Reform recognised FOR THE THIRD time in a row, Egypt has been internationally acclaimed for its continuous efforts to address investment barriers and take effective measures to improve the business climate. A certificate of recognition was thus presented to Minister of Investment Mahmoud Mohieddin who represented the Egyptian government in the annual meeting of the International Finance Corporation (IFC) held last week in Vienna. Egypt also received special recognition this year for coming ahead of all Middle East and North Africa (MENA) countries in terms of the scope of reforms addressing the business climate throughout the last five years. The recognition was based on the 2009 Doing Business Report which acknowledged Egypt's efforts to improve the investment climate and facilitate the operation of business establishments. According to the report, Egypt advanced 12 positions in the ranking for 2009 compared to the 2008 report. Major procedures taken to facilitate business establishments include the operation of one-stop shops; reducing the minimum capital needed to establish limited liability companies; bringing down the cost of establishing new companies and shortening the number of procedures necessary for the process; facilitating and reducing the cost of property registration; and reducing the time necessary to finalise import and export procedures. Moreover, Egypt has taken further steps in the right direction through establishing the first credit bureau which provides credit information and rating services. The implementation of the economic courts law provided investors with a legal umbrella to protect their rights. It also played a role in facilitating litigation procedures and helped achieve speedy resolutions of economic disputes. "The key objective of these reform measures was to further facilitate the operation of productive projects. These measures fall within the context of the comprehensive economic reform programme which is targeting development and stability," said Mohieddin who added that greater attention has been given to small and medium-sized enterprises (SMEs) which have been very active in terms of creating new jobs, particularly for youth. Mohieddin underlined that Egypt is determined to speed ahead with efforts to further improve the investment climate especially in assisting business establishments, obtaining licences, registering property, accessing finance, and enforcing contracts. In addition to Egypt, five more countries, each representing a geographic region, were recognised for their efforts in completing their reform programmes over the past five years. These include China, India, Georgia, Colombia and Mauritius. During the event, Mohieddin held a number of bilateral meetings with government representatives attending the ceremony. Bilateral cooperation between Egypt and Austria was highlighted. Both sides agreed on the need to cooperate in mining industries, chemicals, fertilisers, urban and environmental development as well as technology transfer and tourism. Mohieddin highlighted the investment opportunities available in the infrastructure sector in Egypt. "The government is currently promoting infrastructure- related projects, giving them significant priority as well as providing necessary financial support," said Mohieddin who added that the government had recently set up 52 infrastructure projects to be finalised during the next three years. The Austrian government is assisting Egypt in the institutional twinning programme which aims at helping the General Authority for Investment and Free Zones (GAFI) develop human resources in investment promotion to keep up with the best international practices. Funding SMEs EGYPTIAN Small and Medium Enterprises (SMEs) are becoming increasingly attractive to investors. They may soon tap into a $100 million fund created by Beltone Private Equity, the private equity arm of Beltone Financial Holding. The Beltone MidCap Fund, as it has been named, targets SMEs in Egypt and the Gulf through two sub-funds. The two sub-funds combined represent a total of $200 million. The International Finance Corporation (IFC), the European investment Bank (EIB) and the Export Development Bank of Egypt (EDBE) are the anchor investors in the Egypt sub- fund with IFC and EIB each committing $16.5 million and EDBE contributing $10 million. With these three entities on board, Beltone Chairman Alaa Saba is confident other investors will soon pitch in to close the fund. The Beltone MidCap will invest in privately-owned, financially sound, and promising SMEs or potential spin-offs from large companies with growth and export potential. Abdel-Moneim Omran, director of Beltone Private Equity told a press gathering at the launch of the fund late last week that the fund will be focussing on three main sectors where Egypt holds potential. These include food industries, export- oriented agricultural produce and packaging. He also explained that the fund will hold a share ranging between 25 to 35 per cent in the companies it invests in. And its support will not be limited to financial aid only but will include technical and management support as well. To IFC director for private equity funds, Haydee Celaya, supporting SMEs makes sense not only from the development point of view, but also from an economic point of view because it supports companies into becoming profitable which means they will eventually pay taxes and create jobs. The idea behind the creation of the fund, according to Saba, stems from the fact that the biggest problem facing SMEs is that they are unable to put their hand on funding. He pointed out that they often start off on self-financing, but when they want to expand, they have difficulty getting funding to enable them to grow. This new fund will help them take that step. And being one of the shareholders, the fund will also give these companies enough credibility to enable to them to get further funding from banks. He also said that the success of this fund will encourage others to set up similar entities. Beltone Private Equity has a joint venture with SIGEFI Private Equity, part of the Siparex Group in France, which holds expertise in private equity investments in SMEs in Europe and the US.
