Over the last few weeks, I have been observing the various efforts made by the authorities to attract investment into Egypt, particularly the visit by the Saudi crown prince and his accompanying delegation which resulted in the signing of agreements for Egyptian-Saudi investments estimated at more than $7 billion followed by further high-level visits from Qatar and the UAE.
Of course, I was happy to see the growing Arab investments in Egypt because of my firm belief that they are the most connected to this country and the most willing to persevere and even expand their presence in difficult circumstances. But I was also particularly delighted to see the Egyptian Investment Authority (EIA) at the forefront of such moves.
Not only did the signature of the recent Saudi investment agreements take place at the authority’s headquarters, with the appearance of its director, Mohamed Abdel-Wahab, in the newspapers and on television – despite his reluctance to appear in the media – but also the signature of these agreements testified to the great efforts made by the authority and its leadership to communicate with investors, especially Arab ones, addressing their problems, supporting them with information and incentives, and paying attention to their needs in order to restore confidence in the Egyptian market.
But do the agreements, worth $7 billion, mean that money will now flow into Egypt and achieve the desired increases in production, employment, and exports? They do not. This so-called direct investment unlike hot money does not aim to buy financial instruments and government bonds that can be exited from in an instant. Rather, it seeks to establish or acquire genuinely productive and service assets that will require years of hard work and risk before they yield results.
However, such investment is able to add production capabilities, job opportunities, and the capacity to export goods and services in the longer term, in addition, of course, to rewarding the investors. Direct investment is characterised by its tendency to stay in the country, a situation where its owners have little option but to settle down no matter how fluctuating the circumstances. This is precisely why attracting direct investment is so difficult and requires a lot of patience and perseverance on the part of those entrusted with this task.
We return to the original question. Does signing agreements to invest billions of dollars in Egypt mean that funds will flow into the country? The answer is still no. Each of the agreements supported and sponsored by the Investment Authority will start on a journey of obtaining the land required, the industrial, environmental, and construction licences, permissions to import machinery, equipment, and raw materials, and then recruiting, appointing, and training the necessary labour force. They will need to obtain the necessary financing, start operations, open files with the Tax Authority and the social insurance and export control authorities, and then deal with the sectoral regulator whether in the industrial, commercial, or services field.
All these stages are beyond the control of the Investment Authority, except to the extent that it seeks to facilitate the lives of investors and to strengthen and support them when problems or obstacles arise. All the steps I mentioned are in the hands of various other government agencies, and the final decisions rest with ministers, governors, the heads of authorities, and officials of various ranks.
The result is that the Investment Authority may be able to attract the attention of investors, efficiently promote various sectors in Egypt, provide information, arrange visits, and urge government agencies to perform their roles efficiently. But the desired result of actually setting up factories, employing people, and producing goods and services will not take place successfully unless all government efforts come together and submit to the same orientation, being convinced that they are part of the same team working to achieve the same goal and not individual players disrupting the efforts of the rest.
There has been growing discussion about encouraging investment and improving business in recent weeks, and this is all to the good. But the most important thing is for this conversation to turn into integrated and harmonious team work carried out by all the parties, because one weak link in the chain will be enough to waste everyone’s efforts.
This article also appears in today’s edition of the daily Al-Masry Al-Youm (30 June).
A version of this article appears in print in the 30 June, 2022 edition of Al-Ahram Weekly.