MOSTADAM: Making Egypt a forerunner in sustainable finance

Arab African International Bank is aiming to establish Egypt as a leader in sustainable finance and create a new blueprint for banking in the Middle East, write Perihan Abdel Ghaly and Maha Hasebou.

The banking sector in Egypt represents 57% of the private sector. Only four banks are state owned, and others are joint ventures. Since 2004, privatisation and economic reform, especially in the banking sector, have spurred active engagement and responsibility towards communities and the country at large.

At present, the banking sector’s capacity remains huge compared to its role in social development. However, the Arab African International Bank (AAIB)’s experience offers a successful trendsetting model for other banks to adopt.

AAIB: Leading an industry move in Egypt

In 2003, AAIB started its CSR journey; it was spontaneous and in parallel with the organisation’s wider strategy for business growth with excellence.  For over a decade, AAIB has proven itself a pioneer in addressing social development in health and education with innovative and strategic philanthropy approaches.

The AAIB Award, an annual competition for university undergraduates introduced in 2003, and We Owe it to Egypt, an independent foundation launched in 2007, are just two nation-wide initiatives that set the Bank apart as a national and regional sustainability trendsetter within the banking sector.

In 2012, AAIB made a breakthrough stride. AAIB collaborated with the United Nations Development programme (UNDP) and the Egyptian Corporate Responsibility Centre (ECRC) to start an industry movement to promote and embrace sustainable banking in Egypt, providing sustainable banking products such as microfinance, banking for small and medium enterprises, and clean energy finance. This collaboration yielded the first platform for sustainable finance in Egypt, known as MOSTADAM.

Through sustainable finance, MOSTADAM plans to instil the connection between financial and the three extra-financial pillars of sustainability: Environmental, Social and Governance (ESG) aspects within the bank’s core business operations, lending, products and services. The platform’s vision is to develop a national model for sustainable finance that serves Egypt’s economic needs and challenges, and empower the Egyptian banking sector to become a forerunner in sustainable finance on a global level.

Capacity building

AAIB has cooperated with global professionals to provide state-of-the-art training for middle and senior bankers in corporate and retail industries.

In November 2014, MOSTADAM launched the first certified training programme on sustainable finance for the banking sector in Egypt. Enthusiastically, eleven banks from Egypt attended the training. Progressing forward, further customised modules will be developed for the eleven banks to help lead sustainable finance in Egypt.

Innovative products & services

On the national level, MOSTADAM is intended to help resolve Egypt’s long-standing need for clean energy infrastructure. The platform covers the required business and financial models for financing clean energy at both corporate and individual levels.

Moreover, MOSTADAM aims to contribute to social justice in Egyptian society through inclusive finance, which offers loans and access to finance with limited securities to a sector that has long-been marginalised by banks.

Regulatory engagement

Regionally, MOSTADAM aims to set Egypt as a forerunner in sustainable finance and to exchange experience with successful financial institutions in the MENA Region. Meanwhile, towards the end of this year, AAIB and its partners will collaborate with regulatory bodies in Egypt to work towards a blueprint for sustainable finance in the country.

In the coming weeks, the official MOSTADAM website and platform will be launched online. Together, we will work to promote, educate and embrace sustainable finance in Egypt and the Middle East.

To learn more about MOSTADAM, please feel free to send all inquiries to: MOSTADAM@aaib.com

Perihan Abdel Ghaly is CSR & Sustainability Specialist and Maha Hasebou is Sustainability Head, Marketing and Communications at Arab African International Bank (AAIB).