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Thursday, November 24, 2022

INTERVIEW: ICIEC committed to cooperating with Egypt’s government, private sector: CEO – Economy – Business

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Through the conferences, Ahram On-line mentioned with CEO of the Islamic Company for the Insurance coverage of Funding and Export Credit score (ICIEC) Oussama Kaissi, the help ICIEC offers Egypt amid the concurrent challenges.

ICIEC is an IsDB Group member that gives funding and export credit score insurance coverage for the member international locations and Islamic states primarily based on the Settlement for the Promotion, Safety and Assure of Funding amongst Member States of the Group of the Islamic Cooperation (OIC Funding Settlement).

Ahram On-line: How does your establishment help Egypt amid the continuing multifaceted international financial and monetary disaster?

Oussama Kaissi: Egypt is a precedence accomplice and marketplace for ICIEC. We get pleasure from a robust relationship that goes again 30 years. Egypt is the third largest fairness shareholder in ICIEC (4.53 p.c) after the IsDB (51 p.c) and Saudi Arabia (20.29 p.c).

Because the insurance coverage instrument of the IsDB Group, ICIEC offers credit score and political danger insurance coverage to spice up exports, maintain imports of strategic commodities, guarantee funding safety, and reduce volatility. ICIEC can also be dedicated to the UN’s Sustainable Growth Objectives (SDGs) and the transition to scrub power and Internet Zero underneath the provisions of the Paris Settlement. Our goal helps our Member States obtain these objectives.

Since its inception, ICIEC has insured operations with a complete of $7.6 billion in Egypt. These embrace $3.1 billion for the duvet of imports of strategic items, $2.4 billion in exports credit score insurance coverage, $1.7 billion insurance coverage of international investments into Egypt, and $0.4 billion for the duvet of international investments from Egypt.

This excludes the financing allotted to Egypt in 2021. We managed to steadiness our continued help for Member States with a sound danger mitigation technique regardless of the quite a few impacts of the continuing COVID-19 pandemic and the repercussions of the Ukrainian Russian battle. Challenges additionally embrace disruptions within the provide chain particularly in power and meals, along with the resultant inflation and the worldwide shocks equivalent to subdued GDP progress and a cost-of-living disaster.

Our insurance coverage help for commerce and investments in 2021 was maintained at a reputable $9.7 million of which $7.5 million have been in help for exports and imports and $2.2 million in help of international direct investments (FDI).

Our financing in Egypt in 2021 comprised of $199 million in help of exports and $408 million in help of imports of Egyptian corporations and influx of $204 million of FDI. Some 51 Egyptian entities obtained ICIEC companies in 2021, the fourth highest after Saudi Arabia, Jordan, and UAE.

Furthermore, Egypt options within the prime six of the assorted commerce and funding enterprise metrics facilitated by ICIEC in 2021.

On this exceptionally difficult 12 months and regardless of the persevering with international financial impression of the pandemic, ICIEC 2021 enterprise outcomes present a 12 months of unprecedented dangers, shifting priorities, and IsDB Group COVID-19 response initiatives. All this occurred regardless of the repercussions of the pandemic on insurance coverage operations and the steep decline in market charges on funding insurance coverage operations.

We now have glorious communication and cooperation with our line ministries and IsDB Governor for Egypt, Hala El-Mentioned, the Minister of Planning and Financial Growth, who’re serving to us with pointers and suggestions to enhance our operations and companies within the nation. The potential in Egypt is big therefore our method of getting somebody on the bottom on a full-time foundation to supply extra client-centric companies and to handle our publicity within the nation.

AO: What’s the quantity of amenities, funds, or investments ICIEC intends to inject within the Egyptian market in 2022?

OK: Our fundamental goal is to consolidate positive factors made in the previous few years and to broaden our attain and actions in Egypt. On this respect, ICIEC is dedicated to cooperating with the Egyptian authorities, businesses, and the non-public sector on numerous fronts going ahead.

Our engagement with Egypt is about to extend considerably over the following few years due to a number of necessary developments.

ICIEC is working intently with the Ministry of Commerce and Business to assist us familiarize with a wider scope of Egyptian exporters, producers, and contractors with ICIEC services in the direction of and concerning the significance of commerce credit score and funding insurance coverage as a danger mitigation instrument to encourage exporters and traders to penetrate new markets, particularly these in Sub-Saharan Africa (SSA).

The Central Financial institution of Egypt (CBE) has not too long ago established a brand new export credit score company (ECA) to help the entry and growth of Egyptian exporters and traders particularly within the African markets. ICIEC is already participating with the brand new ECA and can signal memorandums of understanding (MoUs) with the brand new entity and with the CBE on this respect. ICIEC has not too long ago renewed its Reinsurance Treaty Settlement with the Export Credit score Assure Co. of Egypt (EGE) to insure Documentary Credit score Insurance coverage Coverage enterprise.

The institution of the IsDB regional hub in Cairo will facilitate a smoother and extra pressing interplay with companions and counterparties in Egypt. On this respect, ICIEC is within the means of appointing a everlasting consultant primarily based in our workplace in Egypt. That is the primary time the Company will appoint somebody chargeable for its actions in a particular nation. 

We’re actively participating with Egyptian banks with our traces of amenities and different de-risking options. We now have long-standing relationships with financing the cable manufacturing, development, electronics and, pharmaceutical industries.

Egypt’s intra-OIC exports stood at $12.3 million on the finish of 2020. As such Egypt’s complete commerce with the OIC member states reached $26.1 million. That is an incentive to spice up Egypt’s intra-OIC commerce particularly by way of the Egypt Hub which might additionally function a gateway to the Sub-Saharan African (SSA) markets.

It may be a serious enhance for intra-IsDB commerce, funding flows, and the event of the Islamic finance trade in Egypt. We sit up for a partnership that will put ahead sensible initiatives for the non-public sector and traders to be carried out within the curiosity of financial and social growth in Egypt. The IsDB has a specific curiosity in creating the non-public sector and small and medium-sized enterprises (SMEs) that create quite a few job alternatives for residents.

The funding and growth impacts along with the supply of ICIEC services clearly contribute to the socio-economic resilience required for post-pandemic financial restoration and rebuilding. That is executed by way of ICIEC’s distinctive Shariah-compliant de-risking options together with Non-Honouring of Sovereign Monetary Obligations (NHSFO) Coverage, International Funding Insurance coverage Coverage (FIIP) to cowl Fairness Funding, and Reinsurance. That is achieved by way of forging Partnerships for Change according to SDG 17 and ICIEC’s Principle of Change technique thus, mobilizing the worldwide finest practices and applied sciences.

ICIEC not too long ago participated in a number of Inexperienced Finance transactions in Egypt together with the availability of Breach of Contract and Political Danger Insurance coverage (PRI) cowl underneath its International Funding Insurance coverage (Fairness) Coverage to the UAE-based Alcazar Power for its $68 million fairness funding within the Benban photo voltaic advanced in Aswan. The duvet is for 7 years. The advanced includes the development and operation of 4 50 MW solar energy vegetation that generate electrical energy to the Egyptian nationwide grid underneath a 25-year energy buy settlement.

ICIEC additionally offered a NHSFO coverage for $56 million overlaying the participation of Japan’s Sumitomo Mitsui Banking Company (SMBC) within the Syndicated Inexperienced Time period $3 billion Mortgage organized by Emirates NBD Capital and First Abu Dhabi Financial institution in favour of the Ministry of Finance of Egypt to finance Inexperienced Initiatives.

The Eligible Inexperienced Initiatives are anticipated to have a big constructive impression on the environmental and social programmes of Egypt. The initiatives embrace seawater desalination vegetation with probably the most energy-efficient applied sciences that scale back water consumption and enhance the effectivity of assets (equivalent to assortment, remedy, recycling, or reuse of water). Nearly 1.2 million folks in 4 Egyptian governorates anticipate to have entry to higher sanitation and sewerage upon the completion of the Sanitation and Sewerage Infrastructure Undertaking. That is impression funding and growth in actuality.

We’re nicely positioned to play a key function in supporting the non-public sector in Egypt by way of the credit score amenities the company offers to monetary establishments, in addition to nationwide and sub-national our bodies, that are custodians of related local weather motion initiatives and transactions. 

ICIEC, topic to the ultimate approval of the Arab-Africa Commerce Bridges Programme Board can also be launching a landmark Local weather Motion Finance Belief Fund with institutional companions, peer multilaterals, and ECAs in Member States and past. 

AO: How do you understand Egypt’s efficiency underneath its financial reform programme?

OK: I’m heartened by the speedy actions that Egypt has taken to safe meals imports, scale back the inflation pressures, and improve the economic system’s capability to face up to international challenges.

Through the COVID-19 interval, Egypt was one of many few Member States to expertise a constructive GDP progress, which is spectacular for a rustic with a inhabitants of 120 million. Egypt stays considered one of our prime precedence international locations within the MENA area for our operations.

The Worldwide Financial Fund (IMF)’s information on Egypt exhibits that it attained a recorded GDP progress price of three.6 p.c in 2020 and three.3 p.c in 2021, which is projected to rise to five.9 p.c in 2022 earlier than settling all the way down to a projected 5 p.c in 2023 and a projected rebound to five.9 p.c over the medium time period in 2027. The consensus is that Egypt’s economic system stands out for its resilient financial efficiency all through the COVID-19 pandemic, regardless of comparatively restricted pandemic-related stimulus by the federal government.

Despite the fact that it was impacted by latest international developments, Egypt managed to realize an financial progress price of three.3 p.c in 2021, and 9 p.c within the first half of FY 2021/2022. Moreover, unemployment stays low at 7.3 p.c This indicators a robust comeback after the preliminary blow of the pandemic.

Like all economies usually Egypt additionally faces financial headwinds. The IMF information for Egypt exhibits inflation charges from a 4.5 p.c in 2021 projected to rise to 7.5 p.c in 2022 and 11.0 p.c in 2023 settling all the way down to 7.4 p.c in 2027 over the medium time period.

Nonetheless, the chaotic impression of provide chain disruptions brought on by the warfare in Ukraine is matched by volatility in key monetary indicators. On 10 Might 2022, Egypt’s annual client value inflation rose to 13.1 p.c 12 months over 12 months in April from 10.5 p.c in March, in keeping with CAPMAS, the Egyptian state statistics company. The rise is attributed to greater meals costs. Annual meals inflation was up 26 p.c, which signifies a 7.6 p.c improve on a month-to-month foundation in contrast with 3.3 p.c month-to-month in January until September 2021. Based on Moody’s the Meals Weight within the CPI Basket is 32.7 p.c and Egypt has a 48.2 p.c cereal import dependency. 

The latest international developments have prompted us to revise our preliminary progress projections for FY 2021/2022 at roughly 6 p.c (conservative estimate). The IMF raised its forecast for the expansion of the Egyptian economic system throughout FY2022/2021 to five.9 p.c, in comparison with 5.6 p.c in its earlier forecast.

Meals imports and safety might be probably the most related for a rustic equivalent to Egypt, which has an total meals import invoice that’s comparatively modest. The destabilising impact of the warfare in Ukraine comes from the truth that Egypt is the most important importer of wheat on this planet, importing round 23 million tonnes value $5.6 billion in 2020.

In 2020, Russia and Ukraine account for round 86 p.c of the imported wheat (26 p.c from Ukraine and 60 p.c from Russia in keeping with Worldwide Commerce Centre information). This exposes Egypt to any commerce and provide disruptions brought on by the battle. Based on COMTRADE and Moody’s, Egypt is the thirteenth most uncovered nation to a meals value shock. It’s GDP share of meals imports is a middling 4.8 p.c.

Equally, the economic system faces a projected present account deficit of 4.3 p.c in 2022, anticipated to rise to 4.6 p.c in 2023 earlier than tempering to 2.6 p.c in 2027. Regardless of crises impacting its exterior place, Egypt enters with sturdy progress and monetary efficiency.

Egypt’s financial reform programme and the hard-won macroeconomic positive factors have offered the CBE with a robust toolkit to implement its financial coverage and keep costs over the medium time period and with strong buffers to insulate the economic system from extreme volatility.

The Gulf Cooperation Council (GCC) international locations have collectively made $22 billion of monetary commitments to Egypt to help its steadiness of funds dangers. Saudi Arabia made a $5 billion international forex deposit to straight reinforce Egypt’s international change reserves, along with one other $10 billion earmarked for investments.

The entire interventions of the IsDB Group in Egypt so far quantities to $17.8 billion. Meals safety, poverty alleviation, and nil starvation amongst others are core elements of the IsDB’s sustainable growth technique for member states by way of bilateral preparations, co-financing, non-public sector engagement, commerce finance, growth finance, and the availability of de-risking options by way of credit score and funding insurance coverage.

AO: How do you see the end result of the present annual conferences being held in Sharm El-Sheikh to your establishment and for the nation?

OK: I imagine that the 47th IsDB Annual Conferences may very well be a recreation changer for Egyptian-IsDB Group cooperation, together with ICIEC, particularly within the rising sectors of inexperienced and clear power transition and renewable power, in addition to digitalization and commerce finance.

Moreover, there may be ongoing cooperation in capacity-building and coaching offered by ICIEC, Worldwide Islamic Commerce Finance Company, and different establishments of the IsDB Group. Capability-building is of paramount significance to Egypt and one of many cross-cutting pillars of assorted areas of growth plans and programmes of the Egyptian state in commerce, trade, and different financial and growth fields.

The prevailing cooperation between the IsDB Group and Egypt will not be solely a testomony to the sturdy financial ties, but in addition factors to extraordinarily promising and fruitful future endeavours. The annual conferences present an excellent platform for our 57 member states, the assorted taking part businesses, and financial and civil society entities to debate current urgent points and our collective efforts for stability, financial restoration, growth, jobs, prosperity, and well-being to our peoples within the spirit of cooperation, solidarity, innovation, and hope.

Member States and IsDB Teams entities have signed a number of MoUs and agreements throughout the Annual Conferences, together with these by numerous Egyptian ministries, businesses, and corporates. Concepts have been exchanged, proposals submitted, and financings accepted. The problem stays to make sure that these numerous initiatives are literally realised and carried out.

The Egyptian authorities is getting ready to challenge the primary sovereign “sukuk”. That is to help in offering needed funds for funding initiatives included within the financial and social growth plan within the basic price range to realize growth objectives constantly with state’s efforts to reinforce points of enhancing residents’ residing requirements.

We imagine that Islamic finance has nice potential in supporting Egypt’s efforts to finance infrastructure, commerce, and SDGs agenda particularly local weather motion, meals safety, and social security internet initiatives. The SDGs require unprecedented mobilization of funds to help their implementation. Islamic finance gives efficient various technique of financing for sustainable growth actions and initiatives in creating international locations.

I concur with minister El Mentioned’s rivalry that over the following few years, Islamic finance will probably be thought of one of many main financing methods for Egypt, due to its give attention to financing the true economic system, which can also be according to the Nationwide Structural Reform Programme that the Egyptian authorities launched in 2021.

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