Egypt may be on the verge of a major turnaround, as the most populous country in the Arab world looks set for sustained growth, lower unemployment and a manufacturing renaissance under president Abdel Fattah al-Sisi.

Author: Gordon Platt

Banks will continue using surplus liquidity to buy government bonds, Ghamrawi says.

Hisham Ezz Al-Arab, CIB: Seventy-five percent of the population is underbanked.
Hisham Ezz Al-Arab, CIB: Seventy-five percent of the population is underbanked.

Hisham Ezz Al-Arab, chairman and managing director of Commercial International Bank (CIB), says the new investment law, which allows the General Authority for Investment to act as a one-stop-shop for investors, “has tackled the obstacles that had been deterring the progress of FDI. Previously, foreign investments were vulnerable to legal challenge, and investors had to deal with a staggering 78 different government bodies for permits and approvals.”

The law also exempts foreign investors from criminal liability in legal disputes over corporate violations, Al-Arab notes. It will impose fines and revoke licenses instead.

Egypt’s banks have a critical role in supporting the central bank’s financial inclusion initiative, Al-Arab says, “considering that 75% of the population is underbanked.” The government has decided to pay government employees via debit cards, migrating their payrolls into banks. “The more than five million new cards will spread and reinforce the banking culture.”

Meanwhile, the Egyptian Exchange, the top-performing market in the Arab world last year, is attracting a flurry of initial public offerings, including Edita Food Industries and Orascom  Construction. Egypt’s state-owned petroleum companies are next up: They are planning to raise about $2 billion.

In another show of strength, all of the major rating agencies have upgraded the country’s credit rating and outlook since December 2014. This is a welcome development at a time when Egypt is preparing to return to the international bond market–it recently hired seven banks to arrange a $1.25 billion issue. n

GFmag.com Data Summary: Egypt

Central Bank: Central Bank of Egypt

International Reserves                 

$ 16.5 billion

Gross Domestic Product (GDP)

$ 286.4 billion

Real GDP Growth

2012
2.2%

2013
2.1%

2014
2.2%

GDP Per Capita—Current Prices

$3,303.75

GDP—Composition By Sector*  

agriculture:
14.6%

industry:
38.9%

services:
45.6%

Inflation

2012
8.7%

2013
6.9%

2014*
10.1%

Public Debt (general government
gross debt as a % of GDP)

2012
78.9%

2013*
89.0%

2014*
90.5%

Government Bond Ratings
(foreign currency)

Standard & Poor’s
B-

Moody’s
B3

Moody’s Outlook
STA

FDI Inflows

2011
$-483 million

2012
$5,553 million

2013
$64,045 million

* Estimates                                                                                                                               
Source: GFMag.com Country Economic Reports

 

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