The International Finance Corporation (IFC), the private sector arm of the World Bank Group, has signed a $1.6 million agreement for a 20 percent equity stake in the Egyptian Housing Finance Company (EHFC), helping establish Egypt's first private company in this sector.
Egypt has strong pent-up demand for long-term housing loans, which are relatively small and are now provided by only a few public sector banks. Most Egyptians buying non-subsidized housing units currently face the choice of either paying the whole amount up front or paying short-term installments to property developers at high interest rates. With IFC's investment, EHFC will tackle the scarcity of long-term loans for potential homeowners, acting as a pioneer for mortgage financing.
EHFC is expected to play a catalytic role in developing a housing finance industry that will indirectly bolster economic growth and job creation in Egypt. The "real" economy will get a sustained lift from higher output and jobs growth in the construction sector and other downstream industries, while financial markets will deepen as more savings held by local and expatriate Egyptians pass into the formal economy, says IFC.
Total capitalization of EHFC amounts to $8.1 million, with the Egyptian American Bank, the anchor investor in EHFC, holding a 40 percent equity stake. Other shareholders in EHFC include 20 percent held by Deutsche Investitions-und Entwicklungsgesellschaft (DEG), a member of the German KfW group; Housing Development Finance Corporation and Bank of Alexandria, Egypt's state-owned bank. — (menareport.com)
© 2004 Mena Report (www.menareport.com)
