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Wednesday, 30 January 2019

Fitch pours cold water on Egypt’s new administrative capital railway

Fitch pours cold water on new administrative capital rail link: Plans to construct an electric railway line connecting greater Cairo to the new administrative capital (NAC) face “serious obstacles,” Fitch Solutions said in a report (paywall) last week. Egypt recently agreed to borrow USD 1.2 bn from China’s Export-Import Bank to cover part of the construction costs, the first tranche of which will be disbursed in February. Fitch says that it is uncertain about the economic viability of the line, given the fact that the new capital remains devoid of permanent residents, adding that there is not yet demand for such a major infrastructure project. Fraught negotiations and financing issues are also likely to result in “lengthy delays,” making the transport minister’s two-year timeframe look incredibly optimistic.

Fitch needs to re-think this one. Surely we’re not the only ones who remember, 20 years ago, the endless gnashing of teeth about how New Cairo and Six of October would never become viable municipalities because there were no mass transit links to the rest of Cairo? In worrying about financing and delays? Fitch is on point. But in questioning whether mass transport should be built in now? They’ve missed the boat.

Healthcare looking “increasingly attractive” to foreign investors, says Fitch: In a more optimistic evaluation (paywall), Fitch says that the government’s commitment to reform is making the healthcare and pharma sectors increasingly attractive to foreign investors and multinational companies. Plans for a universal healthcare system, the creation of a new pharmaregulator, and the 2017 investment law will “boost demand … improve the business environment and incentivize foreign investment,” they write. A word of caution: The country’s “restrictive” med pricing system and the aftereffects of the float of the EGP will continue to weigh on the sector’s profitability for foreign investors.

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