Egypt will begin to thrive and prosper at some future point – and that’s a certainty. Bet your last bottom dollar on it or anything else you care to mention. A big statement, for sure, but the country has powerful friends and allies in the Arab world who don’t want to see a failed state on their doorstep. It’s not in the best interests of the West either. No matter how desperate the short term appears to be, a positive outcome although some way off is thus almost guaranteed.
From street level to the rarefied atmosphere of the boardroom, a solid financial services sector is an important driver of any economy. It pushes forward trade both domestically and internationally and helps pull in large chunks of foreign investment. Unfortunately, since the Arab Spring and the 2011 revolution, Egypt has been haemorrhaging home-grown wealth and overseas investor numbers in great quantity. The level of consumer and particularly business banking services on offer, especially amongst some Western banks, are but a pale reflection of pre-revolutionary times and indicative of the deep malaise affecting the present political and economic climate.
The point is echoed by Mohamed Raslan, a partner in the Cairo-based Levari law firm, who says Egypt is not a lucrative place for conventional banks to do business in at the moment. Speaking to the independently-operated Somali news agency Midnimo, he adds, “There’s not a lot of money to be made in Egypt at this moment, but banks are really looking to the future because we feel that there are big opportunities coming. Since the revolution, many of the banks here have only been financing state-owned sectors such as pharmaceuticals and food and beverage, rather than civilian ventures. This is to limit the risk involved.”
If many of the major banks are looking towards tomorrow’s sunlit uplands, the present government in Cairo is mired in the messy aftermath following the military coup which led to the ousting of elected president Mohamed Morsi. Commentators and observers on either side of this tumultuous event have been vociferous in both their condemnation and their support. Meanwhile, governments of every hue and persuasion across the world have been left struggling to make sense of the whole affair and to respond in any measured and meaningful way.
One outcome not in doubt, and which has been widely reported in the media, is the economic cost of this latest chapter in Egypt’s continuing revolution. Whether the $17 billion quoted is an accurate figure or not, with millions of people taking to the street in protest, it’s hard to see how Egypt’s fragile economy could not have been adversely affected. Justified or not, the protests also continue to send out signals to the rest of the world that Egypt is not that safe a place to be in right now for both tourists and other visitors alike.
If Egypt’s banks are taking the long view then so is the country’s interim finance minister, Ahmed Galal. Even although such a stance is to be expected, his language is positive, almost cajoling, urging potential investors to get on board now given the political and economic process which is now unfolding in the right direction. “I think that combination is likely to make Egypt a very attractive place for investors,” Mr Galal told CNBC.
He added, “All of them are most welcome to come, sooner rather than later. If I were an investor, I would come to Egypt now, not later, because this is the time when you establish a position, and then later when the economy recovers, this is when you will make your returns.”