Egypt's $12 Billion Sovereign Wealth Fund Paves the Way for Clean Energy Investment

Cairo - Egypt's sovereign wealth fund has announced an ambitious plan to attract foreign investors in clean energy technology and renewable projects, with the aim of dominating the green energy investments in the Middle East and North Africa (MENA) region. The $12 billion fund, backed by the Egyptian government, plans to leverage financial and fiscal incentives to encourage investment in sustainable ventures.

CEO Ayman Soliman emphasized the fund's commitment to positioning Egypt as a major player in the region's green energy sector. Speaking about the fund's goals, Soliman stated, "Our aim is to lead the way in the MENA region's transition to clean energy. By providing robust incentives and fostering a favorable investment climate, we hope to attract foreign investors and accelerate the growth of renewable projects in Egypt."

"One of the fund's main roles is to to ease the way for private capital to come to Egypt."
AYMAN SOLIMAN

The sovereign wealth fund's plan includes a range of financial and fiscal incentives for investors in clean energy and renewable projects. These incentives aim to reduce investment risks, enhance profitability, and establish Egypt as an attractive destination for green energy investments. Potential measures include tax breaks, subsidized land leases, and streamlined regulatory processes.

Recognizing the urgency of addressing climate change and the potential financial risks it poses to Egypt's economy, the International Monetary Fund (IMF) has recently issued a warning. The IMF highlighted the country's vulnerability to the financial impact of climate change, pointing out the potential disruptions to agriculture, coastal zones, and tourism, which form major pillars of Egypt's economy.

The IMF singled out water scarcity, rising sea levels and droughts as direct treats to the country's tourism and agricultural sectors, and they may push Egypt's coastal resources to the brink of collapse.

Even though the government in Cairo has not yet set any net zero targets, unlike most of its larger neighbours, it did launch a National Climate Change Strategy, in May of last year.

As part of these plans, the country's wealth fund, which was only set up in 2018, is mobilised to focus specifically on attracting international investment.

"As in many emerging markets, Egypt has a scarcity of capital."
AYMAN SOLIMAN

In response to the IMF warning, the sovereign wealth fund's push for clean energy investment assumes greater significance. By actively promoting investments in renewable projects, Egypt aims to diversify its energy mix and build resilience against the challenges posed by climate change. The country has vast untapped renewable resources, such as wind and solar, that can serve as a sustainable alternative to fossil fuels.

Soliman saw green hydrogen in particular as an interesting climate solution and  a lucrative commercial opportunity. He sees "one of the fund's main roles is to to ease the way for private capital to come to Egypt."

Soliman argued that the economic benefits for investors looking to tap into green energies in the region are significant because “North Africa has the most significant untapped renewable resources in the world."

He was quick to point out that regional investor initiatives are already underway.

For example, his fund recently agreed with the Oman Investment Authority to jointly invest around $5 billion n a green hydrogen project.

“All of the ingredients are in place for developing industries such as green hydrogen, apart from capital. As in many emerging markets, Egypt has a scarcity of capital,” he told African Business magazine.

Egypt's sovereign wealth fund's bold plan aligns with the country's broader vision for sustainable development, outlined in its Vision 2030 strategy. Through this approach, Egypt aims to reduce its carbon footprint, create job opportunities within the clean energy sector, and ensure long-term energy security.

With its vast potential for renewable energy and a commitment to investment incentives, Egypt is poised to attract foreign investors, revitalize its economy, and play a leading role in shaping the future of clean energy not only in the region but also globally.