Back to the complete issue
Thursday, 3 May 2018

Business leaders watching Egypt expect investments to “take off” as reforms bear fruit

Business leaders and analysts watching Egypt expect investment to “take off” as the government’s reform program begins to bear fruit, writes the Financial Times’ Heba Saleh as part of a special series of reports on investing in the Arab world. Investors, including US multinationals are “looking with interest” at the Egyptian market now that the government has adopted legislation such as the Bankruptcy Act and addressed power shortages. Many of them have been watching from the sidelines to ensure that the government will push ahead with the necessary reforms, says AmCham President Tarek Tawfik.

The lag between the implementation of reforms and the inflow of FDI is understandable, says EFG Hermes’ head of macroeconomic analysis Mohamed Abu Basha: “It takes time for demand to recover after macro adjustments like the one Egypt went through … starting next year, we will see a pick-up of FDI as demand rebounds.” Abu Basha expects demand to continue rising as interest rates drop, creating the “perfect storm” for investment. Business leaders are still complaining, however, about bureaucracy and competition from state institutions expanding their involvement in the economy, Saleh notes.

The series also looks at how fiscal strains and economic realities have been weighing down Saudi Arabia’s reforms. Saudi’s economy has been slowing since the oil price crash of 2014, slipping into a recession last year and compounding very weak growth in the non-oil sector in 2016. Foreign direct investment in Saudi Arabia fell to USD 7.5 bn in 2016 from USD 8.1 bn in 2015, writes the FT’s Simeon Kerr. “Lost in the optimistic noise are the considerable fiscal difficulties that remain across the Gulf, along with bureaucratic challenges, deteriorating credit standings and rising interest rates,” says Nomura Asset Management Middle East CEO Tarek Fadlallah. Optimism still pervades the Saudi story, with Kerr noting the importance of the FTSE emerging market classification and the upcoming MSCI upgrade.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2021 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; and Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Abu Auf (tax ID: 584-628-846), the leading health foodmaker in Egypt and the region.