While Gulf governments intend to pump billions of dollars in the Egyptian economy, their investors past issues have rendered their approach much more cautious.
Saudi Arabia, Kuwait and the United Arab Emirates supported Egypt financially after the ouster of former president Mohamed Morsi following a series of massive protests, putting forth $12bn to back the Egyptian economy.
During the Egypt Gulf investment Forum held in Cairo last week, Egyptian officials announced their intentions to repay part of Egypt’s debt to foreign oil companies totaling $6bn, while also pledging to amend a set of legislations harming investors and finally cut back on bureaucratic procedures.
Some private sector Gulf investors have said they would not come back to Egypt without collateral to secure their funds, in response to judicial cases raised against their projects following the 2011 ouster of former president Hosni Mubarak.
Egyptian courts issued no less than 11 rulings in business related cases since the 25 January Revolution, which included abolishing several government contracts concluded during Mubarak’s rule.
These cases were raised by activists and lawyers, who believed that public companies were sold at low prices.
These judgments resulted in legal dilemmas for several foreign companies in Egypt, which would be repellent to investment and threaten the business climate.
Omar Al-Futtaim, the CEO and vice chairman of Al-Futtaim Group, an Emirati real estate company, said that “investors have asked for clarifying these obscure points, in order to start important investments,” expressing his “cautious optimism.”
He added that attracting large investments requires further transparency and a promising investment climate, especially in regards to the enforcement of laws, regulations and agreements.
The Emirati Minister of State invited the Egyptian government to establish a reasonable legal framework, reassuring investors interested in several sectors as agriculture and energy.
Despite the Egyptian government currently drafting a legislation confirming the legal statuses resulting from the state’s previous contracts, investors are not willing to move forward until featuring serious progress.
Abdallah Ben Mahfouz, head of the Egyptian-Saudi Business Council, highlighted that several Saudi and Emarati investors are anxious from the current government’s abolishing of contracts concluded prior to 2011.
Although interim Prime Minister Haze El-Beblawi has announced the settlement of 19 investment disputes and promised to investigate the remaining cases, there are still deep concerns.
Eighteen Saudi investors held a meeting in a Saudi-owned shopping centre based in Cairo, where they proposed a set of requirements to interim President Adly Mansour when meeting him on Thursday, and were mainly concerning respecting the previously concluded contracts.
In addition to legal obstacles, the situation in Egypt is not that encouraging for investments since some believe the interim government’s political roadmap may be insufficient to attain stability.
Gulf governments other than Qatar – formerly supporting the Muslim Brotherhood – have pledged support for the interim government in Egypt.
When the Egyptian delegation visited the UAE in October, Mansour Ben Zayed Al-Nahyan, the Emarati vice prime minister, asserted that Egypt cannot always depend on Gulf assistance packages, and that the government “has to consider and apply creative plans” for stimulating the economy.
In a related context, five Saudi investors established a company called “Foras” (Opportunities) with a paid up capital of SAR 10m, and intending to raise it SAR 100m, should the Egyptian government satisfy their requests.
Ben Mahfouz summarized the feelings of Gulf investors in saying, “If the Egyptian government amended the regulatory rules, the current investors would foster their investments”, and if not, they would continue investing only with their paid up capitals.