Gafi: More domestic investment needed in Egypt

Abdel-Rahman Hussein
3 Min Read

Emphasis on small and medium sized businesses

CAIRO: The General Authority for Investment and Free Zones (Gafi) increased its emphasis on domestic investment alongside attracting Foreign Direct Investment (FDI) in the past year, chairman Dr Ziad Ahmed Bahaa El Din said.

“In the past we focused on investment from abroad mainly, but last year we decided to also focus on domestic investment, particularly in the governorates, El Din said in a meeting with the press Thursday at the Gafi head office.

To this end, Gafi created an Investment Sector in the Governorates headed by Alaa Omar, and also galvanized the Funding Lease system for the benefit of small and medium sized businesses.

El Din said “There is growth in the economy and in FDI, but this hasn’t yet been divided amongst the populace in a balanced manner. The sector of the population that Gafi can help are the small investors and so the Investment Sector in the Governorates is an attempt to redress the balance.

Therefore, a restructuring of the Gafi offices has occurred in the governorates and a training center was added in the Sohag office.

Additionally, the Funding Lease system,

will also support these types of investors as an alternative source of funding, according to El Din, as there is a banking bias towards larger firms which are better able to satisfy the terms of any bank loan. This bias was due to legal restrictions, he added.

The fundamental difference with the Funding Lease system lies in ownership. The Funding Lease firm owns what the funds are paying for until repayment is given in full even though they are at the investor’s perusal.

So far, 238 companies have registered for the Funding Lease program at Gafi, of which 78 have already started using it.

The Funding Lease program saw a 50 percent increase in the fiscal year 2005-6 to LE 3.8 billion, up from LE 2.5 billion for the preceding year 2004-5. Originally introduced in 1995, by 2005 the total volume of contracts in the Funding Lease program totaled LE 15 billion.

Gafi intends to extend further efforts in this direction, in order to iron out any impediments to the investors.

Vice Chairman of Gafi Nevine El Shafeaay said “Some companies feel that the interest rates are still high, as the Funding Lease firms can be originally borrowing from the banks, so we’re looking into setting up an Operating Lease system.

El Din explained that the interest rates are higher because guarantees are more flexible. However, he stressed that there was more yet to be done.

“There is still more that needs to be done in this domain, he said.

Share This Article
Leave a comment