In a striking show of support for the much-anticipated Egypt Economic Development Conference (EEDC), officials from Saudi Arabia, Kuwait, the United Arab Emirates and Oman pledged a staggering US$12.5 billion to Egypt at the summit’s opening in Sharm el-Sheikh on Friday afternoon.
The funds were promised in the form of investments, grants and deposits to the Central Bank of Egypt (CBE).
After President Abdel Fattah al-Sisi inaugurated the conference, representatives from the governments of Saudi Arabia, Kuwait and the UAE promised $4 billion each in the form of investments and CBE deposits, while Oman assured $500 million in aid to Egypt over the next five years.
The prodigious sums mirror the financial support that Saudi, the UAE and Kuwait offered Egypt in the aftermath of former President Mohamed Morsi’s ouster in 2013, which also totaled around $12 billion.
Since then, Egypt has struggled to get its ailing economy back on track. The EEDC, which has been months in the making, was billed as the first step on the path to a grand, sustainable recovery.
Throughout Friday afternoon, messages of support rolled in from US Secretary of State John Kerry as well as presidents and representatives of African and European countries, who successively took to the stage to pronounce their belief in Egypt, its leadership and its recovery plans.
Sisi: Long live Egypt
Opening the conference with the national anthem and a short video on Egypt, Sisi diligently thanked the Gulf leaders for their support of the conference from its initial stages. He said he was particularly grateful to Saudi Arabia, the UAE, Kuwait, Bahrain and Jordan “for standing beside and constantly supporting Egypt.”
“The path to the future will move forward,” Sisi said. “Egypt is open to the world and welcomes partners and investors.”
He thanked the international organizations and investors present at the conference hall, promising them mutually beneficial investment opportunities that would help Egypt work toward economic recovery and social justice.
“Egypt will be a model Arab and Muslim state that rejects terrorism, violence and extremism, respects its neighbors, and defends — not attacks — while respecting others,” Sisi declared. He added that the country would use the forthcoming investments and its own resources to construct a modern state, create jobs and economic opportunities, and “build a promising future for our children.”
Sisi also saluted the Egyptian people in his opening remarks, promising that their “dreams for a socially just economic model will be realized with the support of the Arab and international partners” present at the conference.
Touching on Egypt’s recovery and growth plan, Sisi set a target of 6 percent economic growth and 10 percent unemployment to be achieved in the next five years. He also vowed to prioritize shrinking the budget deficit, implementing a fair and equal tax system, and ensuring that price changes protect all segments of society. Pointing to ongoing subsidy reforms, the president said that the goal is to target spending so that the subsidies reach those who need them most.
Improving the investment climate by implementing friendlier rules and regulations, while also removing obstacles for investors, has recently been an area of focus. To that end, Sisi highlighted the newly passed unified Investment Law and the “one-stop shops” for investors. New laws to promote business competitiveness and mitigate monopolistic practices will be vital for this development, he added.
Developing the energy sector along with key infrastructure such as roads, bridges and airports will require the cooperation of public and private players, Sisi continued, encouraging the attendees to pursue public-private partnerships.
“The government is dedicated to implementing regulations that promote investment, while keeping in mind the impact on social justice,” he asserted. There will be a robust commitment to developing Egypt’s human capital, Sisi continued, particularly by revamping the education, scientific research and healthcare sectors.
After thanking the investors of Sharm el-Sheikh and the people of South Sinai, Sisi closed his speech by repeating “Long live Egypt” three times.
Gulf States open their wallets
Saudi Arabia’s newly enthroned King Salman bin Abdul Aziz took to the stage, declaring that “Egypt is an important trade partner, and the private sector is keen to support its economy.” He then announced a financial package worth $4 billion, including $1 billion in CBE deposits.
He exhorted the international community to stand with Egypt in its fight against terrorism and its efforts toward development.
Sheikh Mohamed bin Rashid al-Maktoum, the UAE prime minister, ascended to the podium next. Noting that his country pumped more than $14 billion into Egypt over the past two years, he clarified that this support comes “not out of hatred for anyone else, but out of love for the Egyptian people. It is not for a quick return, but for a long-term partnership.”
Maktoum pledged another $4 billion to Egypt on behalf of the UAE, including $2 billion as deposits in the CBE.
Finally, Kuwaiti Emir Sheikh Sabah al-Ahmad welcomed the “opportunity to improve Egypt’s economy,” and made the third pledge of the afternoon for $4 billion in Kuwaiti investments.
Not to be left out, Oman then joined its neighbors in promising a $500 million aid package spread over the next five years, half of which is to come as investments in projects.
Kerry makes US support clear
After the Gulf States put their checkbooks away, Kerry gave a forceful speech that attempted to strike a balance between affirming support for Egypt, while also advocating for democracy, civil society, transparency and freedom. Since Sisi took the reins as president, previously solid Egypt-US relations have begun to crack as increasingly explicit accusations have made their way across the Atlantic at different times over the past year.
“It is clear that your initiatives are confirming the pivotal role Egypt has played in the region for so long,” Kerry said, addressing Sisi.
“I come here with a simple message,” he sternly added. “The American people are committed to the security and economic and political wellbeing of the Egyptian people, and we will work with you to absolutely secure the ambitious and important goals you have laid out here.”
“There is no question that the emergence of a strong and prosperous Egypt is critical to a prosperous region,” Kerry continued, a message that was reiterated by almost every speaker in the opening session. “We all have a stake in Egypt’s success.”
Kerry went on to praise the January 25 uprising, saying that “all of the Middle East needs to see what Egyptians struggled for in 2011 was a real opportunity and not an illusion. This is why the US is committed to Egypt’s economic reforms.”
He also affirmed that US companies are interested in growing their investments in Egypt, pointing out that last year a delegation of 160 companies visited the country.
“We are in the process of laying out projects that will create jobs, especially in agribusiness and tourism,” Kerry said. He also mentioned US financial support for the enterprise fund and other funds to support small to medium enterprises (SMEs), as well as $1 billion in loan guarantees.
Coca-Cola and General Electric have also announced major investments in Egypt. Earlier today, GE said it delivered a shipment of gas turbines to Egypt as part of a $1.9 billion deal to boost power capacity, and will invest $200 million in a manufacturing and training facility in the planned economic zone around the mega-scale Suez Canal project, Reuters reported.
While there are challenges, Kerry said, “We are all here because through these challenges, we see and understand the extraordinary potential for Egypt to grow sustainably.”
Sisi has demonstrated the courage and political will to push forward tough reforms, namely in the country’s subsidy system, the US official continued.
“Egypt needs to grow openly, and Sisi deserves credit for working to improve the business climate,” he said, emphasizing the continued demand for the equal distribution of wealth.
“Foreign investment requires assurance of accountability and certainty,” Kerry asserted. He added that civil society needs to be included in the process, and argued that transparency must be maintained.
“The road ahead is clear, and so is the United States’ determination to support Egypt’s progress in any way we can — that includes efforts to fight extremists and terrorists,” Kerry concluded. “I promise, directly from President Obama and the US administration, the full commitment to the prosperity, security and peace that the Egyptian people deserve.”
A word from the IMF
Christine Lagarde, managing director of the International Monetary Fund, applauded the policies that Egypt has already put in motion, saying that the key to growth will be staying steadfast in implementing more reforms.
Egypt has stepped in and out of negotiations for an IMF loan since the 2011 uprising. The loan never materialized, but the IMF has still been assertively pushing the government to make its recommended economic reforms, and has also offered Egypt technical assistance.
This past July, Egypt enacted a package of contentious subsidy reforms in an attempt to rein in a deficit that the cash-strapped government has struggled to tighten. Prices and inflation rose initially, but have since come down on the back of falling global oil prices and shifts in the CBE’s monetary policy.
“The journey to higher growth is already on the way. In the past few months, there have been promising strides in reforms that we never would have expected a year ago in the energy sector and in subsidies,” Lagarde told the conference attendees.
“Nobody likes taxation,” she conceded, “but there have been changes in taxation and plans to seriously implement VAT [value added taxes]. This is important, because non-oil revenues in Egypt are only 10 percent of GDP [gross domestic product], and that is low.”
Turning to the Suez Canal development project, Lagarde commended the Egyptian people for financing the proposal. “This is a testament to the confidence of the people in the government,” she asserted, but went on to add that “you can also have smaller projects that are equally important. The funding cannot only rely on the public purse. It has to involve private investment, and for that to materialize, there has to be confidence.”
Confidence will come with Egypt pushing forward more reforms, she said: “The new Investment Law is a good step in this direction, but Egypt can also dismantle some inefficient legislation.”
Coupled with trade liberalization and deepening the financial sector, Lagarde promised that Egypt would see tangible results.
The IMF director also spoke of inclusive growth. “Is higher growth enough?” she asked. “We know from our studies that to be sustainable, growth has to be inclusive. That means making sure that all Egyptians have opportunities: youth, women, the disabled, people who would like to access employment. It also means social spending on health and education.”
World Bank eyes governance reform, UNIDO pleas for press freedoms
The EEDC is “a chance to identify better ways to support Egypt by creating an equitable economic foundation that benefits all of its people,” said World Bank Managing Director Sri Mulyani Indrawati as she addressed the conference.
“There are signs that Egypt could be on the right track,” Indrawati said, suggesting that the past four years of tumultuous political transition could pave the way for socially inclusive development.
For instance, infrastructural investment could create jobs for low-skilled workers, and improving public transportation could help women and the poor access opportunities, she asserted.
“Fiscal adjustment is critical, and the government is aware of the need to protect the poor,” Indrawati said, but added that the “temptation to stay away from tough issues like addressing corruption will be hard, as reform needs perseverance.”
“To develop the private sector, Egypt needs to address governance, the rule of law, transparency and accountability,” she added.
The World Bank says that it’s preparing projects in Egypt that strengthen social protection, increase affordable housing and provide better access to sanitation, while still keeping up with its ongoing work in the transport, energy, agriculture and irrigation sectors, with the help of the International Finance Corporation (IFC).
“Egypt and the World Bank will focus on two issues in the next five years: creating jobs and improving governance,” Indrawati continued.
The United Nations Industrial Development Organization (UNIDO) representative distinguished himself by making the only speech that championed press freedoms. He argued that a vibrant civil society and a government that promotes respect for human rights are also vital to economic development.
The rest of the world takes the stage: Egypt’s Arab, European, African, Russian and Chinese partners
Ethiopian Prime Minister Hailemariam Desalegn was a key speaker at Friday’s opening session. Egypt has been embroiled in conflict with Ethiopia since the controversial Grand Ethiopian Renaissance Dam began construction in 2011. But Desalegn’s words at the EEDC reflected a recently improved relationship with Egypt.
“As the sons and daughters of the Nile, our destiny is together,” he proclaimed. “We either sink or swim together. You [Sisi] know we have chosen to swim together. Let us fight terrorism together, and make our region peaceful. Let us proceed for our integration.”
“Development requires concerted effort and partnership among nations with the proper political, social and economic environment,” Desalegn added. “We cannot achieve development in isolation. We have a responsibility toward mutual partnership, as our destiny is intertwined.”
Despite unprecedented turmoil at home, Libya was also present at the conference. Parliamentary President Aguila Saleh Issa touched on the importance of continued cooperation with Egypt to contain the threat of terrorism within its borders.
“No one can deny the threat of the Islamic State [IS] and Al-Qaeda that faces our nations. Security challenges are the priority, and are of mutual interest,” Issa said, adding that since “investments necessitate stability,” the Arab world first needs to face the threats to its security in order to resolve its economic woes.
Egypt has recently stepped up its courtship of Russia on both the political and economic fronts, and their reinvigorated cooperation efforts were clear when Russian Economic Development Minister Alexei Ulyukaev said that there are “160 investment projects in Egypt we are following closely in energy, industry, production.” He also pointed to the $5 billion in bilateral trade that Russia seeks to expand.
Ulyukaev also called for a free trade agreement between Egypt and Russia. Notably, the two countries have recently agreed to cooperate on nuclear energy.
Palestinian President Mahmoud Abbas said, “We are confident that Egypt is bigger than the challenges it faces, and announce here our support in its fight against terrorism.”
He took advantage of his platform to call out Israel, saying that it must “choose between peace with us, or continued occupation of our territories. It cannot operate outside of international laws.”
Returning back to the matter at hand, Abbas concluded that “the international community’s presence at this conference is a sign of support and recognition of Egypt’s progress.”
Spain’s Industry, Energy and Tourism Minister José Manuel Soria gave a brief but impassioned speech, saying simply, “You have the support of Spain and its people — not only toward investment, but also in the fight against terrorism, no matter how long it takes.”
French Finance Minister Michel Sapin reiterated his nation’s confidence in Egypt, and its important role in ensuring regional stability. He said France supports the Egyptian economy and plans to create energy centers in Egypt.
Egypt’s African neighbors also joined the laudatory chorus.
“This conference offers a much-needed platform for heads of states to interact on investor solutions and sustainability for Egypt and Africa,” declared Joseph Mwanamveka, Malawi’s minister of trade and industry. “What happens in Egypt has an affect worldwide, so we need stability and success and growth in Egypt.”
Sudanese President Omar al-Bashir called for Egypt and Sudan to partner on food and agricultural projects, saying that “the only way to ensure food security in the region is by exchanging resources.” He also called for a partnership to ease trade between both countries through better customs regulations and ports access.
Striking a similar tone, Somali President Hassan Sheikh Mohamud asserted that “investing in Egypt is investing in Africa.” Domestic and foreign investment goes hand-in-hand with sustainable growth, he continued, stressing that macroeconomic stability is fundamental.
From Europe, the Swiss representative welcomed Egypt’s 2014 Constitution and called for its swift legislative implementation, while looking forward to the still-unscheduled parliamentary elections as the next important milestone in Egypt’s democratic transition.
“Egypt’s challenge is our challenge. Egypt’s stability is our stability,” Italian Prime Minister Matteo Renzi trumpeted. Instead of being paralyzed by the fear of terrorism, he urged the international community to deepen its economic cooperation.
He also emphasized Italy’s support for Egypt’s recent military action in Libya.
Chinese Commerce Minister Gao Hucheng, on the other hand, avoided the popular topic of regional instability and focused on the country’s investment priorities in Africa. “We are confident that Egypt under Sisi can achieve prosperity,” he asserted.
Hucheng said that 10,000 jobs were created from Chinese investments in Egypt, adding that the Suez Canal project in particular has captured the attention of Chinese investors. China also plans to beef up investments in industry, infrastructure, clean energy, and iron and steel, and will also work to strengthen bilateral trade, he said.
Lebanese Prime Minster Tammam Salam said his country knows all too well the economic and security challenges that are confronting Egypt. Since January 25, 2011, internal affairs have preoccupied the state’s attention, he said, and kept Egypt from fully playing its regional role. He joined Abbas in chastising Israel, while also urging Egypt to regain its regional status and focus.
“Investing in Egypt means investing in Arab security,” Salam concluded.