Mogul Samih Sawiris quits investing in Egypt

Egyptian billionaire Samih Sawiris has stated that he is not investing in any new projects in Egypt due to the country’s unstable exchange rate. In an interview with the Dubai-based Al-Arabiya Business channel, Sawiris mentioned that the Egyptian pound has three exchange rates, which complicates investors’ ability to carry out feasibility studies. He criticized the government’s fiscal and economic policies, which he said had a “suffocating” impact on the private sector. Foreign currency shortages, he added, had prevented materials from entering the country.

Sawiris suggested that Egypt should adopt a floating exchange rate regime similar to Turkey to allow the market to rule instead of strangling it. He emphasized the need for clarity to evaluate the feasibility of projects, as the ambiguity of the exchange rate could cause a killer for any expectation of profitability. In contrast, Sawiris expressed optimism about Saudi Arabia, which he described as the number one promising area in the Arab world. Sawiris is considering several investment projects in the Gulf kingdom but did not disclose them.

Earlier this month, the International Monetary Fund (IMF) demanded Egypt to accelerate reforms before conducting its first review of a $3bn rescue programme to support the country’s crippled economy. Under the 46-month programme, disbursements are subject to eight reviews, the first of which was dated 15 March 2023. However, the review has yet to take place due to the IMF’s wait to see more progress from Cairo. The Gulf states’ support is a critical part of the IMF’s $3bn bailout programme. However, the lack of major investments in the country is due to uncertainty over the currency.

According to an S&P survey released on Wednesday, non-oil private sector activity in Egypt declined for the 29th consecutive month in April. The survey showed that ongoing import and currency restrictions, combined with soaring prices, had a detrimental impact on business confidence, reaching an all-time low. Egypt’s headline inflation reached a nearly all-time high of 32.7 percent in March, up from 31.9 percent in February, and core inflation increased to a record 40.26 percent in February.