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Tuesday, 1 November 2022

Egypt lands USD 2 bn loan to shore up food security

Egypt will receive USD 2 bn to boost food security: The UN’s International Fund for Agricultural Development (IFAD) is providing Egypt with a USD 2 bn loan to boost investment in food, energy, and water, Bloomberg reports. The funds will be provided to the Egyptian government until 2030.

Where is the money going? The funds will be disbursed through a new program — the Nexus of Water, Food and Energy (NWFE) — that’s set to be unveiled at COP27. IFAD will “lead coordination” of the food part of the program, which is set to target “production, food storage and food transportation” and will connect markets with “smallholder” farmers, Bloomberg cited IFAD President Alvario Lario as saying in an interview last week. The European Bank for Reconstruction and Development (EBRD) will oversee the energy part of the program and the African Development Bank (AfDB) will oversee water, Bloomberg added. The EBRD is pledging USD 1 bn to the private sector to support bringing 10 GW of renewable energy online, and another USD 300 mn in concessional or IFI financing to support the grid, EBRD Egypt head Khalid Hamza told EnterpriseAM in October.

The funds will target small-scale, rural farmers in Egypt, Bloomberg noted. Small-scale farmers currently receive only 1.7% of global climate finance, though they produce one-third of the world’s food, it added, citing IFAD.

Background: NWFE is the mechanism by which Egypt’s International Cooperation Ministry will promote its pipeline of low-carbon projects to investors, EnterpriseAM reported in August. It got props from US climate envoy John Kerry for having “the potential to attract bns in investments from donor governments, philanthropy, development finance institutions and the private sector.”

IN CONTEXT- Climate change has hit Egypt’s agriculture sector hard recently: Egypt’s olive production fell by some 60-80% last season thanks to an unusually warm 2020-2021 winter, while the long 2021-2022 winter adversely affected the crop’s pollination and pruning process, local farmers told EnterpriseAM. Mango production took a 40% hit last year on the back of a Ramadan heatwave, though it recovered in 2022. Egypt’s dairy industry has been hit by climate change-induced extreme heat — which affects the growth, milk production, and reproductive rates of cattle, and growing conditions for livestock feed. And even honey production has taken a knock, with one local farmer estimating that it fell to about half its usual rate this year.

ON A WIDER SCALE- Global farming productivity is expected to decline by some 15% globally by 2050 due to rising temperatures and weather instability, according to the UN Food and Agriculture Organization.

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