Egypt - Cairo Three a for International Investments S.A.E. and its Subsidiaries - Project Summary Note

Sccd: k.m african development bank reference no: p-eg-aag-010language: english task managers: bara alayaalessandro pietri original:english project summary note cairo three a for international investments s.a.e. and its subsidiaries [egypt, rdgn] july 2024 african development bank project summary - cairo 3a. project description the provision of a senior corporate loan to cairo three a for international investments s.a.e. and its subsidiaries the group or cairo 3a to enhance grain processing and storage capacities, increase the production of high -value poultry products, and expand the processing capacity for corn derivatives. this project underscores the bank's commitment to improving food security and advancing the pr ocessing of higher value -added agribusiness products in egypt. clientsponsor since its establishment in 1981, the group has developed a distinct self -sustainable and tightly interlocked agri -food platform to maximize synergies through poultry and staple food value chain integration, while building a diversified portfolio of product s. cairo 3a caters to a wide range of consumer segments. the group evolved substantially through a series of acquisitions and greenfield projects, mainly contributing to egypt's food security. the group is managed by a team, with a strong expertise in the trading and processing of agri commodities. cost structure, financing plan the group investment program is to be funded by a mix of external debt, and internally generated funds. the debt portion will be in the form of a loan from the afdb and other local commercial banks. envisaged bank's role a corporate loan of up to usd 27 million with a 7 -year tenor, including a 2 -year grace period to finance part of the group's investment program.implementation arrangements the loan is being granted at a corporate level to cairo 3a, backed by the group's consolidated balance sheet and its subsidiaries. the group will invest the proceeds across its subsidiaries . over the last four decades, the group has demonstrated successful project implementation through sourcing and trading primary inputs both nationally and internationally, building strong commercial partnerships with major multinationals, developing extensiv e distribution and production capacities to support small players in various value chains, and executing and developing operations across targeted value chains. market egypt has a large and growing population, currently estimated at over 114 million in 2024, making it the most populous arabic -speaking country in the world. the annual population growth rate is around 1.57, and projections indicate it will continue to ris e, reaching approximately 160 million by 2050. the country's grain production significantly lags its food needs, necessitating substantial imports. in 2023, egypt produced 8.87 million metric tons of wheat, down 6.63 from the previous year. this shortfall has led egypt to consistently be the world's leading importer of wheat. the rapidly growing population exerts pressure on the country's traditional farmlands along the nile valley and delta, exacerbating the need for imports. since february 2022, egypt's food security has faced increased pressure due to disruptions in wheat imports from the black sea region, from where it sources 85 of its imported wheat mainly from russia and ukraine. in response, the government aims to enh ance self -sufficiency by supp orting domestic production, diversifying its supplier base, and encouraging private sector efforts to import essential grains like corn and whe at. strategic alignment this proposal is fully aligned with the overarching ten year strategy of the bank 2024 -2033, the private sector development strategy 2021 -2025, notably for financing firms that can anchor value chains in key sectors, the agricultural transformation fe ed africa strategy 2016 -2025 and egypt's structural reform program for the period 2021 -2026 that aims to foster the development of the agribusiness sector. the transaction is also fully aligned with both pillars of the approved 2022 -2026 csp to foster productivity i development of a robust private sector to foster growth and job creation ii building resilience to achieve food and water security in the agricultural sector. it is also consistent with the bank's strategic priorities high 5s for indust rialization, and the improvement of the quality of life for africans by modernizing food processing, providing affordable good quality nutrition, msmes development and job creation.development outcomes the cairo three a project is set to deliver substantial development outcomes and impacts. it aims to create a significant number of full -time equivalent jobs, reflecting an increase in the current workforce. the project is also expected to boost government revenues over the loan period. in terms of climate impact, the project includes measures to align with iso 14064 standards for greenhouse gas emissions, targeting a notable reduction in co2 emissions from high -energy -intensive industrial activities. furthermore, the projec t will support domestic value addition and foster stronger interlinkages with smes and smallholder farmers, contributing significantly to egypt's economic resilience and food security.additionality and complementarity the group's efforts to consolidate the poultry value chain and enhance grain storage capacity require access to long -term finance, a critical factor identified as a major impediment to agricultural transformation in africa. securing competitive financing t ailored to the agricultural sector's needs at a reasonable cost is essential. this transaction will i provide long -term hard currency financing to support value chain integration; ii enhance food quality standards and biosecurity norms; improve t he company's environmental and social safeguards system; and iv complement the efforts of the bank and the government to bridge the country's food security gap.

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