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Thursday, 6 December 2018

EBRD has appetite for Egypt’s privatization program, sees Egypt as one of its top two investment destinations in 2019 –Heckman

EXCLUSIVE- Egypt was among the top two recipients of EBRD’s investments worldwide in 2018, Managing Director for the Southern and Eastern Mediterranean Janet Heckman told Enterprise in a recent sit-down. Edited excerpts:

We expect to sign the final contracts for a EUR 148 mn loan for the Kafr El Sheikh Kitchener Drain depollution project at the Africa 2018 Forum, which kicks off on Saturday, 8 December in Sharm El Sheikh. The forum will also see us signing an MoU with Falak, a startup accelerator, to provide technical support and a training program on developing startups and incubators in Egypt. We’re taking a very active role at the forum and will take advantage of the gathering to sign several small private sector transactions.

Overall, we plan to invest some EUR 1.2 bn in Egypt in 2019. We’ve primarily been investing in the transport sector, which is key in making Cairo a more livable city. The EBRD is also keen on green investments, which accounted for around 65% of our projects this year. Our other investments are in local private sector companies that are looking to expand their operations, mostly in Africa. We’re seeing a lot of Egyptian companies, such as Elsewedy Electric, eyeing investments in countries like Ethiopia and Kenya — and finding great success there.

We’ve had an excellent year here in our areas of investment, including infrastructure, renewables, agribusiness, manufacturing, and services. We see that foreign investors, especially from the Gulf, are drawn to Egypt for its big population of 100 mn, growing consumer sector, and variety of trade agreements. Egypt’s reform program has encouraged us to up our investments in the country and we’ve expanded our operations here and will continue to do so as long as the reform momentum is maintained.

Curbing debt, spurring private sector growth are key: The Egyptian government has made extremely difficult decisions. It has not been easy to put in place such an ambitious reform program and follow through with it. Going forward, what’s really critical is tackling debt. We share the same view as the IMF and other international financial institutions that the private sector is really the best way for the state to avoid incurring additional debt. An important factor here is for the CBE to resume its monetary easing cycle; the current interest rates of 16-17% are very demotivating for the private sector.

We are concerned about the state privatization program being put on hold, since it is one of the key sources of financing to plug the EGP 10 bn budget gap. The government has reiterated its commitment to the program, but there remains of question mark on the timing. The program is very important for the EBRD; we see it as a means of increasing private ownership and efficiency.

We remain interested in buying a stake in any of the entities in the program — Banque du Caire is of particular interest.

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