CAIRO: The main challenge facing the pubic-private partnership (PPP) business model in Egypt is local funding, said Rania Zayed, advisor to the ministry of finance and director of the PPP Central Unit.
Speaking at the Euromoney Egypt Conference session titled “PPP: inaction or in action, Zayed said the PPP Central Unit aims to “create instruments in the secondary market that match the mismatch in the market. [PPP models] request 20 years financing while the current instruments are three to five years.
The PPP unit works with the Ministries of Finance and Investment to “fill this gap until the funding institutions [banks] find secondary market instruments at a longer term, she added.
Nabil Rashdan, deputy minister of finance, concurred, saying “financing is the main problem [facing PPPs]. When we get the finance going, most of the problems are solved.
Chairman of the General Authority for Investment (GAFI) Osama Saleh said insurance companies need to be involved in order to activate the PPP model in Egypt more effectively.
“Most investors are looking for long-term investments that they know will be secured in the future, said Bastien Simeon, global head of water at KPMG Corporate Finance.
“There is lots of potential here [in Egypt], he added, particularly with increasing investments in infrastructure, electricity and gas sectors.
Egypt also has a lot of potential in agriculture, he added, especially as the world struggles to meet the growing food needs of 10 billion people by 2025.
Simeon told Daily News Egypt after the session that another problem facing PPP initiatives in Egypt is the ability of investors – both local and international – to evaluate the long-term risks of the projects.
There is also no long-term benchmark or return on investment for 15 to 20 years, he added.
“The Egyptian government could [initiate] a long-term government bond program that will enable investors to evaluate the risk of the country, so developing the capital market will be a very positive step, Simeon said.