Epitomizing Egypt’s Finance and Investment Climate

Epitomizing Egypt’s Finance and Investment Climate

The Egypt Petroleum Show (EGYPS 2019) hosted discussions by economic and banking experts, who reviewed the country’s business climate through the Finance and Investment Lunch and the Finance and Investment Brunch Briefings. The sessions were held during the second and the third day of the Show, on February 12-13.

Among the topics discussed, the briefings addressed the auspicious government’s economic reform program, aiming to regain investors’ confidence, ensure economic stability, increase investments, and securing strong macroeconomic indicators.

“Egypt now is heading towards the second phase of the economic reform program that focuses on the structural reforms; and as a result of the macroeconomic stability, better business environment and continuing fiscal consolidation, we have been able to meet our targets and objectives,” said Mohamed Ashour, Economist at the Macro-Fiscal Policy Unit in Egypt’s Ministry of Finance. Ashour further highlighted that, due to these reforms, investment in the sector is bound to increase.

Meanwhile, CEO of Global Energy Trading in BP, Alan Haywood,  said that “there is an increasing demand for energy around the world. Meeting current demand has got to be met from oil and gas, and therefore, there is absolutely a need to invest.”

By supporting growth and investment in the oil and gas sector, many companies showed their interest in securing funds to help grow or develop mega projects.

“Investing in Egypt now and in the future is an excellent opportunity. It is a growing market, and there is an opportunity for sustainable growth and for international investors to come and invest in Egypt,” Tameer Nasser, Chief Financial Officer (CFO) of Baker Hughes, a GE Company (BHGE) for North Africa, explained.

Most international oil companies (IOCs) that are not already investing in Egypt, will be coming very soon to the market as the country heralds to become a natural gas hub, Nasser believes.

On the other hand, Panos Benos, Energean CFO, linked initial public offerings (IPOs) to the oil crisis, as a recovery method along with other funding programs. Benos stressed on the importance of having an accurate business plan to enable any public or private company to hold a real financial reform.

Likewise, Alan Taylor, Partner at White & Case LLP, discussed the secret for a successful IPO for an energy and petroleum business. “The role key is commitment. You have got to understand why you are doing this, because you have to be all in for it.” He further explained that choosing between mergers and acquisitions (M&A) and IPOs “depends on the nature of the business and assets.”

Moreover, Inderpal Singh, Senior Vice President for M&As in Mubadala Petroleum, talked about his company’s investment strategy in Egypt. He noted that the company has been working intensively on the M&A activities during 2018. As for the key pillars of the strategy, Singh stated that it is mainly focusing on value creation, low cost oil, increasing focus on natural gas, and partnerships that secure new market entries.

Artyom Sitnikov, Senior Banker in the Natural Resources Team at the European Bank for Reconstruction and Development (EBRD), discussed the bank’s support to the industry in Egypt in order to attract more private investments. “I think we have a role to play in Egypt,” he indicated.

Similarly, the briefings tackled the importance of IPOs. It was agreed that information on Egypt’s IPO programs along with project delivery and updates on the country’s business climate are pivotal for foreign investors.

Managing Director of Project Finance at Carbon Holdings, Karim Hefzy, expressed that in the first three quarters of 2018, four IPOs were carried out. He went on to say that, from a legal perspective, the general framework of IPOs is conducive for equity capital markets and constructive for maintaining confidence in the future of the IPO program.

The recent IPO milestones indicate positive progression. According to Hefzy, there are continuous efforts done in making information about IPOs more accessible for investors. There is also an attempt to widen the shareholder base for Egyptian IPOs and the government. Overall, a conclusion was reached that IPOs activity in Egypt is slowly stabilizing.

Moreover, the current project-financing scene was thoroughly evaluated. Philip Stopford, Partner at White & Case LLP, noted that a debt market is lacking in Egypt, leaving project financing only available through banks and equity market. Thus, he suggested that the current environment indicates Development Finance Institutions (DFIs) and export credit agencies (ECAs) are driving project funding and project financing as they are the primary sources to acquire capital for projects.

Other roundtable discussions reviewed Egypt’s Economic Reform Program, looking at developments in the General Authority for Investment (GAFI), and its role in free zones and updates and amendments to investment legislation.

Counselor Amr Noureldin, Legal Advisor to the CEO of GAFI, spoke about the Egyptian investment law, and the changes that made the country’s legal environment more conducive for foreign direct investment (FDI). He said that there are new guarantees and incentives for investors, heightened measures to protect investment projects, promises of no nationalization, or acts against the investor unless approved by a final court verdict, and temporary incentives to attract immediate investors, such as a 30% to 50% tax reduction on projects in the first few years, depending on the region of the investment.

Noureldin further shared information about the establishment of technological zones, which are a mix between investment zones and free zones. They are run by GAFI and the Ministry of Communications and Information Technology (MCIT), and are designed to support activity in the field of information technology.

All of these changes, investments, and data-driven decisions are anticipated to drive Egypt’s economic growth, create new job opportunities, and assist in achieving sustainable development in the country.


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