CAIRO - 27 February 2024: Managing Director & Chief Executive Officer (CEO) at Contact Financial Holding - President of the Consumer Finance Federation of Egypt, Said Zater, emphasized the need to seek exchange rate stability and utilize resources to maintain a healthy market, enabling companies to look optimistically at the Egyptian economy.
Zater added when asked about the Ras El Hikma deal, that exchange rate stability would attract investors.
On Friday, Egypt signed a deal with the Abu Dhabi Developmental Holding Company PJSC (ADQ) - the sovereign wealth fund of the Emirate of Abu Dhabi - to develop the Ras El-Hikma city, with total investments of $35 billion whose entitlements will be earned within two months, and the state will have a 35 percent share of the project's profits.
The government expects the project to attract investments of up to $150 billion during its development, helping to provide millions of job opportunities and inject liquidity into the Egyptian economy.
Under the deal, Cairo will receive $35 billion within two months, including an $11 billion Emirati deposit in the Egyptian Central Bank, in addition to $24 billion to be injected by the United Arab Emirates.
Egypt will receive 35 percent of the profits from the Ras El-Hikma project, and the state will be committed to cash and in-kind compensation for the residents located on the city's lands.
This came during the eighth annual summit of Capital Markets that took place on Monday under the title "Structural Reforms - Sustaining Development."
The summit was held under the auspices of the Ministries of Finance, Planning and Economic Development, to discuss the structural reforms conducted by the Egyptian state across all economic sectors with the aim of creating sustainable development.
In the second panel discussion titled "Companies and Challenges of Financial Management," Zater said that consumer finance is one of the most important economic sectors in Egypt, impacting the lives of all citizens. It stimulates consumption, supports economic growth, and represents the future where we will be.
“In 2020, the Consumer Finance Regulation Law was issued, opening up significant opportunities for companies to enter and play a crucial role, especially amid crises like COVID-19, exchange rate fluctuations, and others,” he stated.
He clarified that consumer finance differs from other types of financing, such as leasing, for example, as variable interest cannot be imposed on the client.
Zater discussed the consumption culture of citizens, where clients might use consumer finance to buy goods they may not need, fearing a future price increase. They may also use consumer finance for savings due to inflation, leading to difficulties in repaying the installments demanded.
The CEO mentioned that "Contact" started in 2001 as the first financing company in Egypt, issuing commercial papers in 2005 as the first source of commercial papers in Egypt. Later, it issued sukuk, becoming one of the largest issuers of bonds and sukuk in Egypt.
He added that the company needs significant liquidity to finance its operations, so it resorts to various financing instruments. “Relying solely on banks is not feasible, so they explore financing needs to attain the required liquidity.”
Egypt is facing difficulties due to a shortage of foreign currency and the rise in the dollar's price in the parallel market, with increased speculation by traders, impacting commodity prices and inflation rates.
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