By Walid Abdel Azim
Mona El Sayed, Head of Commercial Banking at HSBC Bank Egypt, talks to the Daily News Egypt about the company’s plans and assessment of the Egyptian economy.
What is the HSBC’s vision for the Egyptian economy in the coming period?
HSBC Group believes in the long-term future of Egypt and remains committed to investing in growth of its business in the country.
We see a lot of growth opportunities for Egypt and view it an attractive market for investors. This is supported by HSBC’s latest Global Connections Trade Forecast report issued in September 2014, which notes that fast-growing Asian economies will become ever more important trading partners for the country through to 2030.
From your point of view, what are the challenges the Egyptian economy is currently facing?
Egypt is a very exciting economy and once the completion of the political roadmap and the necessary economic reforms are in place, we will witness sustainable growth in the Egyptian economy.
Does HSBC Group still see Egypt as attractive for new investment opportunities?
HSBC Group has an optimistic vision for Egypt and the investment opportunities it brings. This is due to the country’s favourable demographics, strong industrial base, current and emerging trading partners and strong international connectivity. Egypt’s Ministry of Investment is currently supervising 46 projects in several sectors such as infrastructure and public utilities in different governorates throughout the country.
Do you have any plans to acquire new investment/business opportunities in the Egyptian Market?
Egypt continues to feature strongly as one of the HSBC Group’s 19 global priority markets. We will continue to invest in our people, systems and technology to ensure that our customers benefit from a seamless and efficient banking experience.
What are the constraints that should be addressed to attract new investments opportunities?
The new investment law is a significant step to encourage foreign direct investment. Rebuilding confidence in the market as well as clarity on current fiscal and economic reforms are also key to attracting foreign direct investment.
What’s your assessment of the performance of the Egyptian economy in the current year? And do you see obvious improvements that are reflected by the economic indicators?
According to HSBC’s latest Purchasing Managers’ Index (PMI) report for Egypt issued in October 2014 we are seeing a continuation of the recent upturn in Egypt’s non-oil private sector at the start of the fourth quarter. Output and new orders continued to rise, albeit at weaker rates, and companies increased their workforce numbers for the second month running.
The positive indicators are seeing across the market are also reflected in HSBC’s latest Trade Confidence Index, which shows that confidence amongst businesses regarding an increase in imports and exports over the coming period has reached an all-time high.
Do you see the recent reforms adopted by the government on the subsidies restructuring and cost-cutting will have a strong return on the performance of the economy in the coming years?
According to HSBC’s September Trade Forecast Report, we have witnessed an improvement in Egypt’s GDP thanks to a more settled political climate and the recent economic reforms. We estimate that the budget will generate another double-digit deficit this year and if signs of progress continue to be clear, then Egypt is expected to achieve further growth prospects. Yet more economic and fiscal reforms are still required.
How do you evaluate the national projects implemented by the government and the duration of their impact on the performance of the economy?
A project like Suez Canal and the development of the area’s industrial zones offer an anchor for Egypt’s development strategy and could act as a potential draw for foreign investment in addition to further infrastructure and public utilities projects that are currently in the pipeline.
Do you expect the government to implement the Suez Canal certificates subscription model to other new national projects?
We can’t comment on this.
What is your views on SMEs and their impact on the Egyptian economy and availing jobs opportunities? And what is required to increase their business in different state sectors?
SMEs are the backbone of the Egyptian economy. There are approximately 2.5 million SMEs representing 75% of the total workforce, which significantly contributes to the GDP. The SMEs sector has managed to survive the difficult economic conditions in the past three years. Benefiting from the lessons learned during this challenging period, this will enable this sector to capture future opportunities and achieve further growth. In HSBC Bank Egypt, we are working diligently to support the SMEs sector through dedicated teams of relationship managers, trade finance and payments cash management specialists and the International Growth Fund that was launched in 2013 worth EGP 300m.
Do you see foreign aid received will contribute to the economic growth? Or is it analgesic and real opportunities must be created to achieve economic development?
GDP growth has improved thanks to a more settled political climate, financial support from oil-rich Gulf countries and a budget that begins to tackle structural issues.
We expect growth to pick up pace in 2015 and 2016. The unexpectedly marked subsidy cuts announced and tax increases introduced by the new regime at the start of the new fiscal year also offer encouraging early signs that the gains in political order are also feeding through into an improvement in policy formation. Plans to expand the Suez Canal and develop the area’s industrial zones also offers a fresh anchor for Egypt’s development strategy and a potential draw for foreign investment.