The International Finance Corporation (IFC), a member of the World Bank Group, will attend Egypt’s Economic Summit. It will include the presence of a strong delegation from both the IFC and the World Bank, according to Nada Shousha, IFC’s Egypt Country Manager.
Daily News Egypt sat down with Shousha, where she talked about the IFC’s preparations for the Economic Summit, and what the Egyptian government needs to do after. Shousha also discussed the IFC’s role with the Ministry of Finance, the country’s PPP projects and the sectors that the IFC will be focusing on going forward in Egypt.
How does the IFC view the Economic Summit, and what are your preparations for it?
We think that this high level event will mark an important step for Egypt in the consolidation of reforms to foster growth and attract investment; my understanding really is to put Egypt back on the investors map. The World Bank Group is a committed financial and knowledge partner, and this conference offers an excellent opportunity to advance our dialogue with the Egyptian authorities in order to promote social inclusion and share prosperity. We’re having a high level delegation from the whole World Bank Group attending the summit with the managing director, Sri Mulyani Indrawati, the executive Vice President, and the CEO of IFC Jin-Yong Cai; also Vice Presidents from both the World Bank and IFC will be present.
The government is set to introduce several projects, amongst them public projects, through PPP that are consistent with the World Bank’s and IFC standards. Will the IFC engage in any of those projects?
We work with the private sector to support job creation and inclusion, so we’re looking at every project that is reaching these objectives. At this point and time, however, I can’t provide specific names, but again we are looking very seriously at projects that involve the private sector and ways to help it reach its full potential.
What private sector areas is the IFC most interested in?
Our particular focus going forward is going to be infrastructure especially energy because in our role promoting the private sector and encouraging investments of the sector, good infrastructure is important, to provide access to power so that’s our special focus but we will also be looking at other infrastructure projects on a broader view, such as wastewater and ports, or any infrastructure where we can encourage the private sector to participate in.
Egypt aims to attract billions of pounds worth of investments to the country after the summit. Do you believe that this is feasible?
This initiative will definitely put Egypt on the investor’s map and help the country in restoring confidence for local and international investors; it is a good occasion to have a strategy, to present ideas and the long term vision of the government because this is what investors want to hear. They would also want to know the general vision, the sectorial vision and then as you were mentioning the projects but it shouldn’t be seen in my view as the end of it, it is still an open door.
What does the government need to do after the summit?
Following up on the event, the implementation of the vision, the reforms and the projects are all very important steps that should be taken after the summit. Furthermore, following up with the attendees and the questions the attendees may have and of course to monitor the results. Then, hopefully, it will be kind of a regular event, because it’s always a good occasion to show the country’s vision and the actions that have been taken.
How does the IFC support the Ministry Of Finance?
We are in regular contact with government officials and representatives. Our teams are working closely with the Egyptian government to identify opportunities. We remain committed to supporting Egypt’s economy through providing financial and advisory support to its private sector. On the advisory side, the IFC has been working with the Public Private Partnership (PPP), we advised the unit on the country’s first public-private wastewater treatment plant, for example. Built in the New Cairo area, construction on the 250,000m3/day wastewater plant was completed in 2012.
The IFC was one of the international bodies that reviewed the draft investment law – can you tell me how you reviewed it?
At an early stage, we provided substantial comments and more on the general best practices. Thereafter we provided informal comments and input on specific issues when asked. We see the law as an important step in the right direction and it is a positive signal to investors.
How do you evaluate the current investment climate in Egypt?
There have been very good steps taken, and I’m always looking at what the investor would like to see as the investor would like to see access to land, ability to obtain permits being it for establishing a company or construction permits also the ease of even closing the business and these are all areas that we as a world bank group will be looking forward on further supporting the government on.
Do you think that there are any extra reform measures that the government need to address?
To reap the benefits of the ongoing reforms, I think it’s always good to be transparent and clear, also working on the competition by making sure that all rules are known to investors and are levelling the playing field so that everyone has the same chance; so providing investors with anything that eases the process and helps them in having very streamlined procedures can always be beneficial.
Do you think that there was a delay in announcing the final new investment law that investors didn’t take enough time to study it carefully?
I think it’s the messaging that matters, if the messages broadcasted by the government were clear and then followed by the law then that is what investors will want to hear.
What is the value of the IFC’s current portfolio in Egypt?
We currently have a portfolio that accounts to approximately $1bn over 33 projects. Amongst our most recent projects was financing the expansion of Mall of Arabia in 6th of October City, where we invested $60m.
We helped Elif Plastik, a Turkish investor, in expanding into Egypt where we provided a loan to build a plastic container factory. We’ve also helped in trade finance to help in importing critical goods, where we signed trade finance agreements with Ahli United Bank and ALEXBank to support cross-border trade and help Egyptian businesses access global markets. The agreements were part of IFC’s $5bn Global Trade Finance Program, which works with more than 265 partner banks worldwide. There were also other projects that we supported in oil and gas to help on the energy crisis. Also, I’d like to add that our portfolio is ongoing as in some cases we provide loans and the loans get paid back.
How does your support for the private sector affect the local market?
What we’re trying to do is not to compete with the local market, but to be adding to the market to fill in the gap, so this is why we are very flexible in looking at what is needed by the client. So if it is equity that is needed we would go as an equity player , if it is a loan we also provide it, in doing this we’re careful about Egypt and its local market as well as the local banks. Basically it’s about where we can be the most effective and able to help the private sector; for instance in 2012 we have done products that we normally wouldn’t do because the international players retrenched.
What kinds of advisory services does the IFC provide in Egypt?
We provide advice to firms as we have a very effective corporate governance programme where we are training companies on corporate governance. We also provide transaction advice to the PPP unit as new Cairo waste water which was the first PPP, IFC advisory project. We further provide advisory on companies’ access to finance so for example we provided advice for a micro finance company “the Dakhalia business men’s association” which is a leading micro finance institution to develop housing finance products.
Concerning the microfinance institution you supported, did you support it financially or only by providing advisory services?
At this point and time it’s only advisory however we welcome very much the promulgation of the micro finance law that was passed a few months ago in Egypt as we believe it’s an excellent step to open the market and we are planning to see opportunities to finance this area.