Egypt’s foreign direct investment is expected to grow over the coming four years hitting around 16.5 bn USD
For our top macro talks today, first, Egypt’s foreign direct investment (FDI) is expected to grow over the coming four years hitting around 16.5 bn USD in FY 2024/2025, according to the IMF. Egypt could see FDI jump as much as 60% during the fiscal year 2021/2022 reaching 8.6 bn USD, compared to 5.4 bn USD last year. Similarly, tourism revenues are expected to see a rebound to 8 bn USD this fiscal year, up from a projected 4.4 bn USD in FY 2020/2021. This will further increase to 15 bn USD in FY 2022/2023, reaching 25.1 bn USD in FY 2024/2025. We believe that receipts are expected to reach pre-pandemic levels of 4% of GDP in FY 2023/2024.
- Second, Egypt’s primary surplus registered 1.4% of its GDP during the FY 2020/2021, registering 93.1 bn EGP (5.92 bn USD).
The country had achieved a primary budget surplus of 2% before the coronavirus pandemic hit, adding that the government aimed to return to that same level in the coming years. Noting that this is happily higher than the 0.9% targeted by the government and better than the IMF’s expectations for a 1% primary surplus. Henceforth, we believe that Egypt budget deficit is expected to narrow to 6.7% of GDP this fiscal year, before dropping to 6.2% in FY 2022-2023.
- In the light of Egypt’s mining sector, investing in electric car batteries metals targets stock portfolios. La Mancha Holding, owned by the Sawiris family, announced the creation of La Mancha Fund, a Luxembourg-based long-term investment fund primarily focused on gold mining.
The fund will manage assets worth more than 1.4 bn USD. It is worth mentioning that the fund’s primary investment objective is to create investment resources for the gold and precious metals mining sector, and it will also have the flexibility to invest in electric car battery metals. It will invest primarily in a specific portfolio focused on long-term listed stocks, but it may consider investing a smaller portion of his assets in private equity.
- Moving to Egypt’s Education sector, the German development bank KfW will provide 41 mm EUR to the Education Ministry in 2022 as part of a German-Egyptian debt-for-development swap program, aiming to develop technical and vocational education in Egypt.
It is worth mentioning that Germany has pledged financing of 1.7 bn EUR for ongoing projects in Egypt covering various sectors.
- And for Egypt’s banking sector, National Bank of Egypt launched a new product under the name “Intermediate Account Service” through which it provides a mediation service to its clients wishing to conclude an intermediary account contract between its clients and other parties to manage the deal between them.
Accordingly, the introduction of their transactions that were carried out outside the banking sector will become under its umbrella, which supports the state's approach to financial inclusion and contributes to the growth of the national economy.
- Also, Thunder Holding Company revealed that it intends to launch its first fund to invest in Shariah-compliant stocks listed on the EGX during Q3-2021.
The company is currently negotiating with several parties to partner in the new fund, including Azimut Egypt. Moreover, Thunder is seeking to obtain two custodian licenses and deal in marginal purchase soon.
- Equally important, for Egypt’s energy sector, the Egyptian petrochemical industry will witness a qualitative leap expected during the coming period in light of a number of new projects being implemented with investments estimated at about 8 bn USD.
We believe that the project of the Red Sea Refining and Petrochemicals Complex in the Suez Canal Economic Zone, whose investments are estimated at about 7.5 bn USD, is the most prominent and important of these projects.
- Moreover, the Riyadh-headquartered Aldrees Petroleum and Transport Services Company (Aldrees) has submitted a request to acquire service stations in Egypt.
The company plans to expand its footprints into Egypt by opening 60 fuel stations in Egypt in H2-2021, bringing its total number of outlets to 644.
- Furthermore, regards Egypt’s real estate sector, first, Capriole Group plans to inject more investments at the New Administrative Capital (NAC) over the coming period.
The company plans to launch two subsidiaries, one for running commercial and administrative facilities and the other for contracting. Second, Al Marasem Development signed 3.3 bn EGP worth of Islamic financing agreements which will be allocated to finance real estate projects also in the NAC.
- Finally, Amazon revealed its intention to launch its website in Egypt, Amazon.eg, this year to give entrepreneurs, business owners and local sellers the opportunity to reach a larger number of customers in the country.
We believe that this move will strengthen Egypt’s industrial sector by supporting local Egyptian companies of all sizes.
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