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EBRD hopes to establish ‘foreign investors council’ in 2019 - Daily News Egypt

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EBRD hopes to establish ‘foreign investors council’ in 2019

Egypt can continue being first country of bank’s operations this year, says EBRD’s managing director for SEMED 

The European Bank for Reconstruction and Development (EBRD) is discussing the establishment of a foreign investors’ council with stakeholders in Egypt, the Country Head for Egypt and Managing Director for the Southern and Eastern Mediterranean (SEMED) at the EBRD, Janet Heckman, announced, adding, “Hopefully we will announce the establishment of the foreign investors council in 2019. This is something we continue to work on and we expect more news on this issue in the next weeks.”

Noteworthy, the foreign investors’ council will be co-chaired by the Egyptian President, Abdel Fattah Al-Sisi and EBRD’s country head.

The planned council would help to ensure that Egypt is attractive to foreign investors, Heckman said, adding, “It also confirms that the thoughts and concerns of foreign investors are heard. During our past experiences, it worked very well in other EBRD’s countries of operation, such as Ukraine and Kazakhstan.”

Moreover, Heckman said that Egypt can continue being first country of banks’ operations in 2019, explaining that Egypt became the single largest recipient of the EBRD’s investment in 2018 with the provision of €1.15bn through 19 projects, covering all sectors of the economy.

Daily News Egypt interviewed Heckman regarding the bank’s outlook for 2019 and assessment of 2018’s operations. The transcript of this interview is below, lightly edited for clarity:

The EBRD recently announced that Egypt topped its countries of operations’ finance in 2018, for how long can Egypt keep this ranking?

As the fundamental reform continues, opportunity for Egypt continues. This year, we expect quite a strong year. Hopefully, we will achieve even more than we did last year. We dedicated a strong team on the ground. There is every reason for Egypt to continue to be on the top.

We are really very proud of Egypt’s being number one country of operations for the EBRD. The SEMED, which I am responsible for too, received the largest amount of global finance in 2018.

In Egypt, we provided roughly €1.2bn, in many projects, and just over €2bn as total finance for our SEMED’ six economies. As you see, most of our activity was based here in Egypt last year.

The nice thing is that the projects were across all sectors of the economy. Almost more than half of our projects were private sector ones. We had a record year in the agribusiness sector as we financed four projects in 2018.

We also finalized a number of projects in the banking sector, including small and medium-sized enterprises (SMEs), and helped banks to meet their loan requests. Plus, we financed projects in the manufacturing and energy sectors.

In addition, we also almost doubled our staff in Egypt. There are 70 people working here, however, when I came here more than two years ago, we were under 35 people.

We also moved some of the regional functions to Egypt, so we have a new regional economist based here, and his name is Bassem Kamar, who is newly hired by the EBRD. He used to work for the International Monetary Fund (IMF).

The EBRD’s Regional Head for SMEs will be based in Cairo too on 11 February 2019, his name is Holger Wiefel. We are quite fortunate to have such a new big team here.

Will 2019 witness senior visits from the EBRD’s heads to Egypt?

In the first week of March, we expect our First Vice President Jürgen Rigterink to visit the country. We will organise a site visit to the Benban complex in Upper Egypt.

The EBRD is a leader in the Benban project. Egypt has really been a success story in this project. It is technically the largest solar plant in Africa, probably the biggest in the world. And I’m glad to announce that the first plant of the 16 plants financed by EBRD is fully constructed and connected to the grid. What is really interesting is the coordination between the Egyptian private sector, international companies, and banks.

We have other activities for this year too, as we expect to organise the ‘Women in Energy’ event in March 2019, to highlight the role of women in Egypt’s energy sector.

During 2019, we will continue promoting our SMEs, especially in providing advice for these kinds of projects.

What is the value of finance that the EBRD will allocate for Egypt in 2019?

At least, we will allocate the same as last year which was €1.2bn. The Egyptian economy continues to grow, and the opportunities continue to be available. We are increasing our investments because Egypt has a very huge population estimated at 100 million people and the government is reform-oriented. The private sector’s dynamic investments are growing in the country too.

In 2019, we hope to finance Egyptian companies looking to expand and invest in other parts in the Middle East and Africa (MEA). We see some opportunities in the area.

When will the EBRD inaugurate its two new offices in Egypt?

We plan to open our third office in Ismailia in the second half of the year, yet our Assiut’s office will be inaugurated either later this year or in the next year. Our new offices will be SMEs-oriented.

What about the cooperation with Egyptian banks in 2018 and the outlook for 2019?

We provided Egyptian banks with over €350m for different facilities’ types. For 2019, it depends on the banks’ needs. However, we accomplish much more in micro credits and SMEs through the banks. We can’t expect a certain figure for the 2019 cooperation portfolio with the banks as we are demand driven.

Egyptian authorities announced their plans to involve the informal sector in the country’s GDP; How do you see this move?

It is important to acquire the informal sector. We are doing our best to assist SMEs in Egypt through our advisory programme to help them receive the know how to prepare financial statements, and how to offer better tenders for projects, so it’s really important to add the informal sector to the GDP.

What about the outlook of the EBRD’s cooperation with Egypt’s Ministry of Transport?

We work very closely with the Ministry of Transport. Last year, we signed an agreement on the facilities of Cairo Metro, and we hope to cooperate in more projects this year.

We understand that Egypt plans to build several dry ports, and we are very happy to support these plans. We are also happy to support container terminals in these ports as they are very important because they improve freight and the ability of Egyptian companies to export.

Millions of commuters will benefit from a €205m loan provided by the EBRD to support the Egyptian National Authority for Tunnels (NAT) with the partial rehabilitation of Cairo Metro, as the major means of public transport in Egypt’s capital, according to the bank’ statement in August 2018.

Are there any updates regarding the establishment of the foreign investors council?

This is something which we continue to work on, and we expect more news on this issue in the next weeks.

Would you please elaborate more on its function?

It helps to ensure that Egypt is attractive to foreign investors. It also confirms that the thoughts and concerns of foreign investors are heard. During our past experiences, it worked very well in other EBRD’s countries of operation, such as Ukraine and Kazakhstan.

For example, the EBRD Country Director in Kazakhstan, Agris Preimanis and the president of the country, Nursultan Nazarbayev are co-heading the country’s Foreign Investors Council twice a year to meet with CEOs of global companies who operate in the country. They come to Kazakhstan and discuss their concerns with the heads of the council and other stakeholders.

Issues like increasing the companies’ investments in the countries are discussed, so the Foreign Investors Council is good for both sides, the foreign companies and the government.

When will Egypt’s Foreign Investors Council be established?

Hopefully, we will announce its establishment in 2019. We are working very closely with all the concerned parties, different stakeholders with copious coordination, so whenever it is ready, we will establish it.

What about your future EGP loans this year?

The Egyptian banks’ loans to the private sector are subsidised, so we can’t compete with the Egyptian banks on this.

How do you see the Green Economy Programme in 2019?

We are very optimistic about the green economy opportunities in Egypt. Every project we finance, we make sure that it has a green element. Last year, 44% of our total lending had a portion of green economy.

Since you mainly cooperate with the private sector in Egypt, what are the challenges that still face companies?

The biggest challenge continues to be the high interest rates, but it is really a matter of time as when inflation drops, interest rates will follow. Egypt needs to focus on the World Bank’s (WB) doing business report’s criteria.

It is good that Egypt improved many places this year in the WB’s doing business report, but Egypt’s goal should be quickly moving to the top 30. There is no reason why Egypt can’t be at a much higher level with implementing its reform programme.

Apart from the aforementioned key problems that still face the private sector, the Egyptian private sector has new benefits from the newly issued regulations and improvements of economy. The most significant move that Egypt did was the currency floatation a couple of years ago.

Would you brief us about the EBRD’s operation in SEMED in 2018 and its outlook for 2019?

In Lebanon, we implemented seven projects with total financing of about €250m. One of the key issues still facing Lebanon is electricity shortage, so we focus on this issue.

We started operation in the West Bank and Gaza in Palestine, where we financed five projects last year with €12.5m. We also encourage vocational education and courses.

Do you have an office in Palestine?

We don’t have an office in Palestine because technically it is not a member of the bank, but we started investing in the country in 2018, and we invested in local banks and the private sector. We also work with the Palestinian Monetary Authority providing them a great deal of technical assistance on several issues regarding reserve management, inclusion of women in the banking sector, and other issues.

We also focus on an impact bond project which funds the delivery of a series of demand-driven and sector-specific professional trainings, as well as on-the-job support to young Palestinians in order to facilitate their transition into sustainable employment.

In Tunisia, we invested about €200m in 2018, with a special focus on waste management and SMEs. In Morocco, we provided €200m last year with a key focus on the agribusiness and manufacturing sectors, all with the private sector.

In Jordan, we provided €350m last year. We focus on supporting sustainable energy, direct and indirect financing of private enterprises, and promoting infrastructure reform, as well as facilitating non-sovereign financing.

The EBRD is providing a $265m loan to Jordan’s National Electric Power Company (NEPCO). The loan will strengthen NEPCO’s balance sheet through the refinancing of existing short-term debt, and will fund vitally needed investments to enhance the capability of the grid to absorb and manage renewable power.

Alongside the loan, the Jordanian government, NEPCO, and the EBRD have agreed on an ambitious programme of reforms that will strengthen NEPCO’s governance and operations. This will be supported by grant-funded technical cooperation assignments.

What are your expansion plans in the region for this year?

We are looking to other countries and we hope that if the political situation in Libya will improve, it will be good work there to support the development of the economy. We are also looking forward to investing in Algeria.

We would like to invest in regional trade’s opportunities between Egypt and other neighbouring countries in North Africa. This region is one of the least integrated regions. We would like to boost the investments and trade opportunities between North Africa and the Sub-Sahara region.

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