Philip ter Woort Director, Head of Office Egypt EBRD in Egypt Philip ter Woort Director, Head of Office Egypt EBRD Annual Meeting | Istanbul, 11 May 2013 © European Bank for Reconstruction and Development 2012 | www.ebrd.com

EBRD and Egypt - timelines March 1991 Egypt co-signs AEB and becomes a founding father of EBRD May 2011 G-8 expresses support of Arab spring countries (Deauville) September 2011 EBRD Board approves geographical expansion into SEMED October 2012 Egypt request to become a potential recipient country November 2012 Egypt becomes a potential recipient country December 2012 EBRD signs its first transaction in Egypt May/June 2013 Article 1 & 18 ratified - Egypt eligible to become a CoO September 2013 Opening of EBRD Resident Office in Cairo May 2012 EBRD Governors approves €1 bn special fund for SEMED region Host Country Agreement signed with Egyptian Government Let me 1st add the context and share quickly some timelines First – history EBRD and Egypt go back long time – 20 years – first of 25 founding fathers of EBRD Two – non of us would be here if it was not for Arab Spring – Tunisia then to Egypt – January 2011 Mubarak resigned

Summary key transition challenges Manufacturing & Services: Weak contract enforcement & limited competition & high firm disclosure costs Energy: Unbundling & gradual price liberalization & regulator independence Infrastructure: Underinvestment & tariff structures & little private sector involvement Financial sector: State dominated banking sector & access to finance Agribusiness: Low yields & limited logistics & resource inefficiency Starting point EBRD – to understand the specific needs of Egypt – overall assessment Transition gaps in all sectors: Financial sector: Relatively well developed but state dominated Agri: Resource inefficiencies – 50% production is wasted in the production chain Cross sectorial: Fuel subsidies distort system Lack of regulatory independence Large public sector poses challenges to private sector development Challenge for economic inclusion: Youth, women, rural/urban divide EBRD lessons learned: Institutional reform critical Sequencing difficult – big bang an illusion Stuck in transit – EU or other anchor

EBRD Egypt Operational priorities Finance and improve conditions for investments in the private sector, including mid-sized companies Modernise the financial sector by strengthening its capacity and diversifying financial products and support of MSME’s Enhance the agribusiness value chain to improve food security and strengthen the distribution chain Increase the role of cleaner fuels and renewable energy and improve energy efficiency Support reform and commercialisation of the transport, fuels and power sectors Upgrade and expand municipal infrastructure EBRD currently operating under a Needs Assessment of October 2012 - to be followed by (first) Country Strategy You will hear a lot – private sector – main focus and raison d’etre our focus on private sector. Private sector driven: Dedicated team focused on smaller transactions But also direct lending to larger companies and property projects Strong capacity building element: SBS – improve competitiveness and productivity Financial sector: Particular focus SMEs: 75% GDP, 80% employment, 5% of credit Cornerstone engagement: Medium term finance to local banks to on-lend to local MSMEs Possibly targeted: Focus on energy efficiency projects, regional TFP – Successful – 13.000 transaction – credit enhancement - support trade flows – particularly important for Egypt (export Look at alternative forms of finance, leasing and mortgage finance. Agri: Investing in entities/projects along the food chain (storage, logistics, processing and retail) Agricultural infra projects (warehousing, (cold) storage facilities) EE & renewable energy: Support energy efficient investments in manufacturing & agribusiness Investment to reduce energy & water consumption Renewables – wind and solar (wish list of each IFI) Transport , fuels, power: Private sector participation in infra development (ports) but also projects with ENR, water and waste water) Supporting critical investments that promote a high quality and a stable secure supply of fuel and energy Power: Possible PPP solutions, focus on increase of efficiencies and cost covering – also smart metering Municipal: Promote financially viable public sector entities, possible PPP basis Early days – still learning !

EBRD strengths & added value Strong international recognised financial partner with long term perspective and deep private sector focus and experience Triple A rated as recently confirmed by all three major rating agencies Close working relationship with governments and shareholders International Financial Institution with a preferred credit status Wide tool kit, including technical assistance (energy efficiency) Stamp of approval on corporate governance & environmental standards Strong Int. Partner: Triple A status recently confirmed. Political leverage due to EBRD’s mandate and shareholder structure

EBRD Finance Tool Kit Loans Equity Senior, subordinated, convertible Long term (up to 10yrs or more) or short term revolving Floating/ Fixed rates Choice of currencies (EUR, USD, RUB etc.) Mobilize external finance Common stock or preferred Minority position only (up to 35%) Mezzanine debt Particular focus private sector Within private sector - SME sector – direct lending – LEF: dedicated team on the ground EBRD value chain: BAS – EGP – become EBRD finance prospects ALWAYS: Additionality

EBRD Egypt – Activities to date Hired a team of 10 Egyptian professionals Small Business Support: > 50 technical assistance projects General PD TA programs (including obtaining funding for MSME/WIB programme with the Social Fund for Development) Already signed 2 transactions for aggregate amount of Euro 29 mm: Euro 19 mm – White good manufacturing company Euro 10 mm – Waste water treatment plant In process to building a diversified pipeline of new projects Over 200 visits to Egypt All without an operating RO Deals in pipeline: Very diversified: MSME credit lines with local banks; leasing; regional waste water plant & wind park, a gas flaring project

EBRD in Egypt – Open for business! Can forget anything from presentation – but remember ‘open for business’ Egypt has many challenges indeed – but the private sector I have met so far is impressive, forward thinking – can become a tugboat for economic progress and be a positive contributor to Egypt in transition My privilege to be able to represent EBRD in Egypt in these challenging times – I hope EBRD can play a positive role and contribute in overcoming some of these challenges Contact: Philip ter Woort, terwoorp@ebrd.com