Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital discussed the way forward for Egypt's economy with key members of the country's transitional government at the 9th annual Money & Finance Conference organized by Al Mal/GTM
3 October 2013
Hisham El-Khazindar, Co-Founder and Managing Director of Citadel Capital (CCAP.CA on the Egyptian Exchange), the leading investment company in Africa and the Middle East, moderated the opening ministerial panel at Al Mal/GTM’s 9th annual Money & Finance Conference held in Cairo from 30 September to 1 October.
The panel, which included Minister of Finance Dr. Ahmed Galal, Minister of Planning, Dr. Ashraf El-Arabi and Minister of Investment, Osama Saleh, addressed tough questions from the session moderator including an outline of major goals that the government aims to achieve during the transitional period as well as a discussion of pressing issues such as fiscal policies, foreign reserves, the budget deficit, minimum wage and energy subsidies.
During the session, Galal announced that the Ministry of Petroleum is in the process of preparing a program to gradually reduce energy subsidies acknowledging that the current subsidy system that has seen fuel subsidies reach between EGP 128 and EGP 130 billion annually was unsustainable. He further added that approximately 80% of energy subsidies do not reach those who are truly in need.
The panel discussion also shed light on the major impediments that Egypt needs to overcome in the short term if it is to reduce the budget deficit from 14% to 9.5% and achieve a targeted GDP growth rate of 3.5% in the coming 6-9 months up from the current figure of only 2% growth.
El-Khazindar pointed out that streamlining procedures and expediting decision-making will be the key to achieving these goals and attracting new investments both domestic and foreign in the coming period.
“The investment climate in Egypt today is significantly better than it was 3 months ago during the previous administration. During the past year we saw complete paralysis on the part of the government. There were no approvals or licenses issued to businesses. Even the simplest transactions like regulatory approval for our capital increase was stalled for over a year. This of course made it very challenging for us and everybody else in Egypt to conduct business,” said El-Khazindar.
Citadel Capital has received regulatory clearance from the Egyptian Financial Supervisory Authority (EFSA) to call for a meeting of shareholders to approve the launch of an EGP 3.64 billion share issuance. The proposed share issuance is part of the firm’s transformation from the largest private equity firm in Africa into the leading investment company in the region and will allow Citadel Capital to reach majority ownership in most of its platform companies, in particular the firm’s subsidiaries in its five core industries: energy, transportation, agrifoods, mining and cement.
El-Khazindar also participated in a second capital markets panel at the conference addressing issues related to the negative impact of political events on the stock market. Co-panelists included Sherif Samy, Executive Chairman of EFSA and Dr. Mohamed Omran, Chairman of the Egyptian Exchange, who both acknowledged that a proposed revision of the capital markets law was in order.
“I am today much more optimistic about the future of Egypt compared to three months ago. However, it remains cautious optimism. Economically, Egypt faces deep structural problems, particularly in its energy sector and in the waste and inefficiency of its current subsidy and welfare system. To tackle these problems we need deep reforms to address these structural imbalances and to provide real welfare to the vulnerable segments of Egyptian society, and the sooner these reforms take place, the better,” said El-Khazindar.
“The timely and effective execution by the interim government of both the political and economic roadmaps during the next 9-12 months will be critical for Egypt to move forward,” he added.
Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading investment company in Africa and Middle East. Citadel Capital controls investments of US$ 9.5 billion and focuses on 5 core industries: Energy, Transportation, Agrifoods, Mining, and Cement. For more information, please visit citadelcapital.com.
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