Egypt Rolls Out The Red Carpet But Investors Still Wary

Such is the level of confidence of Egypt’s finance minister in his country’s economic turnaround that he advises prospective investors to move quickly because they will be treated on a “first come, first served” basis.

Some of Hany Kadry Dimian’s optimism is certainly warranted: Egypt’s GDP growth is gradually picking up and the economy is showing signs of life again with many observers praising recently-introduced economic reforms and the return to political stability under new President Abdel Fattah Al Sisi.

And with a population of over 80 million, Egypt remains a massive market that will always feature on the radar screens of regional and multi-national companies alike.

But several foreign investors, while acknowledging that positive changes are taking place, remain hesitant and want to see more progress before moving back into Egypt as they are still wary about the difficulty of conducting their business in the Arab country.

“It would not be wise to ignore Egypt but for now going direct, I personally think we can be a little more patient,” said Kaveh Samie, head of Middle East and North Africa for private equity giant KKR. “It will be a massive opportunity in the future.”

Other private buyout funds have also been reluctant to complete deals in Egypt as until last year’s tepid stock market activity and lack of initial public offerings meant they had fewer exit options for their investments.

Wael Aburida, chief investment officer of Bahrain-based Pinebridge Investments, said his firm “was starting to evaluate the situation” and that his focus was on sectors that remain relatively immune to any political transition and are consumer-driven such as food, pharma and healthcare.

Many business people will want to see a prolonged period of stability and the planned reforms to take shape before committing funds to Egypt again.

“The challenge is to start tackling some of the broader bureaucratic hurdles,” said Hisham El-Khazindar, co-founder and managing director of Qalaa Holdings. “And to make it much easier for companies to come in and start projects in this country.”

Underscoring the difficulties Egyptian authorities face in attracting new businesses, Investment Minister Ashraf Salman said an important part of his mandate consists of convincing existing foreign companies in Egypt, including for example Coca Cola, to stay and to enlarge their local presence.

“We have to solve their problems,” Mr. Salman said.

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(via WSJ Blogs)