EGYPT: The Gateway for International Private Equity Investment into Africa

LAGOS, Nigeria, Capital Markets in Africa: Located at the North Eastern gate of Africa, Egypt is considered the gateway to African markets in terms of both investments flows, and target exports destinations. Together with the 90 million plus citizens, its professionally sophisticated financial sector adds to its comparative advantage as an appealing destination for investment flows, mandated towards both the local market and the neighbouring African countries, known for their huge investment potential.

In spite of the temporary disturbance that hit Egyptian African relations right after the eruption of the Arab spring, Egypt has recently successfully regained its position within the African continent.

Earlier in 2016, Egyptian President Abdel Fattah al-Sisi opened an economic summit attended by African leaders and businessmen. The summit aimed to boost trade and investment across the continent. In his opening speech, the president of Egypt highlighted that “Development, which is the main challenge facing us all, calls for achieving cooperation and integration and the need to implement giant regional projects in several areas”.

In terms of trade and investment Egypt has a lot to offer Africa, and Africa has a lot to offer Egypt. Thus a win win situation exists. Egypt is rich in professional experience especially in the establishment and management of investments as well as Development projects, which African countries are in high need of. African countries are also rich in natural resources, which need to be explored and well utilized profitably through smart investment and developmental projects.

In addition, international financial institutions and investors can realize the potential in both Egypt and the African continent, are keeping an eye on investment opportunities proposals coming out of Egypt targeting the huge population of Egypt as well as the rest of the continent.

Defense, infrastructure, transportation, agriculture and farming, are just some examples of the sectors that appeal most to investors in the region. This is supported not only by the availability of natural resources needed, but also the humongous need and demand for such goods and services.

Though it is a relatively new means of finance for investment projects in the continent, Private Equity (PE) has proved to be a very successful source of finance for many projects across Africa. Those vary in the business model between on the ground project management with local offices, or off shore management from Europe and other developed countries.

An additional trend being witnessed is the preference for international investors to invest in Africa through Egypt. One very successful model of an international investor operating in the African continent through Egypt is Actis, with various success stories over the past few years. Another successful model of a local investor realizing the potential of investing in the African continent, and currently expanding to the South, is Qalaa Holdings.

To conclude, international money is interested in investing in the African continent, and especially through the professional expertise of the Egyptian financial sector. This is coupled with the generous availability of natural resources needed to implement the investments on one hand, and the potential high – and expected to continue rising – demand for goods and services, caused by the large, young, and growing population both in Egypt and across the continent. And last but not least, financing investment through private equity has proved to be a convenient, implementable and profitable mean of financing investments across the African continent, and the sector is developing and growing in Egypt. All those factors make investing in Africa through Egypt (and specifically through private equity firms operating out of Egypt) one of the most appealing investment means, routes and destinations in the world.

Contributor’s Profile
Dalia Tadros is the executive director of the Egyptian private equity association. Dalia has a Master’s degree in economics and finance, followed by 17+ years of work experience in and with the various components of the financial sector ranging from stock exchange, to banking. During her professional life Dalia worked in providing awareness, training, business development, consultancy and matchmaking services to SMEs, entrepreneurs and financial institutions. She was also engaged in a number of research projects and advisory projects to the economic policy makers.

This article was featured in the INTO AFRICA July edition, with focuses on Private Equity in Africa and is titled Private Equity: Africa’s Trump Card.

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