Chairperson of Concord International Investments Karim Helal said that the Egyptian state has a huge human force which represents a strong opportunity to invest in many sectors, with a huge room for development which requires an increase in the private sector engagement in the economy.
Recently, the state has adopted a trend towards empowering the Egyptian private sector, and providing various opportunities for its presence in all economic activities. In a way that helps to raise the private sector’s economic contribution to the gross domestic product, implemented investments, employment, exports, and government revenues, according to the Cabinet.
Helal told Daily News Egypt that Egypt is a very attractive investment destination, in terms of geographical location, population, and average age of citizens, but the general investment climate still suffers from several challenges.
He explained that promoting investment by the private sector in Egypt requires providing incentives to all parties, whether local or foreign investors, without discrimination. He pointed out that Egypt has great economic features, the most important of which is the stable political, economic and security situation, but it is in dire need to activate some facilitating factors such as transparency and clarity.
He stressed that clarity and transparency are essential, in addition to opening the economy to everyone with the same controls and rules. A comparative advantage should not be given to one party over the other. Helal emphasized the importance of fair competition in various economic sectors.
He explained that the imbalance of any of these previous elements in the equation has a negative impact on the investment climate. He stressed the need for the business community and the government to be convinced that competition to attract capital has become very intense between countries. “For example, countries such as Turkey and Morocco compete fiercely in attracting capital, with Egypt’s current capabilities, we had to occupy a better position than it is,” Helal indicated.
He pointed out that the most important current component of the local economy is the population, in which youth make up more than 35%.
The Chairperson of Concord International Investments stressed the need to focus on investing in sustainable sectors, namely agriculture, industry and tourism. He pointed to the need to rely on the local product to reduce imports from abroad to save foreign currency.
He explained that IPOs represent a small part of the economic system, stressing the need for the stock market to be the most important source of financing and exit to expand investment, noting that the financing of the International Monetary Fund (IMF) will help boost the IPOs programme in the coming period.
Helal pointed out that any positive step in the Egyptian economy positively impacts the market and thus stimulates offerings. He noted that it is difficult to offer companies at the present time due to the presence of other factors affecting the offering steps, on top of which is the stability of the exchange rate.
He explained that the exchange rate will remain unstable with the continued shortage of foreign currency and the existence of the parallel market, so attention must be given to the industry to increase Egypt’s share of exports.
Helal stated that investment in the market is given priority to the local investor, followed by the Gulf investor and then the foreign one, due to their understanding of the economic situation in Egypt.
A total of 32 state-run companies will be offered to the private sector through the Egyptian Exchange or selling stakes to strategic investors, or both, within a year until March 2024.
These companies are distributed over 18 economic activities, provided that the next six months include offering at least 8 companies, according to the Cabinet.
Helal pointed to the difficulty of completing offering stakes of government companies in the Egyptian Exchange (EGX) during the coming period, explaining that the stock exchange will not absorb this amount of offerings.
In a related context, he said that cash flows in venture capital companies such as technology and startup companies have declined in the recent period, due to the disruption of the investment climate in general. This led to an increase in the volume of risks resulting from the fluctuation of economic indicators.
In terms of Sequence Ventures’ business, Helal said that the pace of new investments has slowed, despite the presence of investment appetite. He attributed this to the repercussions of the recent economic challenges, indicating that the company is focusing on its current investments and there are no plans on the agenda.