In an interview with Daily News Egypt, International Finance Corporation’s (IFC) Egypt Director Nada Shousha to highlight how the IFC reviews Egypt’s economy, the company’s upcoming projects in the country, and their areas of interest.
How do you evaluate the government’s steps after the Economic Summit?
The government of Egypt continues to work towards implementing agreements signed during the Economic Summit, and initiating new projects to address Egypt’s ambitious economic development goals. The completion of the New Suez Canal Project was a positive step, and will need to be followed by the implementation of the Suez Canal Corridor project to attract foreign investment and create jobs.
Are you planning to sign new agreements with the government in the coming period?
The IFC works mainly with the private sector to provide financing and advisory services to companies with the ability to create jobs, boost access to finance for small- and medium-sized enterprises [SMEs], and demonstrate Egypt’s long-term potential to investors.
How much is the IFC allocating for energy and PPP projects in Egypt? What about other projects?
The IFC has no sector-specific allocations. We provide financing and advisory services to the private sector as needed, that will contribute to inclusive economic growth in Egypt and the sustainable growth of its private sector. During fiscal year (FY) 2014/2015, the IFC committed a total of $783m (47% of which was mobilised) to infrastructure projects in MENA, backing private sector investments in key energy projects to meet the region’s growing demand for power. We plan to support Egypt in meeting its energy sector needs during the next fiscal year.
What are the updates on the Safaga Mining port and how much is the IFC contributing to the project?
The IFC has been providing transaction advisory services to the PPP unit on the Safaga Mining Port, which is currently at the pre-feasibility stage.
How do you see Egypt’s problem of dollar unavailability faced by Egypt? How will it affect foreign investors?
The existence of a strong legal and regulatory framework is important in affecting the willingness to invest. Investors look for a favourable business environment, which includes dollar availability.
Why do you think the feed in tariff projects are not witnessing any progress since the government announced the initiative in September 2014?
The feed-in tariff programme is a key milestone to achieving the government’s goals for diversifying the country’s energy mix, and making use of Egypt’s excellent solar and wind resources. The IFC and EBRD have been providing support in conducting bankability reviews for the project. IFC is also keen to support to the project’s development through arranging the necessary debt financing for some of the projects.
There has been some progress on the initiative, with the Ministry of Energy, together with public agencies (NREA, EETC and Egypt ERA) and consultant company Fichtner currently finalising the preparation of standardised FiT agreements. A number of developers have also signed MoUs with the public agencies, received their project sites and are working to receive interim generation licences so that they can start the development work.
Are you considering financing projects in the Suez Canal Axis development project? Do you think the government is successful in promoting investment opportunities in the area or does it need to address them differently?
Yes, the IFC will consider financing investment projects when there are clear investment opportunities for the private sector. There is a large space for future PPPs in infrastructure, port expansions, and industrial and logistics zones. The Suez Canal Area Master Plan has been recently developed, the promotion of investments in the area will yet to follow identifying clear investment projects. However, the major accomplishment of digging and opening the new canal for navigation and the passing of the Presidential Decree, establishing the Suez Canal Economic Zone are all steps that send the right message to international and local investors.
How do you evaluate the economic zones of special nature’s law?
The recent decree creating a special economic zone around the Suez Canal is a positive step that displays the Government’s desire to develop the Suez Canal Area. The decree provides investor privileges and establishes the legal framework which will define the relationship between government and investors, both elements that can help attract investors. However, the assessment of the law’s effectiveness will depend on two main aspects: the Executive Regulations of the Law (which have yet to be developed) and the actual implementation of the law. These institutional, capacity and regulatory aspects are still works in progress, so again it’s early to assess from an investor’s perspective, however the signals are positive.
Will you be participating in the Euromoney conference? What are your expectations for this year’s event?
IFC MENA Regional Director Mouayed Makhlouf will represent IFC at the Euromoney conference. The conference will bring investors, businessmen, and policy makers into a timely discussion on the financing of Egypt’s economic development projects.
How do you evaluate the banking sector in Egypt? Are banks able to meet the financial needs of investors?
The Egyptian banking sector remains resilient despite the global financial crisis of 2008 and the political turbulence Egypt has witnessed since 2011, which is in large part due to the CBE reform programme of 2004. The banking system is liquid, at least in local currency. However, efforts are needed to address the access to finance challenges faced by the SME sector to ensure their financial inclusion.