Citadel Capital Managing Director Hisham El-Khazindar says the private-sector's flexibility and decisive government reforms have left the Arab world's largest economy better-off than many emerging market peers
Despite the global slowdown, structural reforms implemented by the Government of Egypt since 2004 and the entrepreneurial spirit of the Egyptian business community have positioned the country to weather external pressures well, a top regional private equity leader told an audience at the Economist’s Sixth Business Roundtable with the Government of Egypt.
“Growth, FDI and exports will dampen in 2009 with the fall in global demand,” said El-Khazindar, co-founder and Managing Director of Citadel Capital, the leading Middle East and North Africa private equity firm with US$ 8.3 billion in investments under control. “This is happening all across the world. What’s important is that the government’s reform agenda has helped position Egypt to better weather the inevitable swings in the global economy. Egypt is far better equipped for tough times today than just eight years ago, when a slowdown in global growth hit a much less flexible and robust Egyptian economy. At the same time, the private sector is stronger and more flexible than ever, giving it a new ability to absorb shocks.”
Comparatively better positioned than most of its emerging peers, Egypt is poised to rebound quickly as the world economy improves on the medium term, El-Khazindar told those attending on February 17, the second day of the two-day conference. The Economist conference attracted a large crowd of business leaders looking to engage with senior government officials.
The roundtable was held just days after the government announced Egypt’s economy had grown 4.1% in the second quarter of the 2008-09 fiscal year. While vastly better than the global average, that figure was substantially lower than the 7.7% recorded in the same quarter of the previous year.
El-Khazindar was a panelist at the conference’s off-the-record discussion with Dr. Mahmoud Mohieldin, Egypt’s Minister of Investment, which addressed how private and public entities can “make the trickle-down effect work for Egypt.”
The Citadel Capital co-founder welcomed Dr. Mohieldin’s clear declaration that the private sector must take the lead in creating growth and jobs in the years ahead even as the government continues its roll-out of a stimulus plan that includes new investment in infrastructure.
Concluded El-Khazindar, “What is different this time around compared with previous shocks is that the government and the private sector are largely in sync. The business community is now mature and flexible enough to respond to developments in local, regional and international markets. At the same time, the government is willing to make decisive policy decisions. Together, this should help Egypt ‘hold the line’ — growth will dip, but no more than warranted by the global shock.
“With Egypt’s economic fundamentals still robust, Citadel Capital has every intention of continuing to nurture our investments in our core market.”
Citadel Capital is the leading private equity firm focusing on building regional platform investments throughout the Middle East and Africa in selected industries through acquisitions, turnarounds, and greenfields executed via Opportunity Specific Funds. Citadel Capital’s 19 OSFs now control Platform Companies with investments worth more than US$ 8.3 billion in 14 industries, including mining, cement, transportation, food and energy. Since 2004, the firm has returned more than US$ 2.2 billion in cash to investors, more than any other private equity firm in the region.
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