The Egyptian government last week showcased 12 months of "significant" economic reform and promised more to come,reports Niveen Wahish When Egypt Invest, the International Investment and Trade Forum was held a year ago Ahmed Nazif's cabinet had been in office for only a few months. Egypt's business community and international observers were far from convinced the government would be able to deliver on its promises and maintain the pace of reform it had started with in 2004. This year, though, Mohamed Mansour, chairman of Mansour Group, speaking during the third International Investment and Trade Forum said, "we now have a clear vision of where we are, where we want to be and how to get there." And this change in perceptions, said Mansour, was a result of the coordinated reform of fiscal, monetary and trade policy. "Egypt is now a different player," he said. Minister of Investment Mahmoud Mohieddin presented his own balance sheet of what has been achieved over the past year. He cited privatisation proceeds which this year reached LE5.6 billion, double the proceeds of the previous four years. He also highlighted the stability of the Egyptian pound and the effective eradication of a currency black market, and the fall in inflation from 16 to five per cent. In the same period newly registered companies rose from 2,800 to more than 6,000, an increase of 126 per cent, and Foreign Direct Investment (FDI) increased from a meagre $407 million in non-oil sectors to $1.3 billion. And all this happened, he stressed, during an election year. Mohieddin unveiled his ministry's new "to do" list at this year's conference, promising to double privatisation proceeds to an excess of LE10 billion during fiscal year 2005/06, a figure, he revealed, that would exclude the sales of both Telecom Egypt and the Bank of Alexandria. And reform of the banking sector, he said, is finally on track: "the privatisation of the Bank of Alexandria is scheduled for the first quarter of 2006," while mergers and acquisitions will continue until the number of banks operating in Egypt is somewhere between 22 and 28. He forecast a 25 per cent increase in FDI in non-oil sectors and further privatisation including Misr Hotels, Misr Aluminium, Sidi Kreir, Alexandria Mineral Oils Company's (AMOC) and the Middle East Oil Refinery (MIDOR). Despite his upbeat tone Mohieddin acknowledged that many challenges remain. Access to both land and finance remain a problem and "exit rules are still complicated." The government is committed to tackling these issues, and Mohieddin promised another "exciting year as far as policy is concerned". Khalil Hamdani, chief of investment policy and capacity building at UNCTAD, praised the reforms already undertaken as "significant". He cited a recent UNCTAD assessment of the implementation of recommendations made in its 1999 Investment Policy Review of Egypt, which concluded "the new government is committed to promoting investment opportunities and has begun to introduce a team Egypt approach." "This," the report continued, "is in stark contrast to the past when deadlock between economic reformists and ministers advocating a more protected, state-run economy, prevailed... [I]mprovements in the investment framework are not piecemeal improvements but form part of a comprehensive Egyptian reform agenda." However, as Hamdani pointed out, entrenching this reformist agenda within the bureaucracy remains a problem. The administrative machinery, concluded the report, will require "an enormous programme of change in management practices and the retraining of civil servants before reforms become entrenched and sustainable". Nonetheless, it acknowledged "an impressive agenda and leadership are now in place to improve investor conditions and to enhance the flow and benefits of FDI". The two-day forum, held last week, is the Ministry of Investment's sole annual investment and trade promotion platform in Egypt and is co-organised by the Ministry of Investment, the General Authority for Investment and Free Zones (GAFI) and International Event Partners. An onsite One Stop Shop Investment Information Centre was open throughout the conference with representatives from GAFI available to investors for consultations on a host of issues including tax, banking regulations and investment, securities and exchange regulations. Several high potential sectors were highlighted during the forum, including the gas and oil, information technology, textiles, trism, transport and construction sectors.
