The Central Bank of Egypt (CBE) has launched a new initiative to finance the transition to modern irrigation methods. It will finance agricultural cooperative societies or other associations established for the purpose of switching to modern irrigation, through the National Bank of Egypt (NBE) and the Agricultural Bank of Egypt (ABE).
This comes in light of President Abdel Fattah Al-Sisi’s directives to support priority economic sectors, particularly the agricultural sector. It replaces the previous initiative issued for the same purpose, which was at a return of 5%. It also complements the current efforts to rationalise water consumption and maximise resources.
The total value of the new initiative is EGP 55.5bn. It targets to switch about 4 million feddan to modern and smart irrigation.
The farmers benefiting from the initiative will pay for modern irrigation systems in instalments over 10 years with no interest, provided that the first instalment shall be due a year after the completion of the modern irrigation transition.
According to the CBE, it is expected that all agricultural lands in Egypt will be converted to modern and smart irrigation methods within three years. The concerned authorities and ministries will cooperate with the CBE to determine the initiative’s implementation mechanism and the beneficiaries of the initiative.
Alaa Farouk, ABE Chairperson, stressed that this initiative will give a strong impetus to efforts to transform modern irrigation, in implementation of the directives of President Al-Sisi.
Farouk pointed out that the new financing aims to speed up the implementation of this national project and provide more facilities for farmers, develop the agricultural sector, preserve the state’s water resources, and maximize the capabilities of the agricultural sector.
He stressed that choosing the ABE to provide the necessary funding to implement this initiative confirms the state’s confidence in the bank’s capabilities, as it is the largest banking institution specialized in agricultural banking and sustainable development. In addition, the bank has many elements that qualify it to reach farmers wherever they are thanks to its widespread branch network.
Farouk explained that the cost of switching to modern irrigation systems has always been the main obstacle against this project. The farmers were reluctant to implement it. However, after the great support provided by the state, it is expected that the financing for the transition to modern irrigation systems will increase significantly.
Farouk pointed out that the ABE has more than 1,200 branches, and it is working to organize meetings and conferences nationwide to encourage farmers and raise their awareness of the importance of switching from flood irrigation to spraying and dripping. The transition will not only preserve water but also increase the income of farmers, as the modern irrigation methods reduce the fertilizers and pesticides used in agriculture, increase the productivity, and improve crop quality.
Farouk confirmed that the bank developed a work programme to motivate and encourage agricultural cooperative societies and farmers to switch to modern irrigation systems, in cooperation with the Ministry of Agriculture, noting that among those incentives is an increase in credit categories for agricultural crops irrigated by spray and drip by 25%.
He noted that the ABE was the first bank to sign cooperation protocols with a number of agricultural societies, most notably the General Cooperative Society for Agrarian Reform and the General Cooperative Society for Reclaimed Lands, as well as the sub-associations of the two associations which exceeded 1,000 associations, with agricultural land areas amounting to about 2.7 million feddan.
