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Egypt seeks to regain investor confidence, bring capitals back home

A delegation of Egyptian officials and businessmen visited London this month to meet with foreign investors

By Carina Kamel / 26 Jan 2013

Facing the threat of economic crisis back home, a delegation of Egyptian officials and businessmen visited London this month to meet with foreign investors and try to restore confidence in the economy.

Foreign investment to Egypt dropped significantly after the revolution, and now, two years after the 2011 uprising, many investors have yet to return.

Political uncertainty, outbreaks of violence, and confusion over economic policies are all cited as concerns by investors.

Egypt’s minister of investment met with global investment banks and signed a deal with the global stock exchange NYSE Euronext to make it easier for foreigners to invest in Egypt. He told Al Arabiya that Egypt was still an attractive investment destination.

“I think Egypt will continue its allure or attraction for investors. We are here today singing new agreements to give our stock exchange much further outreach to be more sophisticated. This is how we are creating a new environment for investment in Egypt, we are dedicated to strengthening partnerships with the private sector,” Minister of Investment Osama Saleh said.

Egypt is also facing the risk of a currency crisis with the Egyptian pound losing more than 6 percent of its dollar value over the past few weeks.

Officials have played down fears of a sharp devaluation and Egypt’s newly appointed central bank governor told Al Arabiya the price of the pound would stabilise soon.

Hisham Ramez, newly appointed Central Bank Governor, said: “We are not targeting a specific price for the Egyptian pound, what matters to us is to have an orderly market and a market with normal volatility level, where price movements are determined by the forces of supply and demand - We are very confident that the market will become orderly and balance very soo.”

Some investors are waiting for the price of the pound to stabilize before making investment decisions, while others say they need confidence the government has a sustainable and workable plan to restore growth.

Also, many Egyptian businessmen who left after the revolution are reluctant to return for fear of litigation over contracts signed under the previous regime.

The Mursi administration has tried to reassure them saying it wants to reconcile with businessmen abroad - even if they have ties to the old regime.

Hassan Malek, President Mursi’s advisor and liaison with the business community, said: “Egypt opens its arms to all Egyptians outside Egypt and welcomes all Egyptian investors and businessmen abroad, we are sending a message they are all welcome and call on them to return to their country; I think the door is now open for all businessmen to return.”

But still, business leaders remain sceptical saying they need assurances that they will not face long battles if they return.

Investors also await the outcome of negotiations with the international monetary fund over a $4.8 billion loan. If approved, the deal could unlock more than $14 billion in other investments and help restore confidence in the economy.

Over the past two years, the Egyptian economy has managed to tick along thanks to billions of dollars in loans and grants from strategic partners like Saudi Arabia, Qatar and Turkey....but Analysts say for the economy to recover investments need to start flowing again and soon.

The minister of investment’s visit comes just ahead of the two year anniversary of Egypt’s revolution and at a time of growing concern for the economy. The minister says Egypt is open for business but some investors are choosing to stay on the side-lines until political stability returns. Carina Kamel Al Arabiya London

 

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