A year on from its currency devaluation, Egypt is brimming with opportunities for investments. Hesham Ezz Al-Arab, Chairman of the Commercial International Bank (CIB), talks of how the reforms have shaped the banking sector.
How has the economic situation in Egypt altered after approximately a year since the decision to devalue the Egyptian Pound?
We are all aware of the several macroeconomic challenges Egypt has been facing the past year. The much-needed floatation of the currency last November unleashed inflationary pressures and volatility. Due to the spike in inflation, the further removal of subsidies was, therefore, naturally met with resistance from certain segments of the population. However, the current condition gives all of us great incentive to work harder to increase productivity and output, in order to stimulate GDP and economic growth. This will, in turn, significantly narrow the inequality gap in Egypt and ultimately lead to a sustainable and flourishing economy.
Looking forward, the economy appears to be heading in a positive direction. With respect to the banking sector, given the solid fundamentals of the banking system—excess reserves, liquidity and strong deposit base—banks are well positioned to take advantage of pent-up corporate demand, as well as the huge opportunity from an enormous young, unbanked population.
The Ministry of Investment and International Cooperation is keen to support start-ups in Egypt. Does the CIB have any specific plans regarding such of investments?
CIB applies a different policy to this segment, we design and deliver banking products that meet the nature of their requirements, and to further support the growth of their business. The bank provides a comprehensive, integrated offering of services for this critical segment through its business banking arm, which offers programs and products that address the financial needs of these clients, including financing solutions, cash management solutions, and most importantly, e-business and digital products that empower them in managing and planning their financials needs and further growing their business.
We are currently financing micro-enterprises indirectly through the financing of institutions licensed to fund micro-enterprises. These initiatives benefit approximately 120,000 entities. We expect to step our efforts in financial inclusion and bring those segments in Egypt who are unbanked into the financial system. In addition, CIB will continue to provide smart credit services that support small companies and would help them grow.
In your opinion, what are the biggest incentives that can encourage and attract foreign investors to do business in Egypt?
Egypt is a massive market with needs and it abounds with opportunities across all sectors for foreign investors. Whether it is in energy, transportation, infrastructure, or water desalination, the prospects for projects are endless. In addition, Egypt’s booming population is fuelling the demand for consumer goods ranging from healthcare and pharmaceuticals to real estate and energy.
On another note, Egypt’s strategic geographical location and trade agreements give it access and duty-free entry to various Arab, while African countries make it the world’s gateway to Africa. In this light, Egypt offers a productive environment due to its simpler regulations, low cost of labour, FDA restrictions, and IPR laws, making products more competitive.