Ahmed Heikal: Triple Combo Will Be Key to Accelerating Economic Growth

Amidst the many challenges that Egypt currently faces, the 'triple combo' of Development Finance Institutions, Export Credit Agencies and Sovereign Wealth Funds are part of the solution.

Egypt currently faces three major interlocking challenges: an energy-induced balance of payments problem, unemployment, and high inflation, with all three set to be complicated by the impact of devaluation of the national currency. Bilateral and multilateral support programs are among the keys to solving these problems and accelerating economic growth, the founder of Africa’s leading investment company told participants at the AmCham MENA Regional Council Annual Conference in Cairo.

“Egypt has yet to begin accruing a democracy dividend as political turmoil and the reluctance of traditional investors to return to the fray has slowed both domestic and inward investment,” said Ahmed Heikal, Chairman and Founder of Citadel Capital.

“With the government facing a major liquidity crisis it has become increasingly difficult for the private sector to gain access to bank financing because of the crowding out effect; banks prefer to lend to governments,” said Heikal.

“In the period to come, anyone financing large projects should be prepared to resort to what we call the ‘triple combo’ of American, European, and international Development Finance Institutions, Gulf Sovereign Wealth Funds, and Export Credit Agencies,” Heikal told participants at the summit.

Citadel Capital has called on members of this “triple combo” to fund investments ranging from the US$ 3.7 billion Egyptian Refining Company (ERC) in Egypt to the more than US$ 300 million, five-year turnaround program for Rift Valley Railways (the national railway of Kenya and Uganda).

ERC is supported by US$ 1.1 billion in equity provided by a broad spectrum of investors including Egyptian General Petroleum Corporation (EGPC), which has invested US$ 270 million for a 23.8% interest), Qatar Petroleum International (QPI), which has committed over US$ 362 million for an effective 27.9% interest and Citadel Capital (which has directly and indirectly invested over US$ 155 million and holds an effective equity stake of 11.7%). Other participants include International Finance Corporation (IFC), Netherlands Finance Corporation (FMO), German Investment Corporation (DEG) and the InfraMed Fund.

ERC’s US$ 2.6 billion debt package includes US$ 2.35 billion of senior debt and US$ 225 million of subordinated debt. With the Bank of Tokyo-Mitsubishi serving as the global coordinator, institutions participating in the senior debt package include the Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI), the Export-Import Bank of Korea (KEXIM), the European Investment Bank (EIB) and the African Development Bank (AfDB).

“It was very comforting for someone like me to be walking with the elephants,” said Heikal.

At a time when traditional lenders and investors opted to stand quietly on the sidelines wringing their hands about overblown perceptions of risk, members of the ‘triple combo’ stepped up to the plate and invested in a project that is expected to help reduce by 50% Egypt’s present-day diesel imports, generate more than US$ 300 million in annual benefits to the state treasury, and reduce by nearly one-third the country’s present sulfur dioxide emissions,” he added.

ERC stands as among the largest-ever project finance transactions in Africa and is one of Egypt’s largest inward investments. The project is expected to create over 700 permanent jobs in addition to 10,000 during the construction phase.

Heikal also pointed out that: “What complicates matters is that decision-making within government has been severely compromised by a fear factor. It is not reasonable to expect a government official who spends his morning under investigation for a completely legitimate decision he made yesterday to turn around and sign paperwork for a new project. I am thus all for enacting a law that gives amnesty to government officials unless it is proven beyond a doubt that they have directly benefited from a decision,” said Heikal.

Despite the challenges, Heikal remains optimistic about the future.

“Although we will all pay the price of devaluation, I see tremendous opportunities for companies that are prepared for the period ahead. As the government faces balance sheet constraints, this creates opportunities for the private sector — particularly in infrastructure —but we need to be selective with our investments. The key is figuring out whether you’re in an industry poised to benefit or feel the pinch, and to take action accordingly.”

“Again, the triple combo, with their commitment to the long-term future of countries like Egypt, will play a crucial role in bridging the liquidity gap and helping foster economic growth in the coming period,” added Heikal.

This year’s conference theme is “MENA Regional Development Opportunities: U.S. and Multilateral Support Programs.” The two-day event includes participants from the American Chambers of Commerce in Abu Dhabi, Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco and Tunisia.


Citadel Capital (CCAP.CA on the Egyptian Stock Exchange) is the leading investment company in Africa with a focus on Egypt, East Africa and North Africa. Citadel Capital controls investments of US$ 9.5 billion and focuses on 5 core industries: Energy, transportation and logistics, agriculture and consumer foods, mining and cement manufacturing. For more information, please visit www.citadelcapital.com.

For more information, please contact:

Ms. Ghada Hammouda
Head of Corporate Communications
Citadel Capital (S.A.E.)

g...@qalaaholdings.com (click to reveal this email)

Tel: +20 2 2791-4439 
Fax: +20 22 791-4448
Mobile: +20 106 662-0002