Over the course of July, Egypt has announced three major funds to be invested in the country’s economic, educational and sustainable reform as part of its ongoing campaign to enhance the national economy, improve standard of living and attract foreign investors.
The Sovereign wealth fund “Misr Fund” (11 Billion USD)
Egyptian Parliament meeting archives. Source: Middle East Monitor
Earlier this week, Reuters stated that Egypt is setting up a sovereign wealth fund (A state-owned investment fund) of 11 billion USD. The purpose of the fund is to manage state companies that the government is planning to list in the stock exchange. The fund aims support sustainable development through management of its funds and assets. The fund is also eligible for all economic and investment opportunities, including setting up companies and investing in debt instruments.
Earlier this year, Al-Ahram Weekly conducted an interview with Ashraf Ghazali, CEO of NI Capital (A subsidiary of the National Investment Bank) regarding the fund. He stated that the process for the fund will take up to six months to pass through the necessary regulations and legislation. He also mentioned that one of the goals behind this fund is to attract involvement of the private sector and foreign investors in the country’s development.
“The fund is 100% owned by the Egyptian government and will only invest in Egypt.” – Ashraf Ghazali, CEO of NI Capital.
Last Monday, the Egyptian parliament approved a five billion Egyptian pounds starting capital for the fund. One billion pounds will be transferred from the treasury effective immediately to initiate fundraising. Amr El Gohary – member of the Parliament economic committee – stated that the capital’s balance will be paid over the next 3 years through government investments, as quoted by Al Borsa.
It is not yet clear when the fund will reach its 11 billion USD target.
Egyptian Private Sector Fund (2 Billion USD)
Minister Sahar Nasr and IFC CEO Philippe Le Houerou. Source: Egypt Today
As the focus on Egyptian entrepreneurship is rapidly gaining, the International Financial Corporation (IFC) announced its intention to support the Egyptian private sector by 2 billion USD, aimed at funding entrepreneurship and SMEs (Small and medium enterprises).
The CEO of IFC, Phillip Le Houreou, announced the fund during his Washington D.C. meeting with Sahar Nasr, Egypt’s Minister of Investment and International Cooperation. Egypt was highlighted by the IFC as a key area for investments in the region. This fund will focus on supporting sustainable development and renewable energy. It aims to support young entrepreneurs and enhance cooperation between the public and private sectors in this field.
The fund is a result of a signed partnership between Egypt and the World Bank, due to the IFC’s membership in the group.
The Education Loan (500 Million USD)
Egyptian Primary School Classroom. Source: Egypt Today
Last Tuesday, the Egyptian Parliament approved yet another investment, this one in the form of a loan by the International Bank of Reconstruction and Development (IBRD), another World Bank group member. The loan aims to improve the quality of the learning experience through providing access to technology and better training for teachers.
The loan plans to:
- Give 50,000 children access to kindergarten education
- Give 500,000 teachers proper training
- Allow 1.5 million teachers and students access to digital learning tools
The approval of the loan is a result of a signed agreement by Egypt in the United States from last April. It follows the World Bank’s agreement in June 2018 to issue a 530 million USD loan to improve the Egyptian public health sector.
Concerns have been raised regarding the amount of loans that Egypt has been taking over the last couple of years, with national debt projected to reach 225 billion USD in 2018. Nonetheless, fundraising efforts such as the “Misr Fund” can be a stepping stone to balancing out the debts and preventing the country from defaulting on its external debt.