1. What does your role as Principal Banker of EBRD involve?
My role here in Egypt focuses on two main aspects of the business. One is to do with business development so I am at the forefront of the bank here in Egypt so I go meet new clients, introduce the bank, introduce our mandate, try to find potential opportunities for the bank to engage with a specific client, either on the debt side or the equity side or something hybrid in the middle.
The other part is to execute the transaction itself but this is again a team effort so there are people in London helping, there are support functions getting involved, there are people underneath in the resident office in Cairo also supporting, for example. To lead origination and execution includes getting management approvals, preparing all the approval memos, financial models in line with the team and getting the final approval from the board of the bank and then giving it to lawyers for loan documentation then signing the transaction.
2. How much of the work that you do is linked to agribusiness?
Everything I do is agribusiness, I don’t do anything beyond that sector.
Anything that is from farm to fork as they say including food packaging as well.
3. Can you explain EBRD’s current strategy in regards to agribusiness in Egypt and beyond within the African continent?
The overarching mandate of the bank is basically to promote the private sector. For agribusiness we have strategies for every sector and the strategies are updated every four years so now the bank is in the process of updating the agribusiness strategy for the next four years but for the region, and Egypt specifically, the main strategy is to do two things. It is to increase the competitiveness and the integration across the food value chain with the aim of increasing food security and food self dependency in the countries of operation. We try to work with what is called ‘linking the food value chain’ so we work with the aggregators which are food processors that use the fresh produce or raw ingredients or raw materials that are grown by farmers to produce local high quality food products that can be used in the local market or even exported. When you help these aggregators, they buy more from the farmers so you’re indirectly providing a solid and stable cash flow for the farmers.
At the same time we try to engage on consultancy because most of the small farmers in Egypt are not very ‘bankable’ so we try to help them in how they can get better yields, improve the reliability of their crops, comply with international standards on the environmental aspects, health and safety aspects, combating child labor, providing equality for women – all these things we try to incorporate into our product so that we help both parties of the value chain so the supplier and the aggregator.
4. In your eyes, what does make a good agribusiness project to invest in?
In Egypt what makes a good agribusiness projects are two thing from a debt investor or provider perspective:
- That the product itself has a good brand and reputation in the market.
- The business itself is self-sufficient so it can generate cash flow to repay us.
5. How would someone who has an idea about a project what should they do to go about getting finance?
We have already made a lot of noise in the market since we arrived to Egypt in late 2012. I think we have good visibility in the market because we have worked with a lot of clients so we have already invested over 1.5 billion euros in the country over the last 3 and a half years. A lot of companies know me and know my colleagues in London who cover agribusiness sector as well so the best way would be to either email me or give me a call and then we sit and chat and this happens quite often. The other thing to do is to go to our website and get the number and contact our switchboard who will transfer the callers to either myself or the team in London depending on where the caller is dialing from.
6. Having worked in the agribusiness department at EBRD for over four years, what progress have you seen occur in the agribusiness sector and where do you see it headed?
There is a part of the work EBRD does that isn’t project related which is called policy dialogue. Policy dialogue is where the bank tries to work with sister organisations like the FAO to try to influence legislation, cut down red tape, reduce bureaucracy, create efficiency, and improve efficiency in specific areas. One thing we did when we started working in Egypt because we know it is the largest importer of wheat in the world so we saw this could be a good area where we can try to do some policy dialogue. We engaged FAO and signed a MOU with the Egyptian Government whereby we commissioned consultants and we prepared a very detailed wheat sector study. This study came out with some recommendations on how to save costs on the importation, how to reduce waste on the logistics of the wheat and how to basically reduce the average cost per tonne. A few things were shared with the Minister of Supply and with the General Authority for the Supply of Commodities, and we did some workshops. The Government has already started to implement some of these recommendations and we are following through with this, this year.
One of the things we are doing is the establishment of the Green Suppliers Association so there will be an association of private sectors and green importers and they will have someone nominated to speak on their behalf when they have to raise an issue with the Government and the regulatory bodies. We will follow this with another study on the sugar sector because sugar is another thing that is heavily regulated in Egypt and needs a lot of reforms as well.
Our financing, unless it is additional and has an impact, we would not do it anyway. Every project we do has a greater impact on the sector by one way or another. These are very specific but in general, any project we do, either improves the supply of the raw material, improves the processor itself or improves the ecosystem around them.
7. Are there any specific areas in agribusiness you see as necessary for investment?
I think all the strategic commodities are important for investing and I think the other area where I think there could be a lot of potential for Egypt is large scale fresh produce farming because Egypt has good climate and good yields for fruits and vegetables to be exported but the problem is that we have a lot of fragmented ownership so large scale farming, industrialised farming will have good potential.
8. Why is an event such as Ingredients 2 Inspire Africa: Finance & Agribusiness Conference important?
The event should connect investors with financial institutions and bankers. It should also highlight any areas of concern, for example the desertification, increase awareness that we need to develop more water efficient primary agriculture, and promote the culture and mindset of efficiency.
Mr. Philippe Erian is a Principal Banker at EBRD in Cairo and is responsible for the Bank’s agribusiness activity in Egypt.
Mr. Erian leads the origination and execution efforts of agribusiness transactions in Egypt. He has full responsibility for the following: developing deal flow; project assessment and selection of financing instrument; negotiation of investment structure and terms; preparation of transaction documents; and post-investment monitoring.
Register for I2I Africa 2017 today to learn more from Philippe Erian about securing finance for Agribusiness.