IDB aims to revive troubled Saudi investments in Egypt

The Saudi-Egyptian Business Council will begin negotiations with the Islamic Development Bank (IDB) during the next two weeks to finance Saudi investment projects that have been stalled throughout the recent period in Egypt, according to a council official. “Despite solving the issues stalling the operations of 14 out of 24 projects under the previous government, the council faces uncertainty about the applicability of such solutions under the new government, after the departure of ousted President Muhammed Mursi and his government.
Regarding the decision to take advantage of the funding programs of the IDB for stalled projects starting in late June 2012, Abdullah Bin Mahfouz, head of the Saudi-Egyptian Business Council, said: “At the Investment Forum that took place in Egypt recently, we met with IDB President Ahmad Mohamed Ali and explained to him the problems that companies are facing there, particularly those specializing in the development of infrastructure.”
He added: “We support the role of the IDB in enriching the cooperation among Islamic countries, and its role in the development of those countries. Thus we have applied for funding programs for the companies suffering from tremendous losses, so as to allow them to operate again and achieve their objectives.”
The council will put forth great effort in resolving all obstacles as well as legal and administrative issues that resulted in the stalling of these companies’ operations, he said. The IDB should play a role in supporting these projects by granting small loans, he explained. The date of the council’s meeting, during which 16 businessmen in Jeddah will meet with the IDB president, will be determined within the next 10 days.
According to Bin Mahfouz, a date will also be determined for a meeting with Iyad Madani, secretary general of the Organization of Islamic Cooperation (OIC) , who is expected to take office after the upcoming Haj season. “The only strong and existing agreement,” he explained, “is the one that currently exists between Saudi Arabia and Egypt under the umbrella of the OIC. On the basis of that agreement the troubled companies in Egypt were motivated to present their cases before the secretary of the organization.”
Regarding the reasons influencing the desire to meet with the secretary of the OIC, Bin Mahfouz stated that they arose out of the urgent need at this time to revitalize the role of arbitration within the organization, as well as the presence of governmental mechanisms that could help solve the issues of defaulting projects in Egypt and Saudi Arabia. The meeting, he added, will take place at the OIC’s headquarters in Jeddah.
The chairman of the council confirmed the location of the meetings in Jeddah, adding that they will not be attended by the Egyptian side. The delegation will consist of 16 businessmen who are the owners of the companies with stalled projects in Egypt at the moment. These businessmen, although able to find solutions to the issues of 14 stalled projects, are uncertain at this time if and how these solutions will take effect with the departure of the Morsi government.
In reference to the events taking place in Egypt at the moment, Bin Mahfouz said: “I am deeply hurt by what is happening in Egypt in general, but with regards to investment aspect I am especially pained by what Egypt investors are experiencing themselves as they have suffered losses amounting to much more than foreign investments in the country.” He indicated that Egyptian investors are having difficulty in import operations, and the instability of the currency has greatly reduced the size of their productivity. In turn, Egypt’s economy remains halted until the political and security situation improves.”
He estimated the size of affected investments by Saudis in Egypt during the current political instability to be about 20 percent, compared with the faltering of productivity of Egyptian investors, which is estimated to be about 80 percent. A visit planned for Egypt the previous Saturday has been postponed until the current situation stabilizes. Additionally, the current political situation would prevent meetings with the ministers of housing, commerce, industry, and investment with whom the Saudis wish to meet as they are most concerned with the cases of their projects there.
Despite the challenges faced by the Egyptian economy currently, the head of the Saudi-Egyptian Business Council is optimistic about the return of the economy to its previous state, prior to the events taking place in Egyptian streets today. He praised all the efforts being made to reach a state of security and stability through which, he believes, the economic power can reemerge.
According to a statement by the management of the Egyptian Stock Exchange on Wednesday evening, trading was to be suspended on Thursday due to the closure of banks.
Meanwhile, the Central Bank of Egypt also announced the suspension of bank operations in Egypt because of the security and political unrest.
With the halted operations of the stock exchange and banks, most gold stores and currency exchange companies also closed their doors to the public Thursday, especially at locations where violent events took place, especially in Cairo and Giza.