PBDAC can reach nearly half the Egyptian population if properly supported by the government, CBE: Elkosayer

Hossam Mounir
15 Min Read
Elsayed Elkosayer, the head of the Principal Bank for Development and Agricultural Credit (PBDAC)

Elsayed Elkosayer, the head of the Principal Bank for Development and Agricultural Credit (PBDAC), said the establishment of major projects in Egypt and the impact of these projects will become clear in the upcoming period.

In his interview with Daily News Egypt, Elkosayer said that the lack of foreign exchange is one of the main problems limiting Egypt’s economy, adding that this is the time when everybody should be supporting the state through the crisis.

He emphasised that Egypt having to resort to the IMF is necessary in order to provide foreign exchange on the one hand, and to obtain a quality certificate for economic reforms on the other.

What is your evaluation of the current state of Egypt’s economy?

Any economy would be impacted by transitional phases and unusual events occurring in the country, as is the case with Egypt. Compared to neighbouring countries, our conditions are a lot better.

Even though we managed to overcome the events of the past five years, we still have some troubles—most importantly the lack of foreign exchange resources. This shortage was the result of the poor conditions and unfortunate events we are continuing to experience in Egypt. It is also the result of conspiracies from countries that do not wish to see Egypt advance.

Do you believe there are conspiracies about Egypt? Why?

Yes, I believe there are many conspiracies surrounding Egypt, especially after the 30 June Uprising in 2013.

Opinions and decisions are no longer imposed on Egypt. It is now able to stand up to everybody and say yes or no. It is heard and feared. In other words, Egypt’s return to its natural place in the international community is making many other countries very anxious.

Despite all those conditions, we are still trying to succeed and overcome crises. This alone is considered an extraordinary success.

In your opinion, what are the strengths of Egypt’s economy?

Egypt is full of promising economic potential. It is also the largest consumer market in the region.

Egypt also has a distinctive geographic location with undiscovered natural resources. It contains a third of the world’s monuments and is considered the second largest state in the world in terms of the rates of investment revenues.

If Egypt has the potential, what is required in order for its economy to actually move forwards?

There are reform steps that must be taken in order to prepare the investment environment. In my opinion, the government has already started working on this.

First of all, implementation of the one-stop shop system must be sped up. Secondly, thorough research must be carried out in order to look into the tools and ways of increasing foreign exchange.

I have some suggestions in this regard, in the tourism sector in particular, as it is the most attractive sector for foreign exchange considering available infrastructure. Moreover, it does not require any investment or effort as is the case with other sectors. However, it does require a change in the mentality by which we deal with tourists.

For example, why do we insist on hiring foreign agents for Egyptian travel agencies? Why not use Egyptian agents who will be more loyal to their country, especially as compared to many other countries in the region, Egypt is much more peaceful and stable.

This also makes me wonder, why do we not benefit from the opportunities that become available to us? Why have we not used the crisis in France or Turkey to attract tourists who preferred these countries as a tourist destination? Why do we not present Egypt as an alternative to tourists?

There are efforts to help the economy move forward but we also need non-traditional solutions in order to overcome many of the crises we are facing, most importantly the crisis of foreign exchange.

In your opinion, what projects or activities could quickly help Egypt’s economy move forward?

There are many projects that can help achieve this, such as the Suez Canal Development project, the New Administrative Capital, the Golden Triangle, the North Coast development, the 1.5m-acre cultivation, Technology Valley, road and electricity projects, and many other major projects that can accommodate a large labour force and limit unemployment. They will also have a great impact on Egypt’s GDP.

Many believe that these projects will not have an immediate or apparent impact on the economy and that it would be better to delay them. What is your response?

Maybe the positive impact of these projects will not be immediate, but they will most certainly have a great impact later. The state is working on many aspects and is trying to save time. If we remain in this state of recession and slowdown, at some point we will end up with no national projects.

There is a goal behind implementing these projects at the current time. The projects are considered investment incentives which enable the state to attract foreign investments—something we are in great need of at the present time.

The state’s trend towards establishing major projects to save energy is also an important issue. The energy issue is one of the major issues facing investors.

The state is keen to establish residential areas far from the valley and Delta, which are jam-packed with citizens.

Due to the high cost of living, the average citizen often cannot see the government’s achievements. What is the solution for this?

The government is required to augment the protection programmes for low-income citizens and keep a close eye on markets. It also needs to step in as a market-maker to control prices. The entire subsidisation system must be looked into in order to deliver the benefits to those who truly need them.

What are the major problems the economy is currently facing? How can these issues be solved?

The lack of US dollars—and other foreign currency—and the fact that it currently has two prices in both the formal and informal markets is one of the major issues we are facing now.

This issue is the responsibility of the entire state not just the Central Bank of Egypt (CBE). It is not the CBE’s job to provide dollars, but to manage the exchange market and its foreign reserves; hence, we cannot hold it entirely responsible for the lack of dollars reserves.

The CBE has taken many procedures to rationalise the use of the dollar and to focus on importing basic goods and production necessities. It has also provided billions of dollars throughout the past period in order to meet the different needs of the state.

It is necessary to stress the importance of every person playing his or her role to overcome the dollar crisis. Work and production are necessary. We must reduce our usage of imported goods and make strict decisions to not import goods that have local substitutes.

Egyptians working abroad must increase their transfers of foreign exchange and carry this out through banks—not through the informal market.

The government should support the CBE in achieving its goals by increasing foreign exchange resources, and helping it execute the tenders it launches to support different economic fields, most importantly small- and medium-sized projects (SME).

Foreign investors in particular want to know their rights and the law they are subject to, as well as how stable they are. These are points that must be taken into serious consideration in order to attract foreign investments again, especially as there is renewed confidence in Egypt on the part of international institutions.

Regarding international institutions’ renewal of confidence in Egypt, what is the importance of the International Monetary Fund’s loan to Egypt in your opinion? What do you say to parties who criticise Egypt resorting to borrowing from the fund?

Egypt is considered one of the countries that are part in the foundation of the International Monetary Fund (IMF), as it has a share in it. There is no shame in resorting to the fund in order to obtain foreign exchange, especially as it comes with low returns and long-term repayment options.

What is forcing us to launch bonds in international markets with returns of 5-6%, or even more, when we can just borrow from the IMF with much lower returns?

Why borrow from abroad with five-year terms when we can obtain the loan from the fund with terms of 15 and 20 years?

Resorting to the IMF fund does not have an alternative. It will provide us with both foreign exchange and a certificate of confidence in the Egyptian economy. This is considered a message of assurance to the entire world that the reform programme Egypt has prepared is successful, and that Egypt is on the right path.

This certificate will result in decreasing the costs of borrowing from abroad by launching bonds, and will also lead to improving Egypt’s credit ranking.

In your opinion, what role can banks play to help advance Egypt’s economy?

I always say that the banking system is powerful—it has the required liquidity to meet the needs of different projects, and it also has the required expertise. However, we need to increase saving rates in order to increase investments. The banking system is able to attract more savings owing to the confidence it has garnered over the past few years.

What about the role of PBDAC in serving the economy?

PBDAC is one of the largest banks specialised in serving agriculture in the world. It is competing against other large banks specialised in serving the sector, like the Dutch bank Rabobank, French Credit Agricole, and the Agricultural Bank of China.

The bank can reach about 50% of the population with its service. The number of banking clients is nearly one million currently. Farmers represent about six million citizens, in addition to temporary agricultural labour estimated at four million, meaning that there are at least 10 million individuals who belong to the agricultural sector.

If we assume that each person of the 10 million supports four or five other individuals financially, this means that if the bank activated its role with the highest possible efficiency, it could serve about 40% to 50% of Egypt’s population.

The bank’s management is now looking into ways to enhance relations between the bank and farmers in order to offer them and their families all necessary services.

Currently, we are preparing the bank’s infrastructure to enable it to take part in the initiatives launched by the CBE to improve the economy, most importantly the initiative to finance SMEs.

There is a point I would like to stress: what we are after is the approval of the CBE’s decision by the parliament, and that PBDAC joins the CBE. This will provide PBDAC with benefits that will help enhance its role.

Right now, the bank is focusing all of its activities on a group of services as part of its responsibility to Egyptian farmers, including agricultural loans, products in the food sector and services related to agricultural food industries.

The bank is also taking part in the national project “Mashrou’ak” (Your Project) which aims to provide jobs for the youth demographic in villages, neighbourhoods, cities, and districts all over the republic. The aim is to help them onto the right track and bring up a generation of young investors.

During the upcoming phase, we hope to develop these products and create a variety of services to maximise the bank’s role in the field of serving Egyptian farmers; hence, enhancing the entire economy.

The bank owns a network of nearly 1,210 branches around the republic. This gives the bank the benefit of expansion, unlike other banks in Egypt.


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