Investment security, economic stability and government stability are the three top FDI concerns for Egypt but, Nevine Loftfly, managing director and CEO of the Abu Dhabi Islamic Bank Egypt, says investors need not worry about government instability. That is because Egypt finally has a parliament, she told fDi Magazine in an interview. The country has gone without one for more than two years.
“Things are really starting to normalise,” she said. This includes all laws that have long been postponed. “Even security is improving. We all feel that inside of the country.”
But currency issues still loom large for foreign investors. “They really do worry about currency and exchange rates,” said Ms Loftfly.
On March 14 2016, the Central Bank of Egypt devalued the Egyptian pound by 13%, and said it is adopting a “more flexible exchange-rate policy”. It is doing this in an attempt to address slumping foreign investment and tourism, curb black market currency trading and preserve foreign reserves to be a catalyst to facilitate capital inflows.
“This is a first,” said Mrs Loftfly.
Consequently, she said that Egypt’s government and central bank expect the scarcity of foreign currency to end this year. “Beginning in 2017, they believe this issue will be resolved,” she said.
She sees Egypt’s ability to get a loan from the International Monetary Fund (IMF) unlikely. “Business people would like to see the IMF signed, but this has been going on for seven years,” she said.
Currently, Egypt’s foreign reserves are hovering about $16bn, less than half that when president Hosni Mubarak was ousted in 2011. Newspaper accounts indicate that is only enough to pay for about three months of imports. Consequently, the government is discouraging the import of luxury goods and is focusing on necessities. “There is a lot of concern about poor people,” said Ms Loftfly. “The focus is on capital goods – raw materials – whatever is needed to keep factories going.”
The greatest concern for FDI, however, remains Egypt’s bureaucracy. “This is the thing foreign investors worry about the most,” Ms Loftfly said. This includes inconsistent policy decisions, such as numerous recent changes regarding foreign currency deposits. Ms Loftfly emphasised, however, that the Egyptian government is working on streamlining investment processes and creating what it calls 'a one-stop-shop'.
“The one-stop-shop is getting closer to being a reality – maybe by mid-2016,” Ms Loftfly said.