INTERVIEW: Alternative investments to hit $14 tln in 2023 due to the COVID-19 crisis, says G.WORLD founder Mohamed Hamdy
Doaa A.Moneim, , Saturday 11 Jul 2020

The coronavirus pandemic has hit world economies severely, affecting the business-doing and investment scene.

In interview with Ahram Online, Founder and CEO of G.WORLD Platform Mohamed Hamdy said that alternative investment business will hit $14 trillion by 2023, stressing that Egypt needs to bank on this kind of investments instead of the traditional means to help its economy to recover faster.

Ahram Online: How has the pandemic affected Egypt’s economy?

Mohamed Hamdy: Much like the rest of the world, Egypt has been hard-hit by the coronavirus crisis. Nonetheless, the government has managed to implement new policies to mitigate the impact of the outbreak on the economy.

These policies included cutting the central bank’s interest rates by three percent, instructing banks to provide credit limits for companies to finance working capital and salaries, extending the exclusion period for some basic food commodities from their 100 percent cash cover for a year, and other procedures that aim to protect the national economy against the repercussions of the pandemic.

What is the effect of the crisis on doing business and investment in the Egyptian market?

There is no doubt business-doing and investment have been affected significantly, especially in tourism, manufacturing, small and medium enterprises (SMEs) and real estate which are heavy-labour sectors.

However, with the gradual reopening the world over, I expect the market will recover within the next six months. I believe Egypt will be one of the important markets for investment funds and foreign capitals by the end of the crisis.

Sovereign funds across the globe have seen potentials that could be tapped in the sectors that are hit mostly amid the crisis, and Egypt’s Sovereign Fund can do so in the sectors I mentioned earlier.

What is the role of G.World platform in the investment scene, especially amid the crisis?

The platform focuses mainly on alternative investments as a means to direct the investments to new kinds of businesses and sectors, especially with the increase in the number of high-net-worth and very high-net-worth (HNWI and VHNWI) individuals in MENA.

Our work is drawing the investor’s attention to these sectors and fulfilling the needs of investors who seek to diversify and expand their local, regional, or international investments, while maintaining access to authentic data and information from alternative investment industry experts.

Additionally, we aim to establish a platform that provides a simple modern Arabic content that serves HNWIs and VHNWIs, and provides the necessary PESTEL (political, economic, social, technical, environmental and legal) analysis for the countries of the MENA region.

What is the concept of alternative investments G.World focuses on?

Investments are generally divided into two categories: traditional investments, which include stocks, bonds, and cash investments; and alternative investments, which involve all other kinds of investments in tangible or intangible assets.

This encompasses a wide range of fields, including logistics, real estate, venture capital, private funds, hedge funds, digital currencies, blockchains, e-commerce, biotechnology, franchising, information and communications technology, natural resources, financial technology, cyber security, agriculture, sports, livestock, renewable energy, healthcare, petroleum products, chemical industries and fish farming.

What is Egypt's potential to attract more investments?
Egypt is a promising market, but it needs more policies to lure investors to the market.

Digital transformation is one of the most important policies that Egypt really needs, especially in government transactions and ending manual and paper handling, in addition to building more free zones near ports and airports.

Other measures include developing special economic zones and banking on technologies to introduce and market business opportunities in Egypt.

How do you see the future of investment and business-doing in the Egyptian market in the medium and long terms?

I believe global markets will remain volatile in the medium term, but they will recover.

In Egypt, we should focus on improving the business environment and upgrading legal services provided to business owners to attract deals and foreign capitals.

In the long term, the Egyptian government should work to attract more commercial deals with the owners of private and sovereign funds and offer more investment opportunities in alternative investment sectors.

How can Egypt’s Sovereign Fund deal with the challenges of the coronavirus?

The fund's investment strategy mirrors its focus on alternative investments, particularly in healthcare, energy, infrastructure and tourism.

Currently, alternative investments is one of the best strategies because it depends on diversity.

I expect the fund will invest in tech-startups in the coming phase since the coronavirus crisis has proven the importance of this kind of investments that introduce solutions to individuals to deal with the daily life challenges.

What has the pandemic changed in Egypt's and the Arab world's sovereign wealth funds?

The alternative investment industry will hit $14 trillion by 2023, according to recent reports. Emerging markets will become ever more important, both as a source of capital and investment opportunities.

According to a recent report issued by Preqin, an alternative assets investment platform, investors plan to increase their allocations to three major categories in the next five years; 79 percent said they would increase their private equity allocations, 70 percent are planning to boost allocations to infrastructure, and 62 percent are planning to increase allocations to private debt.
The investment strategies in Arab sovereign wealth funds will incorporate more alternative assets into their portfolios as well.