Islam Zekry, the Group Chief Financial Officer at the Commercial International Bank – Egypt (CIB), emphasised the bank’s commitment to sustainable economies. CIB aims to stabilise the per capita share of gross domestic product (GDP) across Africa by focusing on green assets. Notably, CIB’s green assets account for 12%, a significant commitment even though this percentage remains well below the global average of 1%.

During his participation in the “Climate Risk Mitigation: The Role of Financial Institutions” symposium, held on the sidelines of the Wall Street events in Kenya, Zekry said that CIB is striving to invest in understanding its customers. This is why it created the D-squared framework. It depends mainly on data to understand the nature of customers and ensure that the offers made to them are attractive from the perspective of transaction costs and others, so that the bank becomes generally more attractive to future customers.

“This framework is our gift to Africa to create a more balanced business and provide attractive products to customers. That can help make more profits without creating any additional financial risks to the general economy,” he said.

Zekry also noted that CIB is starting to entrench ESG as a business to generate a positive return for shareholders as well as for the economy, creating a win-win situation for everyone.

He also explained that the bank is working to transform green financing into products for individuals. It worked to provide a solar energy financing loan, to support customers to switch to less expensive energy and encourage them to use renewable energy. From a technical standpoint, renewable energy is an alternative means that meets the same needs, but in a cost-effective manner.

He explained that the bank works to utilize opportunities, and human capital capabilities through a group of well-trained, competent consultants, to reflect the value that can be created for giant construction companies.

Zekry went on to explain that there are two types of trends: one that focuses mainly on the governance aspect, reporting the percentage of green assets and adhering to the percentage of TCFD, EGRD, and others. This is a rather strict approach but may create added value. The other approach revolves around dealing with the matter as bankers. “We try to create added value for all our partners and stakeholders, not only in Egypt and Kenya but anywhere where we serve customers. We have regulatory frameworks, environmental, social and governance frameworks,” he said.

He added: “Technically, I think we need to come up with a global standard, a global code for green finance or sustainable finance, or whatever standard that is globally accepted.”

Zekry noted that the classification of data and percentages serves the digital reports of green standards worldwide, therefore everyone must know what should be done and what should not be done and how the process is organised. “Even in the same country, we could easily see conflicting views,” he said. Additionally, when looking at the classification In the European Central Bank’s data, we will find about a 30% to 40% mismatch, not only in the industries that are classified as harmful, but also in the way they are dealt with, and the way the weight of those industries is calculated, which makes this global framework a necessity.

According to Zekry, the main problem is not in directing funds to Africa, but rather in creating a future that is free of climate risks. Furthermore, the financing coming from development funds must have some kind of allocation mechanism, especially in terms of environmental, social and governance issues. Zekry stresses that incentives are necessary, as well as identifying appropriate and future opportunities to direct funds to Africa.

The longer interest rates remain high, the greater the risk of financial trouble. Joe Biden’s term in office began with the resurgence of a trend in inflation that had disappeared three decades ago, and it could end with a financial crash in the US. An office real estate crisis, a venture capital downturn, the risk of unlisted debt, Wall Street’s artificial intelligence bubble and abysmal deficits: The signals are proliferating, raising fears that the blue skies of full employment and growth might turn into storm clouds, brought on by persistent inflation and high interest rates, both slow poisons for the national economy.

The country got a taste of this in March 2023, when one regional bank after another went bankrupt for making rookie mistakes. They had made long-term investments with their clients’ funds and were then squeezed by the general rise in rates: Their customers withdrew their deposits to discover short-term remuneration equivalent to that offered by the Federal Reserve (Fed) – 5.25% per year – while the value of their long-term investments had fallen (when rates rise, the value of a bond falls to adjust in line with the market). The fire was put out by the Fed and J.P. Morgan, Wall Street’s “boss” in the event of a serious crisis.

One year later, high rates have continued to spread their venom. As is often the case, crises come as a surprise, emerging where no one saw them coming, often because the system is not transparent and does not allow for risk assessment. Private finance will feel the impact first – though not “private” as opposed to “public” (almost nothing is public in the United States), but rather as opposed to “listed on the markets.”

The first issue is office real estate. The 2010s were characterized by a frenzy of construction, which crashed up against the wall of Covid-19 and the mainstreaming of remote work, especially in expensive cities such as New York, San Francisco and Chicago. With 110 million square meters of vacant office space in the country, landlords are caught between plummeting rents and occupancy rates and rising interest rates. The Wall Street Journal (WSJ) examined securitized real estate loans, which account for less than 15% of loans but give a good indication of the state of the market.

Within 12 months, $18 billion (€16.6 billion) of securitized loans will have to be repaid – double the figure recorded in 2023. According to the WSJ, only 35% of the loans have been repaid at maturity as scheduled in 2024, compared with 99% in 2021. This is worse than the 37% repayment rate that was reached in 2009 in the wake of the great financial crisis, according to Moody’s Ratings. These non-repaid loans are not necessarily the result of bankruptcies, but renegotiations or extensions. Nevertheless, the tension is high.

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