Up with the economy

11-03-2015 01:33 PM

Fady Labib

As Egypt gears up to the Egypt Economic Development Conference (EEDC) to be held in the coastal resort of Sharm al-Sheikh from 13 – 15 March, Egyptians have been holding high hopes that this conference would work to attract the foreign investment needed to get the economy up from the beating it took in the wake of the Arab Spring uprising in January 2011. Back then Egypt had a pre-Arab Spring growth rate close to an annual 7 per cent and had foreign currency reserves of some USD36 billion. Today, Central Bank of Egypt (CBE) figures place the reserves at USD15.4 billion and, according to Head of the Central Agency for Public Mobilisation and Statistics Abu-Bakr al-Guindi the growth rate has risen to 2.2 per cent after its all-time low of 0.4 per cent after the Arab Spring in 2011.

Much is needed for Egypt to reach her full economic potential. Never in modern history did the country face so many challenges on the economic, political, social and security levels; because the challenges are so great Egyptians agree that President Abdel-Fattah al-Sisi is the right person to lead Egypt into a better future.

The Roadmap to Egypt’s future established jointly by representatives of all the sectors of the Egyptian society in the wake of the 30 June 2013 Revolution which overthrew the post-Arab Spring Muslim Brotherhood regime charted the required political change. It was directly put into action, and Egypt now has a new Constitution, a secular President, and is gearing up for parliamentary elections. But the greatest challenge ahead is economic development.

Collaborative effort
The idea of an international economic conference was first put forward by the late King Abdullah of Saudi Arabia, who suggested holding a conference where major international companies would gather to explore promising investment opportunities in Egypt.

To prepare for the EEDC, the cabinet of Prime Minister Ibrahim Mahlab, primarily the ministerial economic committee, met representatives of local and international business organisations, especially during the three-day economic forum organised last September by the Akhbar al-Youm Academy in Cairo. The meetings opened communication channels with businessmen and investors, the backbone of economic development. They unanimously stressed the importance of removing all impediments to investment in order to put Egypt’s economy back on track, and insisted that the country should be overtly committed to the principles of free economy and social responsibility.

Ahead of the EEDC, the government teamed up with legislators, businessmen and economists to issue a new unified investment law guaranteed to get the wheels of investment rolling. It practically puts an end to longtime investor disgruntlement with the notorious red tape in Egypt by instituting the ‘one-stop shop’ through which all investment requirements may be resolved at a single window. It regulates the relationship between investors and the Egyptian State, ensuring the rights of each in a given partnership and in case of its termination. The law has met with much praise from businessmen and investors; it remains to be seen, however, how it will be put into action once the bylaws are issued in the coming three months. But almost everyone concerned agrees that the State’s attitude towards investment and investors is so far extremely positive.

A new law is also expected soon to allow private investment in the fields of infrastructure and renewable energy.

Legislative groundwork
Even though the legal groundwork established to attract investment is so far encouraging, more has to be done. Investors have been calling for a more well-defined tax law, a broader investment base, and a labour law less confining to employers. The latter demand, however, is problematic since it involves privileges that had been granted to workers since the 1960s during the heyday of the socialist era in Egypt.

The recent rules placed by the CBE to put an end to manipulation of the currency market in Egypt by a handful of exchange companies, and in the process stabilise the money markets in the country, have been met with wide praise in financial circles. It is no secret that investors seek predictable exchange rates to plan for future investment, and the CBE rules are seen as a step in the right direction since they have practically attracted the money flow from the black market and into the banking sector. Even though it will take more time for the full force of these rules to be felt, financial experts insist the rules have already made available a pool of foreign currency for the banking sector to finance investment.


Attractive projects
Perhaps searching will help. buy essays online http://dynoimports.com.au/ http://ecoton.org/ An investment map of prospective projects in Egypt was drawn for promotion at the EEDC. Among them were national projects already under execution such as the New Suez Canal and the International Logistics Centre for Grains in Damietta. Other projects included the Airport City: a trade, shopping and entertainment mall over some 16 million square kilometres near Cairo Airport expected to generate 500,000 job opportunities. It should include models of tourist sites, shops selling international brands, an amusement park, a health centre, a convention centre, and a residential area of affordable as well as luxury housing.

The technology sector offered projects with investment values of up to EGP30 billion, among them an information technology zone in the southern Cairo suburb of Maadi with an expected investment of EGP3 billion, a digital documentation project for the Documentation and Contracts Registry (which registers ownership, contract, and legal documents) with an investment value of EGP650 million, a digital commercial register project with an investment value of EGP700 million, and a project for smart electricity metres with an investment value of EGP6 – 7billion.

Plans were announced to revive existing technological plans that never saw light, among them the Technology Valley, modelled after the famous Silicon Valley, in Ismailiya on the banks of the Suez Canal. The project is now affiliated to the Suez Canal Corridor Development Project (SCCDP) which should turn the area into an international logistics hub and regional trade launch pad to Middle Eastern and African markets. Major Internet providers were invited to establish international Internet services centres to best profit out of the 17 marine cables that pass through Egypt. The expected annual revenue: EGP1 billion. The project aims at creating an industrial and urban community that relies on the high-tech, programming and electronics industries.

Trading partners
Participating in the EEDC are more than 2000 individuals representing firms from 121 countries: 20 Arab countries, 43 from Africa, 36 from Europe,15 from Asia, and seven from North and South America. The World Bank is participating with a high ranking delegation.

A number of foreign investors, however, needed little prodding to participate in the EEDC. According to Investment Minister Ashraf Salman, direct foreign investments in Egypt reached USD1.8 billion during the first quarter of the current fiscal year. The Minister of Investment explained that, since Egypt is considered the gateway to African markets, investing in Egypt enabled investors to access a market of 1.6 billion consumers, and the banking system in Egypt was sufficiently strong to finance any projects.

Supply Minister Khaled Hanafi, during talks with the Egyptian European Business Council, said that the EU is Egypt’s first business partner. “Egypt’s economic reform relies on strong commercial allies who would help her fix the economy. The most important ally is the EU which also enjoys geographic proximity to Egypt,” Dr Hanafi said.

French companies expressed great interest in investing in the Egyptian market; the French delegation to the EEDC is headed by French Minister of Finance Michel Sapin. Egypt’s Minister of Commerce and Trade Mounir Fakhri Abdel-Nour said that Egypt is a main destination for French investment in the Middle East and Africa. France is the sixth largest investment partner for Egypt globally and the third on the European level with an investment value of USD3.4 billion (3 billion Euros) during 2014, according to France’s ambassador to Cairo Andre Parant.

Mr Abdel-Nour stressed Egypt’s importance as a vital global distribution centre for Egyptian-manufactured French goods because of Egypt’s trade agreements with Arab, Asian, COMESA and EU nations.

BP did not wait for the EEDC
The Spanish delegation at the EEDC is headed by José Manuel Soria, Minister of Industry, Energy and Tourism and Secretary of State for Trade Jaime Garcia Legaz. Current Spanish investment in Egypt focuses on industry, tourism, construction, information technology and petroleum, as well as money and banking.

According to investment expert Fouad Hamed, the United Kingdom is the second largest foreign investor in Egypt after Saudi Arabia. British companies, Mr Hamed said, had owned cumulative investments in Egypt since 1992 that now amounted to more than USD22 billion, 60 per cent of which were in the oil and gas sector. This makes the UK an expert in the Egyptian market’s services and goods, in addition to its experience in investment in Egypt.

Only last week, right before the EEDC, British Petroleum (BP) announced it had signed the final agreements of the West Nile Delta (WND) project to develop 5 trillion cubic feet (tcf) of gas resources and 55 million barrels (mmbbls) of condensates with an estimated investment of around USD12 billion.

Production from WND is expected to reach up to 1.2 billion cubic feet a day (bcf/d), equivalent to about 25 per cent of Egypt’s current gas production and significantly contribute to increasing the supply of energy in Egypt. All the produced gas will be fed into the country’s national gas grid, helping to meet the anticipated growth in local demand for energy. Production is expected to start in 2017.
“BP is proud of its record in Egypt over the past 50 years and we are looking forward to many more years in the country,” said Bob Dudley, BP Group Chief Executive.

Watani International
11 March 2015


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