World Economy

Surge in FDIs a Game Changer for Egypt

The gas discoveries should eventually make Egypt a gas exporter.The gas discoveries should eventually make Egypt a gas exporter.

Encouraged by Egypt’s economic reforms, a major gas find, streamlined business rules and a devalued currency, investors are increasingly optimistic about prospects for the North African country after years of political turmoil.

Foreign holdings of treasury bills hit a record high in December, foreign inflows into the stock market last year were the highest since 2010 and direct investment by foreign firms and private equity funds is on the rise again, Reuters reported.

Key for many longer-term foreign investors are the natural gas fields that have come on stream in the last few months, including the offshore Zohr field, whose estimated 30 trillion cubic feet makes it the largest in the Mediterranean.

Iyad Malas, a Dubai-based partner of private equity firm Gateway Partners, said Zohr “will be a game changer for Egypt” and the company’s fund, which invests in Asia, the Middle East and Africa, is looking at several opportunities in Egypt.

The gas discoveries should eventually make Egypt a gas exporter and boost its plans to become a regional energy hub.

Besides the gas, private equity firms say reforms launched since the end of 2016 that secured a $12 billion loan program from the International Monetary Fund have shifted sentiment enough to spur investment, despite the risks.

Investors, however, say they are more concerned the government might deviate from reforms agreed with the IMF, such as cutting energy subsidies further, to keep voters on side ahead of presidential elections this year.

Investors also want inflation to fall and for the government to press ahead with reforms to tackle the red tape that has left Egypt ranked 128 out of 190 countries in the World Bank’s ease of doing business index.

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