Interview: Egypt full of economic opportunities, improved investment climate needed

Egypt is experiencing stability and growth rich with potential for investment opportunities. However, it still needs to improve its investment climate and strengthen its infrastructure, said Cai Jinyong, CEO of the International Finance Corporation (IFC), the private investment arm of the World Bank Group.

Egypt's economic reform has shown preliminary results indicating positive growth, yet still with a bottleneck of insufficient infrastructure and energy, said Cai, who is also the Executive Vice President of IFC, in a recent exclusive interview with Xinhua on the sidelines of the Egypt Economic Development Conference (EEDC).

Approximately 90 countries, some represented by heads of state, 25 organizations and international institutions, as well as world renown economists and diplomats, participated in the EEDC between March 13 and 15 at the Red Sea resort of Sharm El-Sheikh, seeking investment opportunities in Egypt.

Egypt's economy has been marred by political turmoil, protests and political polarization since 2011, which witnessed the ouster of long-ruling president Hosni Mubarak, followed by his predecessor Islamist leader Mohamed Morsi.

Since then, the country's annual growth rate has hovered around two percent, with sharp declines of foreign reserve, FDI and revenues of vital sectors, such as tourism.

With the reforms of the subsidies and taxation systems which aim to ease the pressure on the public budget during Sisi's tenure, Egypt displays positive signs in growth rate of 5.6 percent in the first half of current fiscal year, with rising tourist visits in recent months.

Cai believed the reforms carried out by the Egyptian authority are successful. The huge turnout at the EEDC also demonstrated the substantial interest by foreign countries and businessmen to invest in Egypt.

What's more, Cai believes Egypt exhibits great potential in extensive progress.

Before the EEDC kicked off, Egyptian investment minister Ashraf Salman told the media that Egypt aims to attract foreign direct investments to the tune of 60 billion U.S. dollars and to reach an average growth rate of 7 percent over the next four years.

"Egypt has considerable domestic demands in many sectors. Therefore, as long as reform is on the right track, the investment climate improves and the political situation remains stable, the objectives are achievable," Cai told Xinhua, stressing that implementation of the proper policies is key to economic development.

The development of the agriculture, manufacturing and tourism sectors are based on stable infrastructure and sufficient energy, therefore these sectors are teaming with investment opportunities, said Cai.

Investment opportunities also exist in labor-intensive manufacturing industries as Egypt has a large population with more than half of them young people, said the chief of IFC, noting that one of the major roles of his company is to seek investment opportunities and return added investors back to Egypt.

Established in 1956 and owned by 184 member countries, IFC works in more than 100 developing countries, allowing companies and financial institutions in emerging markets to create jobs, generate tax revenues, improve corporate governance and environmental performance, and contribute to their local communities.

The World Bank Group affiliate stepped up its commitments to Egypt in recent years. During 2011-14, IFC committed a total of around 1.1 billion dollars in 20 projects.

The next challenge in developing Egypt's economy is to strengthen the infrastructure, not only through foreign capital but also through mobilizing local resources, Cai advised.

He added that in order to approach exclusive growth and create job opportunities, it's also necessary to figure out industries with comparative advantages along global value chains.

IFC, focusing on finance, manufacturing and service sectors, will expand investment in Egyptian infrastructure in the future, confirmed Cai, reiterating that IFC is keen to be the bridge between the government and the private sector. Endit