NORTH AFRICA – The European Bank for Reconstruction and Development (EBRD) has announced that it is contributing US$20 million to support the development of high-quality hospitals in Egypt and Morocco.
The financing by EBRD is being channeled to the US$125 million facility arranged by IFC under a “Commodity Murabaha” compliant with Islamic law.
“The EBRD is supporting the development of high-quality hospitals in Egypt and Morocco, teaming up with other international financial institutions to deliver funding under an Islamic finance structure, also known as a “Commodity Murabaha”, that the Bank is using for the first time,” EBRD said in a statement.
According to IFC, the funds will be used for investments by the Al Batterjia Medical SAE group to develop one greenfield general hospital in Alexandria, in Egypt, and another in Zenata, Casablanca, in Morocco.
IFC notes that the project aims to improve the quality of hospital services in both Egypt and Morocco beyond the current standards.
According to an EBIRD statement, the facilities will benefit from internationally recognised certification, which is a rarity in these two countries.
Apart from the US$20 million from the EBRD, IFC also structured other funds from other financial institutions including a US$25 million package from the OPEC Fund for International Development and US$ 18.75 million from the Finnish Fund for Industrial Cooperation.
The IFC itself together with the IFC Managed Co-Lending Portfolio Program (MCPP) raised US$ 61.25 million towards the “Commodity Murabaha” project.
Egypt and Morocco, like other economies in the southern and eastern Mediterranean region, suffer from a low penetration of high-quality healthcare, against a backdrop of fast-growing populations.
In addition to raising the quality of available healthcare, the developers are also committed to delivering high standards of efficiency in the use of energy, water and construction materials.
This is the first time the EBRD has used a Commodity Murabaha, which is just one of many financial products that are compliant with Islamic law.
A Murabaha transaction is a multilateral sale arrangement whereby the financier – equivalent to the lender –purchases existing commodities from a supplier and immediately resells them to its client – equivalent to the borrower – on terms that provide for deferred payment.
The deferred payment is calculated as the original purchase price of the commodity plus a premium to include the financier’s profit margin.
The EBRD started operating in the southern and eastern Mediterranean region in 2012 and to date has invested more than €11 billion in 255 projects in Egypt, Jordan, Lebanon, Morocco and Tunisia.
