Q This year, Egypt is set to attract a record flow of more than $10bn in FDI. What have been the economic reforms that have helped in reaching such a result?
A When I started three years ago, Egypt’s economic data wasn’t encouraging: it was growing at just above 3%. The first thing we did was to ask investors what they didn’t like about Egypt. This allowed us to highlight a number of obstacles, ranging from tax and financial issues to disputes procedures.
We have been simultaneously tackling all these issues. We have reactivated the privatisation programme with the co-operation of other ministers and, when necessary, we have been pressing for change in the legal framework.
Economic and financial reforms have not only resulted in higher FDI levels. Investment through the Cairo and Alexandria Stock Exchange has gone from 34% of GDP, in July 2004, to more than 95% of GDP.
Q Which sectors are driving FDI?
A The financial services sector is one of the fastest growing, alongside information and communications technology. Real estate, manufacturing, tourism, logistics and associated services are also strong. We have maintained the sources of FDI from Organisation for Economic Co-operation and Development countries – in particular from the US, Europe and Canada – and also managed to get FDI flows from China, India, Turkey and the Gulf states.
Domestic investment is growing, too, with private sector investment rising an average 40% per year during the past three years. If you compare this with China and Russia, the amount is limited but if you relate it to our level of indebtedness, especially the short-term one, Egypt has a very healthy balance sheet in terms of total liquidity and liability.
Q What has fuelled the growth of the financial sector?
A We have been consolidating the banking sector, reducing the number of banks from 57 in 2004 to 41, and we aim to reduce this number further. Our goal is both to reduce the number of players and to have sound and competent banks. We have encouraged acquisitions and entries into the market by foreign institutions.
Recently, Italy’s Intesa Sanpaolo took over former government-owned Bank of Alexandria. French banks BNP Paribas, Société Générale and Crédit Agricole, which are already present in Egypt, are expanding as are UK players Barclays and HSBC.
Q What are your ambitions as a financial centre?
A A financial centre needs a good regulatory framework. We have a sound corporate governance code, introduced in 2004, and more importantly, we apply it.
At the same time, we have a deep financial market that caters for both non-residents and the increasing demands for financial services of Egypt’s 72 million population. I am pleased to see many Egyptians working in the US, London and the Gulf countries coming back to Egypt and bringing with them their international financial experience.
CURRICULUM VITAE: MAHMOUD MOHIELDIN
Member, Commission on Growth and Development
Minister of investment
Office of Minister of Economy & Foreign Trade
Senior economic adviser
Office of Minister of State for Economic Affairs