Egyptian-French Business Council leaders expect French investments in Cairo to increase by 10% in 2017, following an exchange of visits by the Egyptian and French presidents to the respective countries.
French companies plan to invest in metro projects, transportation, renewable energy, water and sanitation, and military contracts, where Cairo will purchase developed warships from Paris, according to members of the council.
French president François Hollande arrived in Cairo on Sunday, serving as the head of a delegation of about 650 businessperson and 80 companies, to discuss economic and military cooperation.
French parties invested about €3.2bn in Egypt in 2014, an investment figure that has remained stagnant in the past two years.
France is the sixth largest investor in Egypt, after Saudi Arabia, Britain, the US, the UAE, and Belgium. French companies provide about 33,000 job opportunities at 150 French companies operating in the Egyptian market.
“Before talking about the future of the investment, we should point out that French investments were not withdrawn from the Egyptian market after the beginning of the 25 January Revolution, with the exception of two banks, for reasons that are not related to the crises experienced by the Egyptian market due to the recent political events,” said Fouad Younis, the head of the Egyptian-French Business Council.
Younis contended that French investments will increase by about 10% next year. He moreover expects that French companies’ investments will be focused on the new and renewable energy sector.
He praised the role played by the Ministry of Electricity and the New and Renewable Energy Authority (NREA), which have overseen the revision of the laws regulating the sale and purchase of facilities in the energy sector.
The council plans to arrange regular visits by French businesspersons to facilitate the exchange of their expertise, according to Younis. He added that the council is already in the process of holding four seminars a year, every three months, in addition to the council’s annual meeting.
Egyptian companies will export textiles and garments to France in an attempt to bolster domestic production, Younis said. To facilitate the great trade volume, the council plans to commence collaboration with shipping parties to establish a regular shipping route between Egypt and France at the start of 2017. The council has also requested that the Ministry of Industry increase export incentives to curtail further erosion of foreign currency reserves.
Egyptian food exports to France pass through the Marseille-Fos Port, which is connected to France’s industrial transportation infrastructure. However, Egyptian agricultural exports will require additional transfer facilities, according to Younis.
Plans to implement a French industrial zone in Borg Al-Arab in Alexandria governorate remain suspended, pending the completion of studies on investor advantages, according to Younis.
French investors interested in Egypt have three primary focuses, according to Younis: the establishment of the one-stop-shop business governance system, the Egyptian state’s national projects which include the establishment of a global wheat silo, and the Central Bank of Egypt’s (CBE) efforts to mitigate any further currency devaluation.
“The majority of the obstacles faced by French companies are related to security, gas shortages, the unavailability of foreign currency for the purchase of production inputs,” said Younis.
In a notable disagreement between Egyptian authorities and French companies, the Egyptian Authority for Supply Commodities (EGASC) rejected a wheat cargo load from the French company Bunge due to a disagreement over the permitted percentage of ergot fungus in February. The company subsequently launched legal proceedings against the Egyptian state. The company has since agreed to work with the Egyptian State Council to settle the dispute.
Hamed Hassouna, a member of the Egyptian-French Business Council, praised the recent decisions by the CBE to curb the devaluation of the Egyptian pound. However, Hassouna added that the currency is not the only factor that determines investment. Other notable factors include the provision of facilities and legislative clarity
Hassouna suggested that large companies create multiple funds to diversify investment in projects in downtown Cairo.
The French-Egyptian Business Council has contracted two public relations firms to communicate Egypt’s investment opportunities to the French media and government. While French investments in Egypt will be a focus, the public relations campaign will also address the minimal flow of French tourists to Egypt.
The council is preparing the Year of Egypt in France, wherein it will market Egyptian products in concert with Egyptian cultural shows.
The French company Renault has expressed interest in opening an automotive manufacturing centre in Egypt, according to Younis. However, the company has not announced a timetable for its decision, nor has it addressed the potential size of investment. Younis reported that the French automaker is currently conducting a study on the feasibility of launching such a centre in the Egyptian market.
Younis agreed with Hossouna’s suggestion of large companies creating multiple funds, saying that the returns on investments in Egypt can be significantly augmented in light of the economy’s potential for growth.
According to Hassouna, the Union de Banques Arabes et Françaises (UBAF) provided funds for investments in Egypt exceeding €1bn in 2017.
The bank aims to finance the Solar Direct Company’s establishment of a solar power plant with a capacity factor of 25 MW. Solar Direct Company is one of 136 companies that qualified to launch solar electricity projects according to the feed-in tariff system. Solar Direct Company will implement the plant with an investment of US$50m.
A board member of the French-Egyptian Business Council and the managing director at PIZA Industrial Supplies, Ghada Darwish, said the severe decline in the export of fertilisers caused the larger decline of exports from Egypt to France. Fertiliser exports declined by €56.3m during 2015, at a rate of 55% compared to 2014.