The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved $510 million funds for two infrastructure projects in Egypt.

Co-financed with the Government of Egypt and other lenders, the projects will help the country transition to a greener, cleaner economy.

Egypt is currently the only AIIB member outside of Asia to receive funding from the Bank. With its strategic location between Europe, Africa and Asia and its abundant wind and solar resources, with the right investments in cross-border transmission connections, Egypt has the potential to become a regional green energy hub.

To support its potential, AIIB is investing in the Benban Solar Park to help meet domestic energy demands, stabilize the grid and scale back use of expensive and polluting hydrocarbons.

“During the Board of Directors’ recent visit to Egypt, government officials highlighted their efforts to revitalize the country’ sagging energy infrastructure and transform its power generation and transmission capacity,” said AIIB President Jin Liqun.

“We see a lot of opportunity in Egypt’s renewable energy sector and will support the government’s goals of exporting clean energy to its neighbors. This is aligned with our priorities to invest in sustainable infrastructure and enable cross-border connectivity,” he added.

According to the Global Infrastructure Hub, there is a $230-billion infrastructure investment gap across all sectors in Egypt. Like much of Asia, the gap in Egypt cannot be filled through public sector money alone.

Private sector investment is required to build critical infrastructure needed to support Egypt’s growth. Under its Strategy on Mobilizing Private Capital for Infrastructure, AIIB is examining opportunities to address Egypt’s infrastructure financing gap.

“To address Egypt’s infrastructure gap, the government is working on enhancing macroeconomic stability to accelerate a higher private investment path, modernizing PPP legal and operational framework, and facilitating additional funding from international institutions at preferential rates, including from AIIB,” said Egypt’s Minister of Finance Mohamed Maait.

Strengthening the implementation capacity for public-private partnership projects has been identified as a way to attract private sector investors to Egypt. Lack of capital for smaller projects is also a challenge for the local market.

“The need to mobilize private capital is not unique to Egypt, but we must come up with an approach that is responsive to local market conditions,” said President Jin. “With our peer multilateral development banks and the Government of Egypt, we are actively looking at ways to address private sector investment barriers.”

To date, AIIB has approved two projects in Egypt, namely a $300-million loan to improve rural sanitation services for 892,000 people in 178,000 households in Egypt. The project is co-financed with the World Bank.

The other is Up to $210 million in financing for the Benban Solar Park to tap the country’s renewable energy potential.

This project will increase solar power generation capacity, reduce dependence on hydrocarbons and help Egypt meet its commitments under the Paris Agreement. The project is co-financed with the International Financial Corporation and other lenders.