MSME departments within banks: iii) relaxed documentation requirements for micro and small firms; iv) expanded Business Development Services (BDS) Hubs offering free advisory support as well as funding institutional capacity building programme for Microfinance NGOs; v) simplified KYC rules; vi) new Points of Presence (PoPs) in underserved areas; and vi) broader access to banking products aim to deepen financial inclusion and formalise informal businesses.

These reforms have contributed to a significant expansion in bank MSME’s financing, with MSME lending increasing by 395% between 2015 and 2025 and microfinance portfolios growing by 1 478%. Despite this progress, targeted support is still needed to improve access to finance, as limited financial literacy, low digital adoption, and the prevalence of informality continue to constrain demand for formal financial services and limit MSMEs’ eligibility for credit.

Box 4.10. Role of a national development bank and an infrastructure fund

National development bank

National development banks or infrastructure‑mandated bank are established with capital from the national budget to support achieving the mandate of the bank. They are established to fill the gap that commercial banks are not able to finance, and should be structured and operated to avoid crowding out of the private sector, as well as conflict of interests that could favour certain stakeholders. Given this, this type of bank may need to operate on a non-commercial basis in some instances but ensure that they are financially sustainable on a mid-term basis. National development banks should aim to address market failures, for example when risk perceptions may not be reflecting the economic reality of a project.

Reasons for creating a national development bank that is focussed on infrastructure could include:

• to attract longer term private‑sector finance, particularly institutional capital

• to secure finance for sub-national projects that might otherwise struggle to obtain financial support

• to focus development on a specific sector (e.g. energy, transport) or sub-sector (e.g. clean energy, surface transport) and/or

• to create a centre of financial expertise around infrastructure financing.

However, considerations that need to be made when establishing such a bank include:

• to balance the control of public infrastructure that is given to the private sector

• crowding out private investment and lending (raising questions of financial additionality)

• use of the bank position to influence state or municipal government authorities into prioritising infrastructure over other areas and

• benefit large corporate investors in projects rather than project end-users.

Public infrastructure fund (PIF)

A PIF is a non-bank financial institution, under government ownership or contribution, that provides financing support to infrastructure projects in a country, sector, or region. Public infrastructure funds are a specific type of infrastructure financing fund that uses public resources to leverage much larger amounts of private financing for infrastructure development. Their objective and design can vary depending on country context and the specific market failures the PIF is trying to solve. Since their inception, PIFs have demonstrated mixed performance, but given the persistence of market failures that inhibit long term private financing for infrastructure development, they remain a popular public-policy option for governments as the infrastructure gap widens.

PIFs have adopted different institutional and governance structures, ranging from the most common form (a development bank) to strategic or infrastructure investment funds. These vehicles are typically established as non-bank financial institutions (NBFI), with the government assuming majority ownership. NBFIs do not accept deposits from the public but are still subject to the banking regulations of the domestic market due to their financial intermediary role among participants in the domestic financial markets. In some cases, PIFs are decentralised corporate institutions with financial and fiscal autonomy.

Some PIFs focussed on structured financial products, such as risk mitigation or credit enhancements (partial credit and partial risk guarantees), while others offer only debt financing. There are four broad objectives they have:

• Vehicle for optimising the use of public support by centralising various public resources (subsidies/grants, contingent support, etc.) into one platform.

• Vehicle for effectively managing and ring-fencing financial commitments and contingent liabilities through centralised oversight of them from PPPs.

• Overcoming market failures by providing financing/products to help well-structured projects attract private finance.

• Overcoming government failures by creating a one‑stop organisation, outside of the civil service, with the capacity to implement projects.

Core design features can critically influence the success of a PIF:

• Transparent, autonomous governance to ensure financial and decision making autonomy and enable PIFs to make sound investment decisions.

• Capitalisation and funding strategy to ensure financial autonomy and effective use of the initial capitalisation (irrespective of its source).

• Suitability of products offered to match the PIFs product range with the market failures it’s intended to address.

• Project preparation and expertise to develop high-quality projects through qualified in-house staff and a sustainable source of funding for project preparation.

Source: GI Hub (2019[28]), Guidance Note on National Infrastructure Banks and Similar Financing Facilities, https://cdn.gihub.org/umbraco/media/2621/gih-national_infrastructure_banks_-full_report-web.pdf; World Bank and Inter-American Development Bank (2020[29]), Global Review of Public Infrastructure Funds Volume I, https://www.ppiaf.org/documents/5982.

4.6. Risk mitigation instruments

There is growing recognition of the role that risk mitigation instruments can play in mobilising private capital, either by lowering exposure to risk, reducing the severity of losses, reducing uncertainty, or increasing returns. Governments, multilateral development banks, national development banks, export credit agencies, public infrastructure funds, and the private sector offer a variety of risk mitigation instruments that allow projects to move forward and enhance their bankability. This is especially important for emerging and developing countries as they seek to address the shortage of bankable projects, which hinders private sector involvement.

Although risk mitigation is often thought of as an instrument (e.g. guarantees, insurance products) it can also take on the form of institutional frameworks that reduce risks in a project’s lifecycle. Regarding infrastructure projects, efficient pricing mechanisms, transparent cost-benefit analysis, and rigorous project appraisals can support informed decision making and efficient implementation. Life‑cycle cost assessments and strategies like open access to essential infrastructure and limited downstream renegotiations in joint arrangements like PPPs can contribute to the long-term sustainability and value for money in infrastructure investments (see Box 4.11 for good practices).

Box 4.11. Key principles to ensure economic efficiency in infrastructure projects

To ensure economic efficiency, infrastructure investments must provide value for money, accounting for both positive and negative externalities. A stable legal and regulatory framework is essential to minimise risks and support sound investment decisions. Additionally, appropriate pricing mechanisms can encourage efficient use and determine optimal provision levels. Rigorous project appraisals, focussing on economic efficiency and sustainability, should guide project selection, while strategies to mitigate delays and cost overruns are crucial. Competitive procurement processes and consideration of life cycle costs ensure optimal quality and cost. Finally, effective maintenance and monitoring during the operational phase, including the use of innovative technologies, are essential to preserve asset quality and avoid costly rehabilitation.

The OECD Compendium of Policy Good Practices for Quality Infrastructure Investment outlines several good practices and auxiliary measures that correspond to creating a strong policy and institutional environment, project development, and project implementation. In ensuring economic efficiency of infrastructure projects and minimising associated risks in project development, the compendium lists the following good practices:

1. Competitive business environment: Promoting a competitive business environment and a level-playing field to foster cost effective infrastructure through subjecting activities to appropriate commercial pressures, dismantling unnecessary barriers to entry, and implementing and enforcing adequate competition laws.

2. Carefully considering, when appropriate, private sector participation in infrastructure provision.

3. Open access to essential network facilities: Guaranteeing access to essential network facilities to all market entrants on a transparent and non-discriminatory basis.

4. Sustainable pricing mechanisms: As relevant, using appropriate and flexible pricing for infrastructure services (e.g. user charges, congestion prices) to encourage more efficient use of infrastructure and to help decide on appropriate levels of infrastructure provision.

5. Rigorous project appraisal and selection, based on cost-benefit analysis: Investing in rigorous project appraisal and selection processes that privilege socio-economic efficiency (taking into account economic, social, fiscal and environmental costs and benefits including externalities) and consider not only initial costs, but the full life cycle costs of projects (planning, design, finance, construction, operation and maintenance (O&M), and possible disposal).

6. Value for money assessment: Carefully evaluating different procurement modes on the basis of value for money with respect to life cycle costs.

7. Competitive tendering process focussed on defined measurable outcomes: Using competitive tendering, maximising participation of all qualified suppliers, and limiting the use of exceptions and single‑source procurement.

8. Efficient and transparent risk allocation: Ensuring a transparent and appropriate allocation of risks in the structuring of projects.

9. Effective monitoring and management of assets: Optimising life cycle costs and asset quality through ensuring effective monitoring, operation and maintenance.

10. Re‑negotiations: Limiting recourse to re‑negotiations in public-private partnerships, and if unavoidable, establishing predictable frameworks and strategies for handling them.

Source: OECD (2020[30]), Compendium of Good Practices on Quality Infrastructure 2024: Building Resilience to Natural Disasters, OECD, https://doi.org/10.1787/54d26e88-en.

Egypt’s approach to risk assessment and mitigation in infrastructure projects is governed by a legal framework outlined in the PPP Law (Law No. 67/2010), which sets guidelines for risk allocation across different phases of infrastructure project development. PPPs have been a cornerstone of Egypt’s strategy, allowing private investors to develop and manage infrastructure projects while the government provides essential support and guarantees. For projects following a PPP framework, the Ministry of Finance’s PPP Central Unit (PPPCU) plays an important role in risk management, conducting comprehensive studies to identify, measure, and mitigate risks. The process begins with a pre‑feasibility study, where risks are classified, and a risk matrix is created to quantify them. The proposed mitigation strategies are then submitted to the PPP Supreme Committee,2 for approval, after which a more detailed feasibility study revisits these risks for further refinement.

Once a project moves to procurement, the system is designed to be transparent. Tender documents, including a draft contract and risk allocation matrix, are provided to all qualified bidders, who are given a specific period to review and raise questions. The PPP Central Unit and the tendering authority address these queries and may amend the draft contract based on feedback before finalising the tender documents. This participatory process ensures that risks are thoroughly understood and shared with all stakeholders before the project begins.

During the project lifecycle, contracts may be renegotiated, if necessary, as mechanisms for financial re‑equilibrium are embedded within the agreements. The Ministry of Finance emphasises that draft contracts and annexes related to the project are shared with bidders and discussed during the procurement process. These documents typically include provisions for dispute resolution, term adjustments, and compensation calculations for early termination. Additionally, independent experts, the performance monitoring committee, and the partnership committee contribute information to ensure transparency.

To further bolster investor confidence, the Egyptian Government implements risk mitigation instruments, such as investment guarantees and insurance mechanisms, including political risk insurance and guarantees against non-commercial risks. In parallel with the tendering process, the PPP Central Unit also secures approval from the Supreme Committee to issue a sovereign guarantee in the case of projects tendered out under a PPP arrangement in cases where the government is the off-taker. This guarantee is formalised immediately after the project reaches financial closure. Sovereign guarantees play a prominent role in PPP projects in Egypt, ensuring financial security for private investors and lenders.

The Ministry of Finance provides sovereign guarantees to cover obligations under PPP contracts where the government is the sole off-taker, ensuring that lenders and export credit agencies are protected. The sovereign guarantee is outlined in Article 38 of the PPP Law (Law No. 67/2010), which entitles the contracting Administrative Authority (any government owned entity party to a PPP project) to enter into a direct agreement with the project’s financing institutions and the Project Company. This agreement governs the method of payment for the financial obligations of the administrative authority. These agreements may also include provisions for the Ministry of Finance to guarantee the administrative authority’s fulfilment of its contractual financial obligations. In cases where the public tendering authority has financial liabilities under a PPP contract – such as structure payment obligations – the issuance of a sovereign guarantee in the form of a “Direct Agreement” is required. As such, all PPP projects involving the government as the off-taker are required to have the sovereign risk guarantee be provided to move forward. This Direct Agreement is thereby signed by four parties: the tendering authority, the successful bidder, the financing institutions, and the Ministry of Finance, which provides a guarantee for the Tendering Authority’s payment of its contractual financial obligations.

These sovereign guarantees act as contingent liabilities for the Egyptian Government but provide additional security for investors and ensure the long-term stability of infrastructure projects. However, given the fiscal conditions of the government this also creates a ceiling to the number of projects that can be delivered by PPPs. The sovereign guarantee is issued in the form of a law approved by Parliament, which is in place as a form of governance and fiscal oversight mechanism to ensure prudent management of public finances, although the length of the legal process for each project could be a challenge.

Previously, the sovereign risk guarantee extended by the Ministry of Finance covered both local and foreign currency-denominated debt, offering broad protection for investors against currency-related risks. However, recent fiscal constraints and exchange rate volatility have led to a shift in policy. Sovereign guarantees are now limited to covering only local currency obligations. This adjustment aims to manage the government’s exposure to foreign exchange risks while still providing essential support to PPP projects.

To date, the ministry has reported that no guarantees have been called upon. The ministry is also working on enhancing monitoring mechanisms for these long-term obligations with the support of technical assistance from international organisation like the IMF to streamline the process for the obligations and monitor the imposed annual cap on contingent liabilities.

While sovereign guarantees play a critical role in Egypt’s infrastructure financing, exploring other types of guarantees, as observed in other countries, could expand funding opportunities and mitigate risks for both public and private parties (see Box 4.12 on the types of financial guarantees provided by the National Development Bank of Mexico).

Box 4.12. Case study: Guarantees provided by Mexico’s national development bank

The National Bank of Public Works and Services (BANOBRAS) is the Mexican development bank responsible for infrastructure financing. BANOBRAS was given the authority to offer new financial guarantees in order to increase private sector investment in public infrastructure projects.

BANOBRAS provides a range of financial guarantees for both states and municipalities, as well as for projects:

• Securities debt guarantees: These guarantees can be used to support bonds issued to the market by project developers.

• Bank guarantees: These guarantees support the debt service the project must pay to a bank due to contracted loans.

• Guarantees for service provision projects: These guarantees are intended to cover the periodic payment obligations of the contracting units derived from the service provision contracts signed with the suppliers of the service.

• Pari-passu guarantees are other similar schemes with the main difference that losses are assumed pro rata between BANOBRAS and commercial banks.

Source: OECD (2021[18]), OECD Implementation Handbook for Quality Infrastructure Investment, https://doi.org/10.1787/479131b2-en.

Foreign investors in Egypt’s infrastructure sector have also benefitted from export credit support, particularly in sectors like transport. Export credit agencies have been instrumental in providing financing, supported by sovereign guarantees from the Ministry of Finance. This has increased foreign investor confidence and helped facilitate large‑scale infrastructure projects. Alongside these assurances, regulatory reforms have been introduced to create a more favourable business environment. By streamlining procedures, enhancing transparency, and reforming the legal framework for investment, Egypt has sought to facilitate greater private sector engagement in infrastructure projects.

Table 4.5. Key challenges and policy recommendations for the mobilising infrastructure investment and financing

Challenge	Recommendation
Technical ministries could benefit from greater capacity building, to better understand the benefits of the PPP route which are not always clear to the technical ministries.	VI.a.) Engage more capacity building on technical aspects of PPP projects at other ministries (other than MPED and MOF) and on the local governorate level to ensure wider understanding and adoption of engaging with the private sector.
The government needs to take a more aggressive approach to direct more public investment projects to private sector financing to alleviate the pressure on the state budget and allow a bigger role for the private sector in infrastructure projects.	VI.c.) Review all infrastructure investment projects potentially costing EGP100 million and above by the Joint Committee for PPP to increase the number of projects financed by private investment compared to financing from the state budget. The mandate of this committee could be formalised through a Prime Ministerial decree to help ensure a more consistent and objective approach to reviewing projects financed by the state budget. VI.d) Review smaller infrastructure projects costing below EGP100 million by a sub-committee affiliated with the Joint Committee, to expand on opportunities for SMEs to finance medium sized infrastructure projects especially in rural areas. The mandate of this committee could be formalised through a Prime Ministerial decree to help ensure a more consistent and objective approach to reviewing projects financed by the state budget.
Private stakeholders highlight opportunities to further enhance the framework supporting PPPs and attract greater private sector participation with one key area being improving visibility into the pipeline of potential PPP projects. Stakeholders highlighted the absence of a clear, centralised system for identifying and budgeting for PPP projects, which creates a degree of uncertainty and discourages private sector engagement.	VI.b.) Centralise the PPP process to ensure the development of bankable project models in different sectors and to increase private sector participation and a more centralised and co‑ordinated approach to allocating technically and environmentally viable land for projects. Centralisation of the PPP decision making process could be reviewed at the Cabinet level to have a scalable pipeline and fast track for project selection and approval. VI.e.) Strengthen the understanding of technical and financial assessment of PPP projects within the different ministries to fully engage the private sector and ensure timely and successful implementation of the projects. The fundamentals of the PPP Comparator concept should be elaborated within the technical ministries to clarify the merits of private investment financing (private sector expertise, risk-sharing, technology transfer, and cost-efficiency) versus state financing to reduce the pressure on the state budget and expand the role of private investment in infrastructure financing. VII.a.) Provide a pipeline of infrastructure projects in different sectors where the government is an off taker of the public service, improving the visibility of the pipeline of infrastructure projects, with plans for public investment and private participation as PPPs being clearly indicated. A transparent mechanism of project preparation, development and other opportunities should be made available through websites and international platforms. This should go beyond energy and water projects which currently dominate the pipeline of projects. VII.b.) Expand the mandate of the inter-ministerial joint committee headed by the Deputy Minister of Finance on PPP to provide a clear roadmap for private investors and develop a national pipeline of projects in different sectors while addressing challenges facing private investors in infrastructure projects. The Joint Committee should promote more co‑ordination among the various ministries and help familiarise all parties with engaging the private sector through other financing venues like private infrastructure funds.
Although private sector involvement in economic infrastructure is growing – particularly through PPPs – there still remains much scope to advance their role. Several sectors require more openness to private investment in infrastructure. Telecom Egypt, with 80% government ownership, controls the legacy cable network and remains the primary provider of cable services to end-users, while the country’s regulator acts as a key investor in network expansion and installation in underserved areas which negatively impacts the entry of private sector competitors. The energy sector has attracted private investment through Independent Power Producers (IPPs) and Power Purchase Agreements (PPAs), yet the rate of private sector participation is minimal, and commercial incentives are very limited. This is largely due to the monopolistic position of the Egyptian Electricity Transmission Company, which acts as the sole off-taker and seller of electricity to distributors.	VIII.a.) Expedite the liberalisation of economic infrastructure sectors and other infrastructure sectors for private sector participation as a key step to attracting more private investors. VIII.b.) Adopt a sector-specific approach to financing by aligning private financing and investment strategies consistent with each sector’s characteristics and circumstances – accounting for potential revenue streams and private sector appetite. Long-term power purchase agreements (PPAs) in renewable energy could be extended to other projects that have a revenue stream, for example, tolls for user fees in transport infrastructure can provide stable revenue streams, thereby incentivising private investments if the market is liberalised. VIII.c.) Consider the possibility of limiting government financing for renewable energy projects in some instances given the high interest and suitable geography of Egypt, which could be supplemented by long term private infrastructure investment funds instead.
Infrastructure projects involve substantial maintenance costs, and reliance on imported parts which require international commercial loans to finance the imports.	VIII.d.) Expand the involvement of the private sector in investment, operation and maintenance of projects and incentivise projects that manufacture spare parts to reduce reliance on commercial loans.
The Ministry of Transport has big plans for expanding infrastructure to cater to economic and geographic growth and the rising needs for logistics services but budget constraints present a significant challenge.	VIII.e.) Encourage the Ministry of Transport to incorporate “Transit-Oriented Development” (TOD) in its transportation strategy, co‑ordinating with other modernisation and urbanisation projects, as it presents an approach to ensure sustainable development by strategically linking transit infrastructure with urban centres, thereby facilitating access to economic hubs. This could stimulate private investment, as increased land value brought about by these infrastructure projects can attract private capital inflows.
Beyond PPPs, to further close its infrastructure gap and enhance private sector involvement in infrastructure financing, Egypt can draw from a diverse range of instruments designed to leverage private investment in urban areas.	VIII.f.) Support the development of financial instruments to expand private investors opportunities including through i) regulatory measures (including development levies, fees, and charges) to enable municipalities to capture a share of the value generated by private developments; ii) collaborative strategies (including strategic land management and the transfer of development rights) to create a conducive environment for private capital; iii) subsidises and tax incentives can direct private investment towards priority areas like green infrastructure; iv) partnership models between cities and private entities offer comprehensive frameworks for jointly planning, designing, and executing urban projects, enhancing service delivery and local economic development.
Egypt needs to continue exploring innovative financing mechanisms to support its infrastructure ambitions and use different financing methods to complement PPPs. Further development in the banking and capital market is needed given the demographic trends of Egypt and the potential capital from pension funds and saving, presents opportunities for infrastructure financing. Institutional investors and savings provide a potential source of infrastructure financing, that could serve as domestic private capital mobilisation, if the regulatory regime can be aligned and financial instruments that create infrastructure as an asset class are available	VIII.g.) Consider the possibility of issuing an infrastructure‑specific bond to diversify financing channels. VIII.h.) Consider the adoption of Hybrid Annuity Models (HAM), a PPP model that combines aspects from Engineering, Procurement, and Construction (EPC) and Build-Operate‑Transfer (BOT) models, for infrastructure networks which require large public investments otherwise, such as water, sanitation and electricity sectors, which require large capital investments in upgrading and extending the networks. HAM offers a balanced risk-sharing framework between public and private parties. VIII.i.) Develop the capital market and increase liquidity in the financial market through a strong regulatory framework and clear rules, accompanied by strong disclosure regime of financial instruments. VIII.j.) Mobilise domestic institutional investors to expand private financing opportunities towards infrastructure assets, including pension funds, insurance companies and banks that have the possibility of long-term investment which would allow better asset-liability matching. The regulatory requirements related to pension funds and insurance companies should be reviewed to examine whether asset allocation towards long-term investment can be increased. Incentivising domestic and foreign infrastructure investment funds is key to diversifying private financing to complement the use of the PPP model. VIII.k.) Consider the benefits of the potential establishment of an infrastructure‑mandated development bank or fund, which is well capitalised and is arm’s length from the government in its decision making with strong market expertise and technical knowledge, can better manage investments and support the private capital to take part in infrastructure development. Such a bank or fund can also contribute to the development of the capital market, through the issuance of debt and equity instruments which are part of a diversified portfolio towards infrastructure assets. VIII.l.) Enable international developers and investors to contemplate contracting with a more autonomous framing with special economic zones such as the Suez Canal Economic Zone. Such economic zones create strong investment incentives, bypassing certain regulatory burdens, and can be an attractive method to attract infrastructure investment into the country. Incentives including lower taxes or customs on parts for infrastructure projects could also boost private investment in such projects. VIII.m.) Encourage greater openness to private financing into economic infrastructure, including SOEs, depending on their financial performance and bankability. This could occur through the sale of equity (if divestment takes place) or debt issuance by SOEs. This will also contribute to the development of the capital market, as well as create a baseline of investment opportunities for both domestic and global investors.
Private stakeholders have noted the need to strengthen budgeted operational expenditure (OPEX) by public entities, including state‑owned enterprises and holding companies involved in infrastructure which has contributed to the deterioration of assets. Strained funding for OPEX has also led to limited opportunities for private sector engagement post construction.	VIII.n.) Improve budgeting through better financial structuring of each asset in the ownership portfolio of an SOE to account for operational expenditure (OPEX) and capital expenditure (CAPEX). Explore operations and maintenance (O&M) agreements and asset management arrangements with the private sector (concessional agreements for example) to improve asset management of infrastructure assets and preserve and extend the asset lifetime.
Sovereign guarantees act as contingent liabilities for the Egyptian Government but provide additional security for investors and ensure the long-term stability of infrastructure projects. However, given the fiscal constraints of the government this also creates a ceiling to the number of projects that can be delivered by PPPs.	IX.a.) Explore various types of guarantees and expanding the use of risk mitigation tools, as observed in other countries, to expand private financing opportunities and mitigate risks for both public and private parties. IX.b.) Improve credit rating of projects through improved financial auditing to support this process of understanding the risk profile of a project or sector. IX.c.) Provide risk mitigation tools such as guarantees from a national institution for projects that cannot be privately financed on its own, to improve risk management of projects and support local bank involvement in mega projects. IX.d.) Give a stronger role to the export credit agency of Egypt in co‑ordinating and partnering with other export credit agencies, and providing a more diverse product line up to support the import of goods and services related to infrastructure development. Engaging more foreign commercial banks in this endeavour will be a critical step to improving the understanding of projects and enabling greater private capital mobilisation. IX.e.) Improve risk management of infrastructure projects, by taking a more risk-based approach to its financing while expanding approaches to financing to pursue and manage the process of projects based on their priority.
Interviews with the private sector flagged payment in USD as an essential financial issue needed to service debt and dividend payments for lower cost international financing and to allow lower government payment in line with international practices. Availability of foreign currency was a challenge during periods of economic distress in addition to the convertibility cost risk at times of multiple devaluations and limited visibility for long term modelling of project financing. The Central Bank of Egypt introduced new FX hedging tools in October 2022, along with reforms in the FX market in 2024, to address the challenge of availability and long-term convertibility costs. The government led by the PPP Central Unit need to consider the full or partial payment of its dues in foreign currency following these reforms to align the payment model with international standards.	IX.f.) Explore flexible payment options to pay part of the government payment in foreign currency which could increase private sector appetite for investment in infrastructure as the cost burden of FX conversion in the long-term could be reduced.

Note: The numbering in the recommendation column reflects the numbering applied in list of policy recommendations in Section 1.6.

References

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Notes

← 1.  A questionnaire inquiring on quality infrastructure investment and risk mitigation instruments in Egypt was circulated in mid-2024 among relevant government ministries and agencies. It covered investment approaches, public and private sector financing, concessional and blended finance, risk mitigation, and sustainability. A follow-up questionnaire was disseminated after a Cairo workshop in November 2024 to address gaps and expand on workshop discussions.

← 2.  According to Article 14 of the PPP Law (Law No. 67/2010) establishes the Supreme Committee for Public-Private Partnership Affairs as an oversight body chaired by Egypt’s Prime Minister. The committee includes the Ministers of Finance, Investment, Economic Development, Legal Affairs, Housing and Utilities, and Transportation, as well as the Head of the Public-Private Partnership Central Unit (PPPCU). The Prime Minister has the authority to appoint additional ministers to the committee. In the Prime Minister’s absence, the Minister of Finance assumes the chairmanship.