Transcript Egypt .. Challenges and opportunities

» Key facts
» Political milestones
» Economic Review
» Demographic Trends
» Egypt Compared to the Region
» Foreign Interests in Egypt
» International Financial Institutions
» Examples of Planned Private Investment
» Present Dutch Interests in Egypt
» Concluding remarks
2
The Arab Republic of Egypt
» Area:
1 mn km2
» Population:
90 mn
» GDP:
$255 bn (2013)
3
4
• Natural Resources: oil & gas (70% self sufficiency),
minerals
renewable energy,
• Location: Strategically located between high purchasing markets of Europe and
Gulf. Transport corridor between Mediterranean sea and Indian Pacific ocean.
• Fourth largest economy in Arab world after KSA, UAE and Algeria
• Huge market: 90 mn people
• Work force: Educated, skilled, moderate cost, majority of population is young
• Party to many bilateral and regional trade agreements
• Suez Canal: 8% of global maritime trade, turnover $5,5 bn
• Tourism: Long term global destination for cultural and leisure tourism.
• Oversees Remittances $18 bn in 2013
5
Egypt has the most diversified economy in the Middle East
6
GDP
•
$255 bn
•
$3,000 per capita
•
2.1% growth Rate
(FY2012/13)
7
•
Unemployment
13.3%
•
Annual Headline Inflation
11.4%
•
Public Budget Deficit
14% of GDP FY2012/13, 12% expected FY2013/14
•
NIR - May 2014
$17,3 million (covers 3 months imports)
•
BOP Surplus
$2.2 bn (July/March 2013/14)
•
Trade balance
$-25 bn deficit in FY2009/10
$-33 bn deficit in FY2012/13
8
• Total FDI reached $5.2 bn in
2012/13 from $8.1 bn in
2008/09.
• FDI has fallen dramatically
after 2011 revolution. After
2012 we see FDI picking up
again.
9
Netherlands is the 2nd largest EU investor and the 7th internationally (Accumulative data
since 1970).
Main EU investors in Egypt
10
»
The Netherlands is the fourth largest EU exporter to Egypt after Italy, Germany and
France with exports of €1,276 million (2013)
»
The Netherlands is the seventh largest EU importer from Egypt after Italy, Germany,
France, Spain, UK and Greece with imports of €331 million (2013)
11
»
Morgan
Stanley
confirms
confidence in Egyptian Stock
Exchange (EGX), keeps it in
Emerging Markets Index due to
positive market developments.
»
Benchmark index EGX 30
increased 85% since 30th June
2013. EGX 30 value was 4,752
in 30/6/2013, recorded 8,746 in
12/6/2014.
»
Market
Capitalisation
is
currently $66 bn down from
$139 bn in 2007
12
» GDP growth was 7.2% before the global financial crises; expected
to recover to 5.5% in 2017/18 (Source: EIU).
» IMF forecasts economic growth 4.3% in 2015; GoE estimates is
3.2% for 2014/15.
» Goldman Sachs includes Egypt in top 11 countries from which
global growth will come in 15 years.
» World Bank expects Egypt to rank 15th globally by GDP in 2050
ahead of Canada and Italy.
» Investment opportunities exist across a wide range of sectors
(agriculture, transport, water, oil & gas, education & training,
energy, engineering, ICT, retail, financial services, life sciences and
security equipment).
13
» Energy crisis (blackouts, inefficient usage, slowdown natural gas
production)
» Fiscal balance (budget deficit, reliance on aid and grants)
» Subsidy schemes (1/5 of budget, not directed to needy, social sensitivity)
» Solvency crisis (Lack of hard currency, black market, delayed payment of
obligations, etc.)
» Business and investment climate (complicated government procedures,
changes in legislations, contract enforcement, tax conflicts, protecting
investors etc.)
» Stability / security (dropped credit ratings, demonstrations and strikes,
increased crime rates, etc.)
GoE is aware of these challenges and has started to rebuild the country by:
o Economic reforms started by reducing energy subsidies.
o Major efforts to improve security.
o Legislative reform to encourage investment
o Use of International Advisory services (multilateral and private)
14
» Most populous country in the Middle
East and North Africa
» Population: 90 million (May 2014)
expected to reach 150 million by
2035
» Growth rate: 2.8%
» 50% population is under 25 yrs
» 45% of population live on less than
$2/day
15
Compared to other countries in the Region:
16
»
USA: 2 missions to Egypt (infrastructure and safety), 1 ministerial visit (Foreign Affairs).
Relieving $1 bn of Egypt’s debt for new educational and economic projects. Providing
$1.7 bn in loans for infrastructure projects (water and transportation sectors) and SME
support. Annual $1.3 bn military aid.
In addition to training and investing in people
initiatives.
»
UK: 3 missions to Egypt (SCC, Waste Management, energy) and 3 events (tourism,
nursing, banking), 1 Ministerial visit to the UK (education) and 3 events about Egypt in the
UK (investment, ports and multi-sectorial)
»
France: French Development Agency to provide €1.2 bn for financing the third phase of
Cairo's third metro line Sep 2014. Financing € 95 million for SMEs projects.
17
»
Italy: Italy is granting a € 45 million credit line Egyptian and Italian small and mediumsized enterprises (SMEs) with projects in Egyptian industry, food and services sectors.
»
China: Contracted new tunnel to Sinai under Suez canal; Negotiating electrified new rail
line between Cairo and Alexandria (220 Km); Negotiating new Tram line (urban transport)
in Greater Cairo.
»
South Korea: Egypt – South Korea Business Forum to launch in Aug 2014 (Energy,
Chemicals, Transport, Construction, Electronics)
»
Russia: Two Egyptian mission to Russia (Aug 13 & Feb 14) and one mission to Egypt
(Nov 13) to discuss military cooperation. A Russia-Egypt intergovernmental commission
on trade and economic cooperation was formed and a $2 bn arms deal finalised.
»
UAE: Khalifa Fund to provide loans of $400 million to finance small, micro
and medium enterprises in Egypt.
18
Has a portfolio of over € 900 million; current projects include:
»
Education and TVET (€ 220 million)
»
Health (€ 110 million)
»
Water (€ 116 million)
»
Energy (€ 110 million)
»
Emergency employment € 70 million (Social Safety Net )
»
Transport (€ 80 million)
»
Environment (€ 40 million)
»
Socio-economic development and Civil Society (€ 90 million)
»
Business Development and Trade (€ 64 million)
19
EIB Portfolio for 2009/2014 is €1,7 bn:
» After 2011 investments 200-250 million/year, top year 2010 (€ 900 million)
» Energy, € 865 million
» Oil/gas (2010), € 346 million
» Transport (2012/13), € 250 million
» SME credit (2013), € 80 million
20
EBRD Portfolio for 2013/14 is € 1,25 bn; major allocations are:
» Power
€ 650 mn
» Transport
€ 171 mn
» Agribusiness loans
€ 190 mn
» SME loans
€ 73 mn
21
WB current portfolio in Egypt is $4.9 bn: (through IBRD and IDA)
»
»
»
»
»
»
»
Power $2,177 mn
Finance $900 mn
Transport $880 mn
Social sectors (health, education and employment) $418 mn
Water and sanitation $416 mn
Agriculture $100 mn
Environment $27 mn
Additionally IFC, part of WB group, has total commitments in Egypt since 2011
close to $1 bn. IFC mission is private sector development.
22
Current portfolio consists of 27 projects with ongoing commitment of Euro 1.4
bn:
• 7 public sector loans (87% of ongoing commitments)
• 3 private sector loans (12% of ongoing commitments)
• 17 grants (1% of ongoing commitments)
Ongoing commitment by sector:
• Power (80%), finance (12.2%), water and sanitation (4%), social (3.6%),
and agriculture (0.2%)
23
Nationality
Name of the company
Amount of
investment
Timing of
the
investment
USD 402 million 2014/2015
Budget
Type of investment
Employment
NL
Shell
NL
Orascom Construction BV
USD 300 million
Int'l
Coca Cola
Int'l
Chipsy
USA
Apache Corporation
USD 500 million in 3 years
time
USD 64 million in 5 years
time
$24 million
UK
British Dragon Oil
$39 million
Gernmay
Porsche Automobiles
Korea
Samsung
EGP 1.7 bn
Russia
New Russian Industrial zone
Renovation of Helwan Iron & Steel
Factory, Renovation of Nasr Automotive
Company
EUR 45 million
to finance small & medium-sized enterprises (SMEs) in
Egypt
EUR 260 million to be repaid to establish a new wind farm plant in
(loan)
over 25 years Suez Gulf Area
EGP 200 million Over 2 years Establish a new factory in Bani Suef to produce an
export home appliances
Italy
Japan
JICA
Japan
Panasonic
Investment in Badr El Din Petroleum
Company used in excavation,
exploration, development and
establishment of new production
facilities
to support real estate developers including Emaar Misr
& Palm Hills developments
new factories
12000
new production line
9000
Oil & gas exploration
Oil & gas exploration
EUR450,000
Construction of dealerships in Egypt
2014
transform its Upper Egypt plant into an
integrated LED screen production center
24
Nationality
Name of the company
Amount of
investment
Timing of
the
investment
Distributorship agreement with GB
Auto
Type of investment
establish the largest commercial, office and
housing center in Cairo
Russia
Gazprom Neft-Lubricants
UAE
Emaar
EGP 8 bn
UAE
Al-Futtaim
EGP 16.5 bn
UAE
Collaboration between United Arab
USD 760 million
Shipping Company & Holding Company
for Inland and Maritime
Transport
Financial Aid of EGP 20 bn
EGP 20 bn
UAE
UAE
Khalifa Fund for Enterprise Development USD 200 million
(loan)
China
China Harbor Engineering
Gulf Countries
Al-Ahly for Real Estate + Saudi Group Al- EGP 1.2 bn
Rabeaat
Almarai Dairy Company
USD 345 million
KSA
KSA
Saudi Egyptian Construction Company
(SECON)
in 5 years time
to include lubricants and other products to the
automotive market in Egypt
Commercial Malls
38000
opportunities
to establish a container handling facility
constructing 50,000 residential units, completing sewage projects in
151 villages & building 100 new schools
to be repaid over to finance SME-projects in Egypt
15 years
EGP 3 bn (loan)
USD 245
Employment
to finance Ismailia governorate's "Thalatini tunnel" project.
residential project in New Cairo
Over 5 years
expansion of its subsidiary “Bayti” existing factory
in addition to establishing new plant for juices and
dairy products
housing project to establish large number of medincome housing units in three different cities.
25
26
» Egypt has a long term potential for economic development and offers an
important market for Dutch companies.
» Clearly Egypt has its challenges, however, the present government is aware of
the problems and has started economic reforms.
» Many countries, in the gulf region but also in Europe, Asia and the US, are
showing interest in Egypt for investment and trade.
» The large international companies are ready to increase investments if the
present trend of reforms materialises and security further improves. No
companies have withdrawn.
» Investments are picking up and stock market has recovered, reflecting
improved investors confidence.
» Large investment projects, like the Suez Canal Corridor, offer opportunities for
Dutch business.
» Now is the time to get reconnected.
27