CAIRO: The Lord Mayor of the City of London, David Brewer, is visiting Egypt this week with a business delegation to meet local companies and government officials, including President Hosni Mubarak, Prime Minister Ahmed Nazif and a number of other ministers.
Brewer heads up government services for the Square Mile, an area in central London within the ancient perimeter of the city that is now home to a number of financial institutions. He is therefore effectively the ambassador of the United Kingdom s financial sector and spends much of his time traveling abroad to promote banks and related businesses that are based in London.
This is the second business-related visit of a senior U.K. government official in the past three months, following that of the Duke of York – as Special Representative for International Trade and Investment – during the Egypt Invest conference last November.
Brewer s visit covers four areas: investment, public-private partnerships, mortgage lending and insurance.
The U.K. is currently the largest non-Arab investor in Egypt, with some $18 billion invested in oil, gas and other projects. Brewer estimates that this will increase to $25 billion in the next five years. We re very proud that the U.K. is the biggest [non-Arab] foreign investor in Egypt, said Brewer. That s a position that we very much intend to hold.
The increase of foreign investment from the U.K. and elsewhere toward industrial projects in Egypt is supported by changes in the financial sector. The government has implemented a number of reforms to the financial sector, including a substantial increase in the minimum capital required for banks along with plans to merge two state-owned banks and sell another.
The objective of these actions is to consolidate a banking sector which has been historically dominated by four public banks, with a number of smaller private banks that are unable to support large industrial projects. Financial services are supporting the industrial development in the country, said Brewer. Financial services, also, in its own right, can be an important source of employment.
The delegation also visited the Smart Village yesterday. This is particularly relevant in light of the government s plan to establish an area for financial services within the Smart Village to which the stock exchange and several financial and investment authorities will move.
Drawing on London s experience, Brewer says that concentrating professionals in a specific area such as the Smart Village creates a cluster affect where lawyers, bankers, insurance professionals and other related lines of work interact frequently and cooperate closely together.
Brewer met with the Governor of the Central Bank Farouk El-Okkda on Sunday and is enthusiastic about the financial sector developments in Egypt. We see Cairo becoming the regional financial hub, said Brewer. There s no doubt about it. That s one of the ambitions of all my people in the group.
At present, the majority of banking and insurance business in the Middle East and North Africa are managed from London. Beirut, Bahrain and Dubai are all contending to become centers for financial activity in the region. We see this as the staging point, much more than somewhere like Dubai or one of the Gulf financial centers, said Brewer.
While substantial progress has been made in reforming the banking sector, the government s plans to liberalize the insurance industry have yet to materialize. According to Brewer, insurance reform commonly lags behind banking reform in most countries he has visited.
Having met the Insurance Supervisory Authority, Brewer says that he is nevertheless impressed with preparations that have been made for amending insurance regulations. The government has prepared a new draft law for the sector that it plans to refer to parliament within the next two months.
The new law proposes a reduction in taxes on insurance premiums from 26 percent to 13 percent. It will also allow foreign companies to provide corporate insurance. If foreign brokers can get more involved in the domestic market, Brewer explained, they would make more products available to industry which would give protection to different types of risk.
Unlike the banking sector, where a number of domestic banks have been sold to foreign investors over the past year, Brewer believes that Egyptian insurance companies are unlikely to be attractive for acquisition by foreign businesses.
Experts on public-private partnership projects are also accompanying Brewer. These experts, including members of HSBC and law firm Trowers & Hamlins, held seminars at the Ministry of Investment yesterday in which they shared their experiences with private-sector partnerships with the government in the areas of transport, housing, water and waste management.
That s been very successful for us in the United Kingdom going back to Mrs. Thatcher s government, when there was a lot of privatization, said Brewer. And this meant also that we get private money investing in public projects, like hospitals, schools, railway lines [and] toll roads. The principle is that the money is put up, is invested and the investors get there money back over, say, a 25-year period, because rent is paid or tolls are paid.
* The delegation s main interest in Egypt is to participate in the process of economic reform and privatization by providing consulting, financial and insurance services. They are also observing the government during their visit. In this regard, Brewer is pleased with the presence of several businessmen in the cabinet. That sends out fantastic signs and encourages things to be done, said Brewer.
* Brewer stresses that, by following through with their plans and announcements, officials give confidence to the international investment community. Economically, we see ministers who are saying they are going to do things and then doing them, said Brewer. They say two years ago it was words, now it s deeds. It s a city which is full of promise and a country which is fulfilling those promises. People see that and they pass it on.