Wednesday, April 8, 2020
The Forum for Development and Human Rights Dialogue Egypt’s Sovereign Fund is an Unconventional Step to Stimulate the National Economy and Ensure Economic Development
The Forum for Development and Human Rights Dialogue issued a policy paper on Egypt’s sovereign fund as an unconventional step to stimulate the economy, stressing that the issue of exploitation of economic assets in Egypt was one of the most important files occupying the political management of the state, to restore the vitality of those assets through the issuance of the fund law.
The focus of the study was to clarify what the Fund would work within the sovereign funds of affluent countries with large fiscal surpluses, while the Egyptian Sovereign Fund was based on the management of state-owned assets, with a licensed capital of EGP 200 billion, sub-fund management and extensive partnerships with other international funds.
The Forum’s study predicted a positive and vital role for the Egyptian Sovereign Fund in partnership with the private sector in providing investment opportunities in new assets and sectors, to be an attraction to the Egyptian economy, in addition to the fund’s work to overcome any obstacles to investment, to ensure positive and tangible results that benefit the Egyptian economy and to provide new jobs for young people and improve the standard of living of citizens.
The study shows how the assets of a disabled State can have serious consequences for society, as well as its many negative effects, such as increased inflation, increased unemployment, devaluation of the local currency, distortion of markets, poor distribution of resources, all of which lead to increased poverty rates and income inequality, and above all distort the government’s fundamental role and undermine its legitimacy, underscoring the importance of Egypt’s sovereign fund in restoring the vitality of those assets and turning them into a driving force for the economy.
The Forum stressed that if the State exploits these disabled assets well, it will serve as a powerful tool in achieving development, reducing unemployment and improving social conditions, which ultimately reflects on the advancement of democratic development and the human rights system.
The study also pointed to the diversification of opportunities within the fund, which is currently studying 16 opportunities divided between tourism and antiquities, and joint companies whose ownership is fragmented between state-owned companies and banks, as well as energy and industry. The study considered that the most successful step was the signing of the Egyptian Sovereign Fund and the National Service Projects Organization of the Egyptian Ministry of Defense, a cooperation protocol, under which the fund will offer some companies affiliated with the armed forces to the stock exchange, and allow investment in them with shares of up to 10%.
The Forum’s study also indicated the international confidence that the Fund now enjoys despite bring only two years old, the Egypt Fund was able to join the International Forum for Sovereign Wealth Funds (IFSWF), which requires transparency and compliance with disclosure and transparency standards, and joining that forum was very important, in order to attract investors to the Egyptian market, to partner with the Fund by local and international investment funds.