ADB's first private loan goes to Egyptian car plant.

Position:African Development Bank
 
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A private-sector Egyptian company, JAC Corporation, has received a loan of 10.19m units of account ($14m) from the African Development Bank (ADB) for the production of passenger cars with technical assistance from Citroen SA of France.

The plant is to produce some 25,000 passenger cars per year at full capacity. The loan is repayable in six years, including a grace period of two years.

The sponsors submitted to the ADB in August 1992 a feasibility study of the project, prepared in collaboration with a consultant from General Motors (GM).

The loan to the car-assembly project is the first loan provided through the ADB's private-sector window directly to the Egyptian private sector, without governmental guarantees. The principal shareholders of the assembly plant are Emad Mokhtar, Magdi Mokhtar and Mamdouh Mokhtar, all Egyptian.

Motorcars currently in use in Egypt consist of a wide array of brands and types, which tend to be old and in poor condition. The country has a shortage of about 1.3m cars, caused by low domestic production and the ban on car importation which was in effect until August 1993. The car industry in Egypt began 30 years ago when the government established El-Nasr Company to produce cars with components from the then-Yugoslavia and from Turkey

But the project performed poorly, suffering from outdated technology and operating at a low capacity-utilisation level. It now produces about 7,000 cars per year.

American Arab...

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