Private sector can turn crisis into investment opportunity: Samir

Mohamed Alaa El-Din
9 Min Read

Shady Samir, President of SELECT International Group, believes the coronavirus (COVID-19) pandemic has had a positive local market level impact. It presents an opportunity to start using local products instead of turning to imported, with the potential economic benefit coming in light of the interrupted supply chains from China.

Talking to Daily News Egypt, Samir said that the private sector should continue with its work and production outputs to turn the current crisis into an investment opportunity.

Shady Samir, President of SELECT International Group

What are your initial evaluations of the economic consequences due to the coronavirus outbreak on both the local and global levels?

COVID-19 is a tragic global crisis that is spreading at an extremely high rate, hitting the largest economic power, the US, which has become one of the biggest break out points of the virus pandemic today.

For the first time in many years, the whole world is being tested in how it manages the same crisis at the same time. And it’s one of the biggest challenges that has happened in years.

It is true that the Egyptian economy will be affected, but the government has still managed to pull off some distinguished decrees aimed at refreshing the status of investment, and restoring the confidence of investors in the economy. This has led to a better performance of the EGX (Egyptian Exchange) and that is an indicator of the performance of the economy at the moment.

With the recent economic developments that have taken place through the reform plan, the economy is showing great flexibility handling the crisis and withstanding its hits. It has enabled the government to support businesses and citizens by reliving part of the taxes for the upcoming six months, which has ensured the sustainability of companies, especially small- and medium-sized enterprises that have a bigger chance now, more than ever, to grow due to their low operational costs.

In the long run, Egypt has opportunities that can contribute to an even stronger comeback by endorsing the exports of the country, and at the same time, exporting powers such as China might withdraw a bit. This will pave the way for Egyptian exports to gain more solid ground and the confidence of more importing countries

To what extent do you see the government decrees serving the current situation? Do you think these decrees are sufficient?

The announced governmental decisions are ‘unprecedented’ ones, that showed the ability and power of the state in dealing with crisis in times when other developed countries have failed. All the decisions have placed the Egyptian citizen and his health at the forefront of the state’s concerns, considering the citizen’s health and safety a national security issue.

On top of the historic announcements during this phase, is the Central Bank of Egypt’s (CBE) postponement of loan instalments and credit liabilities for six months. This is in addition to cancelling fees and commissions applied on withdrawal and deposit processes from ATMs for the same period and providing the credit limits to fund working capital. This exceptional bundle of the CBE’s decisions proved its power and effective multiple roles, including economic, financial, banking and even social, to reduce the subsequent burdens on the shoulders of the citizen.

What economic mechanisms should be followed to revive the economy following this crisis?

The Egyptian government has a strategic plan to fight this global crisis with minimal local losses, which is reflected on the strategic decisions announced over the past few weeks. However, a bundle of economic decisions should follow to set a defined plan for the economy’s revival, ensuring protection of economic and financial relations between workers and business entities, financial institutions and their stakeholders, as well as suppliers and end customers.

As for the private sector, it has always been the strategic partner of the government, thus different corporations in various sectors should join forces to overcome this economic crisis and support the national economy. This can be done by pursuing business commitments and regular production to transform the crisis into investments opportunities.

The CBE has allocated EGO 20bn to support the Egyptian stock market. In your opinion, to what extent will this decision impact the economy?

The decision by President Abdel Fattah Al-Sisi to pump EGP 20bn through the CBE to support the Egyptian stock exchange came about to affirm the stability of businesses. It reflects on the performance of the stock exchange that thrives due to the confidence of investors in the market indicators. Furthermore, the approach of alleviating stock exchange pressures is rather an effective one as it will encourage share purchases, thus contributing to supporting the economy.

Among the other positive results is the recovery of the market capitalisation of shares of companies listed on the stock market. This is estimated by EGP 19.6bn from the total losses since the beginning of March and the increase of the main index of the market ‘EGX 30’ by 5.92% which is equivalent to 545 points, to reach 9750 points. This is in addition to the transaction exchanges that reached EGP 793m through dealing with almost 251.6 million securities that took place through the implementation of about 25,600 purchases and sales transactions

Do you think the government should postpone its public offerings? Or do you think that this is good timing with a positive long-term economic effect?

Rising opinions on the world economic crisis show that the situation now is more challenging than ever. Egypt is still performing very well compared to other nations and would remain in this position by scrutinising and analysing the situation further. The issue of the public offerings on the stock exchange has been one of the priorities of the government, but it has been subject to meticulous study for a long time now and it would be wise to wait until the current status is clearer. Therefore, I think the government should postpone its EGX offerings until the second half of this year to have time to study the country’s internal conditions and the market status after the changes caused by the outbreak of the coronavirus. And it is actually an expected decision by the committee in charge of the government’s offerings that will look for stability after the consequences that left negative repercussions on markets’ economies. However, the government has still applied a number of effective initiatives in the banking sector, like lowering interest rate, decreasing energy costs and abolishing the stock exchange tax. All of these are seen as bold and effective measures that contribute to relieving the economic burden off the shoulders of both the market and the citizens and paving the way to an even stronger comeback following the crisis.

Do you advise investors to direct their investments to gold?

No doubt that that investment area has become a concern nowadays, as some investors seek buying real estate, others prefer gold and a few resort to hoard currencies.

Gold is always a safe option as it protects money from inflation factors of other commodities like the changing price of oil, the dollar etc, and therefore it is considered the most stable investment area, especially when its price declines at a certain time of the year, it flourishes again in the long run.

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