The Egyptian Junior Business Association (EJB) has developed a vision to improve the investment climate in Egypt and attract foreign capital during the next 6 months, as the Egyptian economy suffers due to global crises. Accordingly, the EJB believes that ensuring stability of foreign exchange market is the main determinant in all developing countries to facilitate the exit of investor’s foreign exchange.
The EJB noted that there is a fear among foreign investors of entering the local market in light of the shortage of foreign exchange, which makes it difficult to transfer funds abroad. Hence, large fluctuations in the exchange rate without control represents great losses for foreign investment in general, consequently, there is a need to control the exchange market because it affects many production derivatives.
The EJB called on the Central Bank of Egypt (CBE) to set its monetary policy for at least a year, whether those policies are deflationary, or otherwise. The clarity of vision enhances confidence of the national economy, and ensures restricting aggregate demand to address inflation levels on the one hand, and move away from the market from recession while ensuring the continuation of buying and selling processes at specific levels to not cause stagnation. In addition, the state should enhance production incentives and ensure regularity of export subsidy dues payment. Along with providing foreign exchange, and stability of the market on the ground through policies and marketing support for investors and exporters, in light of the impact of the movement of buying and selling due to stagnation problems in supply chains due to difficulty in obtaining raw materials.
The association disclosed that high interest rate has many risks on the future of investment and negatively affects investment, due to high financing prices, which in turn affects the possibility of investment obtaining the local financing necessary for building factories, expansion, etc.
The EJB pointed out that the interest rate hike is always in light of the Egyptian deflationary policy, which reduces aggregate demand and affects markets with the aim of accumulating money circulating in the market, which affects the market movement. Therefore, the best way to improve the investment climate in the future is through announcing monetary policies including ensuring the stability of monetary, commercial and economic policies and announcing them, which enhances the confidence of Egyptian or foreign investors.
This could strengthen investment incentives and ensure their implementation, while controlling administrative system governing investment, including the establishment of companies, licensing, facilitating industrial lands and making them available to investors at low prices, and providing other incentives for manufacturers in Egypt and taking advantage of the current crisis prompted many companies to return to work again in Egypt, led by BMW and OPOO.