The successful response to environmental challenges relies on the presence of supportive financing mechanisms presenting incentives for the stimulation of investments in the environmental management and protection fields.

The Environmental Protection Fund:

The Environmental Protection Fund (EPF) was established under Law 4/1994 for the Environment with the aim of mobilizing investments in the environmental sector. The financial resources of the EPF include revenues from the national protectorates entrance fees, and fines on environmental violations.

The EPF provides financial assistance to environmental projects on a competitive basis. In this regard, a broad range of organizations, including private enterprises, public institutions and non-governmental organizations, are eligible to apply to the EPF for support for the implementation of environmental projects and initiatives. Applicants, however, must meet a number of criteria primarily concerned with their ability to cover a share of the projects costs, as well as demonstrate their capability, both financially and technically, to undertake the proposed project.

Each year, the EPF issues a plan describing the financial support program offered for that year, specifying the types of financial packages provided, as well as the areas of focus based on the national environmental priorities. The financial packages offered by the EPF include interest rate subsidies on commercial loans, equity participation, as well as grants offered to non-profit environmental projects on a cost-sharing basis.

Financial Packages for Industrial Compliance:

Within the context of the importance accorded by MSEA to industrial compliance, as specifically reflected in the policy directives and the adopted five year action plan, three financial packages are made available to assist major industrial establishments in this regard. The underlying objective is to promote investments for pollution abatement and the implementation of cleaner technology initiatives.

The World Bank is providing access to 35 million USD made available on a soft loan basis for supporting pollution abatement projects, of which a total amount of about 15 million USD has been already allocated over the past year to ten major polluting industries. Moreover, 9 million USD are underway to three establishments at different stages of tendering their respective pollution abatement initiatives. In this respect, a number of changes to the conditions of these funds have been carried out during 2000/2001 with the aim of broadening the scope of support. These changes include the extension of the geographical scope for the allocation of funds to include all governorates of Egypt, as well as the extension of support to new industrial sectors such as the cement industries, petrochemical industries and pharmaceuticals. Furthermore, financial modifications entail the development and implementation of measures to avoid risks resulting from rate exchange fluctuations.

In addition to the above, the European Investment Bank (EIB) is making available a total of 15 million Euros, as soft loans, of which about 5 million Euros have been allocated to one industrial establishment in 2000/2001. The disbursement conditions for three further loans, amounting to 5.5 million Euros, are still under study, and the funds are expected to be released in the coming year 2001/2002. The primary focus of the European Investment Bank loans lies in the conversion of combustion processes of the different industrial establishments to natural gas.

As for the German Bank for Reconstruction (KfW), access to a total of 50 million Deutsch marks (DM) is provided, targeting the public enterprises industrial sector for the end of pipe, in-plant pollution abatement and prevention projects. In this respect, projects in 14 establishments were allocated a total cost of 20.3 million DM in 2000/2001, and the allocation of a further 13.6 million DM is under study for projects at different stages of tendering.

In line with the MSEA and EEAA aim of promoting the involvement of the banking sector in environmental protection issues, the Environmental Risk and Liability Guide was finalized during 2000/2001, thus enabling banks to take environmental issues into account during the conduct of credit analyses of industrial projects.

In conjunction with the World Bank assistance, the Finnish Government, through the Environmental Pollution Abatement initiative in EEAA, is providing technical and institutional support. This targets the institutional development of EMU's and RBO's, the promotion of the roles of NGO's in industrial pollution abatement, as well as financial support of required technical assistance for industrial abatement investments.

Egypt Environmental Initiatives Fund:

The overall aim of the Egypt Environmental Initiatives Fund, supported by the Canadian International Development Agency, is to promote the involvement of the Egyptian private and voluntary sectors in sound and sustainable environmental practices and management. This is achieved through three lines of action:

The first, targeting the small and medium enterprises (SME's) of the private sector, aims at improving the environmental performance of such SME's, as well as promoting their adoption of sound environmental management practices, through technical and financial assistance.

The second line of action targets the voluntary sector composed of non-governmental organizations (NGO's) and community development associations (CDA's), aiming at increasing their capacity to deliver community-based environmental improvement initiatives.

The third line of action supports the development and expansion of green businesses in Egypt.

The operational strategy of the Fund is based on sustainability, both financial and institutional, achieved through the support of replicable, financially self-sustaining demo-projects, as well as the involvement of "implementation partners teams" composed of stakeholders, local government and beneficiaries.