Egypt could be at a turning point. Both the World Bank and IMF are supportive of the Government’s Structural Adjustment Programme, which is finally addressing deeply rooted imbalances in the economy that often go back decades. Emerging markets traditionally suffer from a strengthening dollar, but Egypt may prove an exception.
The currency is now fully convertible, distortions in the energy and food sectors are being tackled and long needed investment in infrastructure is being made. It was against this background that we took the Financial Times’s LEX column to Cairo to participate in a roundtable discussion with many of the country’s top business leaders, jointly hosting the event with our regional strategic partner InkTank Communications.
The fundamentals of a 100 million+ population combined with a return to growth made Egypt the largest recipient of FDI in Africa last year, ahead of Nigeria and South Africa. High interest rates have stabilised the currency and attracted money into local currency bonds. But high interest rates have also stalled private sector investment.
With inflation falling, and investment flows beginning to flow into the country, all felt interest rates have probably peaked and are expected to be firmly on downward trajectory. As LEX wrote following the visit “the direction of travel is propitious”.