Global changes herald new world economic system: CEO of Evolve

Fatma Salah
10 Min Read

The Egyptian government has taken serious steps in boosting the partnership between the public and private sectors, especially in recent years, as it has become the most important part of the process of advancing the economic growth of the Egyptian state during the coming period.

The participation of the private sector in the economy is seen as a cornerstone for stimulating growth and providing the necessary financing to complete sustainable development plans.

Sameh El Torgoman, co-founder and CEO of Evolve Investment, said that the private sector in Egypt needs procedures and legislation that help improve the investment climate in order to lead the growth process in the coming period.

In an interview with Daily News Egypt, he clarified the need to implement the policies of the state ownership document on the ground in front of everyone, given the impact and reflection on sending messages of reassurance to investors on the health of the Egyptian investment climate.

“The positive movement of the economy requires a partnership between the government and the private sector, and this is a healthy and moderate equation. Attracting foreign investment requires that the Egyptian private sector be strong,” he said.

According to data from the Central Bank of Egypt, net foreign direct investments jumped by 94% during the third quarter of last year 2022, to reach $3.3bn compared to about $1.7bn.

In a related context, he added that the market is always ready for offerings, as it depends only on the pricing policies of each offering and its objective, saying, “If the goal is to revive the market with offerings, simple shares can be offered at attractive prices currently commensurate with the local and global situation.”

The Egyptian government has announced the offering of 32 different companies on the Egyptian Exchange during the coming period, and part of the company is scheduled to be offered on the stock exchange and the other part through a strategic investor. The Cabinet sought the assistance of a number of specialized investment banks, which ended up determining the method of offering.

El Torgoman mentioned that the guarantee for the current flow of offerings will be in the success of the companies after they are registered in the market, by creating appropriate opportunities for that, explaining the market’s need to activate both sides “supply and demand” in parallel, stressing that the Egyptian market has always been attractive to investment.

He identified promising sectors that include great opportunities in the coming period, especially transportation and logistics within the framework of Egypt’s plan to be a logistics centre for transporting goods between countries of the world, in addition to the diversified services sector that includes labour and training, and then exporting them in the future to countries that need highly qualified labour.

El Torgoman stressed that Egypt has a competitive advantage with its geographical presence between the continents of Asia and Africa, which makes it a very important region as a link between Asia and Africa, and between Europe and Africa, stressing the need for Egypt to seize the opportunity to be a regional centre for export to the African region.

He added that the state must focus on sectors that enjoy a competitive advantage and increase exports, and provide full support to them according to specific plans in order to provide hard currency.

The offering of companies will take place over a full year, starting from the current quarter of 2023, until the end of the first quarter of 2024.

The offered companies include 18 different economic sectors and activities, and 3 banks will be offered, namely Banque du Caire, the United Bank, and the Arab African International Bank.

The National Petroleum Products Company and the Safi Water Bottling Company will be offered, and 25% of these companies will be fully offered within 6 months.

El Torgoman stressed that the Central Bank’s policies to combat inflation will encourage foreign investments to target Egypt, which has already begun in the recent period, in addition to implementing the financing program with the International Monetary Fund, which is a certificate of confidence in the government’s plans.

The International Monetary Fund approved last year a $3bn loan through a 46-month agreement with Egypt. The decision allowed the disbursement of an immediate payment equivalent to $347m, to help meet the needs of the balance of payments and support the budget.

He pointed out the need for investors to feel the government’s role in implementing the announced reform programs, as much as possible, while working hard on social protection programs.

El Torgoman explained that the world went through similar crises in the late 1990s, specifically in East Asian countries as a result of currency stabilization, but the crisis worsened in 2019 through the 2008 crisis, inflation levels continued to grow, and debt volumes jumped.

He explained that expectations of recession began before the spread of the Corona pandemic, but the rate of acceleration increased strongly, especially after the Russian-Ukrainian war, which was followed by strong price hikes and an increase in interest rates.

El Torgoman hinted that the composition of the global economy began to change after the crisis, and all countries are working to rearrange papers and reduce costs, stressing that the world is reconsidering once again the dimensions of the idea of globalization.

He explained that emerging markets are most affected by the crisis, including Egypt, as it was previously suffering from the process of attracting investments in general and foreign ones in particular, and determining the exchange rate of the local currency.

He stressed the need for the gold market in Egypt to be regulated through financial tools, as is happening in the countries of the world, which is also something that will attract huge foreign investments, as the volume of daily investment in gold exceeds about $200bn, indicating that 12% is traded in the Middle East.

El Torgoman stressed that this is the motive of seizing opportunities in the gold sector and related sectors.

In a related context, he explained that the Evolve Investment Holding Company will start its work by establishing funds with the participation of financial institutions, as it provides financial instruments that can be dealt with as traditional fund documents, but they will be backed by gold, as a first stage, to be followed by adding other metals in the future.

El Torgoman indicated that the fund will give an opportunity to investors wishing to invest in gold, to deal with it, but through this mechanism, provided that it is deposited with the EgyCash company affiliated to the Central Bank of Egypt.

He revealed that the FRA’s approval will be issued soon, provided that the mechanism for pricing the fund’s documents will be clarified in the prospectus, which will be announced as soon as the FRA approves the establishment of the fund.

He confirmed that the fund’s securities will not be available for trading through the stock exchange screen in the first stage, provided that this is done in later stages.

Evolve Investment intends to launch a gold investment fund in cooperation with Azimut Egypt, and has already applied for incorporation to the Financial Regulatory Authority.

It is expected that global gold prices will continue to rise, in parallel with the continued state of turmoil in global markets and political crises, especially the Russian-Ukrainian war.

In response to a question about whether the current time is the most suitable for investing in gold and precious metals, he clarified the need to diversify investment portfolios between different financial instruments such as gold and stocks, stressing that the diversification of the investment portfolio is a necessity during periods of high inflation.

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