(MENAFN- Daily News Egypt) Egypt is gaining strong momentum in its drive to diversify the economy. With a focus on renewable energy-especially solar power and green hydrogen-new opportunities are emerging to build a robust green sector that can significantly boost GDP. Digital transformation is another critical area of growth. The pandemic underscored the demand for digital banking solutions, and Egypt has responded by expanding financial inclusion and supporting fintech innovation, Jane Fraser, Chief Executive Officer, Citigroup, has said.
Daily News Egypt sat down with Fraser to learn more about the bank's point of view on economic reform in Egypt and investment opportunities in the region.
What is your perspective on global trade and investment flows and how do you see the future of FDIs inflows to Egypt in the coming years?
We're certainly seeing a lot of change happening around the world right now. Global lanes have changed materially. Food, supply chains, financial flows - they're all different today because of COVID, geopolitics and an increasing focus on sustainability. With these changes, there are enormous opportunities for Citi and our clients, including those in Egypt.
Egypt is a critical hub for FDI because of its strategic location, market size and young population. The country's role as a gateway between Africa, the Middle East, and Europe makes it attractive to companies looking to expand internationally. There's great potential in Egypt's renewable energy sector, including the green hydrogen initiative that is drawing strong interest from international investors. We're optimistic that Egypt will continue to be an attractive market for FDI, particularly in sectors aligned with the country's long-term economic and environmental goals.
Jane Fraser
What do you see the Egyptian financial markets and how do you expect them to develop in the short and medium terms?
Over the last few years, Egypt has taken significant steps to modernize its financial sector, enhance regulatory frameworks and improve access to finance, particularly for SMEs and the private sector. These reforms are key to driving sustainable growth and attracting more investment.
We're seeing strong momentum in Egypt's efforts to diversify its economy. The focus on renewable energy - particularly solar and green hydrogen - is creating new opportunities for a thriving green sector which would contribute significantly to GDP. Digital transformation is another key growth area. The pandemic highlighted the need for digital banking solutions, and Egypt has responded by expanding financial inclusion and supporting fintech innovation.
In the short term, headwinds such as inflation and global market volatility will likely continue to impact Egypt and other emerging markets. However, over the medium term, the country's investment in infrastructure, energy and technology should pay off, positioning Egypt as a more resilient, diversified economy. Whether through the capital markets or partnering with our clients on the ground, Citi will continue to play an active role in supporting this transformation.
How does Citi view the impact of the current economic and structural reforms on its investments in Egypt?
These reforms are mutually beneficial for the country's continued growth and for Citi. The steps taken by the government to improve the business environment, strengthen fiscal policies and reform key sectors are critical to attract and sustain both domestic and foreign investment. With ongoing and upcoming reforms, we believe Egypt can grow quickly and move to a more sustainable debt position over a long period.
The reforms in digitalization and infrastructure development are very encouraging. They're creating stability and transparency, which helps attract FDIs and builds investor confidence over the long term. There are, of course, still short-term challenges due to global economic pressures, but we feel that in the medium- to long-term, these reforms will be transformative for Egypt.
For Citi, the economic and structural reforms enable us to bring more sophisticated financial products to market and help our clients access global capital markets more efficiently. The government's reforms in the banking and regulatory sectors, for example, have improved liquidity, enhanced market efficiency, and fostered growth in industries such as renewable energy and manufacturing - all areas where Citi plays an active role. Our commitment to and investment in Egypt is as strong as ever.
How can green investments be encouraged in Egypt, and what role does Citi play in this regard?
It starts with building a supportive ecosystem with clear policies and incentives that make sustainable projects attractive to local and international investors. Partnership between the public and private sector will be key to continue driving investment and funding large-scale green infrastructure projects.
Egypt has made meaningful progress when it comes to green investments. The national renewable energy strategy, for example, is laying important groundwork for exciting, upcoming projects in solar, wind and green hydrogen.
Citi is focused on helping our clients as they navigate the transition to a low-carbon economy and embrace opportunities ahead, which is part of our mission of enabling progress and economic growth. We're working with the government and private sector to support projects that align with Egypt's green ambitions whether through advisory services, capital raising, or connecting investors with opportunities in renewable energy and sustainable infrastructure.
How is Citi enhancing its presence in emerging markets, especially in the Middle East ?
In the Middle East, we're seeing Saudi Arabia, the UAE and others undergoing major transformations as they look to diversify away from oil, which is creating new trade corridors. For example, the Middle East is now more connected to Asia than to Europe. And of course, you have the rise of the BRICS bloc, which has widened its membership to include Egypt, Saudi Arabia, and the UAE. This expansion will certainly accelerate flows in dominant emerging markets, and Citi has an important role to play in helping clients navigate these dynamics while capitalizing on benefits to fuel growth plans.
With clients in over 180 markets and a physical presence in over 90 - 75% of which are emerging markets - Citi has a front-row seat to this evolution. In Egypt, we're a major player in the country's custody business and a major Primary dealer, so we have a good sense of the local debt market. We saw major portfolio flows after the application of a flexible FX regime and the EGP becoming more attractive to investors. These are the niche areas we're investing in to capture increasing opportunities presented by trade and investment corridors.
Citi has been going through its own transformation over the past few years. What are the latest developments in Citi's global strategy and how do Egypt and the broader Middle East fit into that?
Over the last several years, we've set a clear vision and strategy for the bank. We have made significant progress simplifying and modernizing the bank and we are focused on serving institutions with cross-border needs. I'm very proud of the progress we're making, and our third quarter earnings showed multiple proof points that we're moving in the right direction and delivering concrete results.
Citi's unique global network is key to the simplified business model, and it's increasingly a competitive advantage for our clients looking to go global and optimize their operations and supply chains. In this sense, we see Egypt as a key growth driver for Citi. As the third largest economy in Africa and home to the critical Suez Canal trade route, Egypt is a strategic gateway at the heart of Citi's Middle East and Africa (MEA) cluster. The latest developments in the country increased our confidence in the structural reform story in Egypt, which in turn should improve investor outlook on buying more long-term domestic debt and increase FDI flows.
That's where Citi comes in. We remain the preeminent banking partner in the country, delivering our full platform to multinationals, institutional investors, public sector entities and top-tier local corporates. No other bank has the global reach we do or the capabilities to support clients as they navigate emerging opportunities and shifting flows.
What is the volume of deals the bank is currently working on in the region, and how do these deals impact the local financial markets?
We're seeing a strong pickup in deal activity around the world, including a strong pipeline of deals across the Middle East and Africa. I'm proud of our current position as the top international bank in the Middle East and North Africa (MENA) equity capital markets and we have been the lead bond bookrunner across the wider Middle East and Africa region for the past 22 months.
We've worked with sovereigns, sovereign wealth funds and top national champions to ensure they have access to global capital markets and, at the same time, we're deepening our presence in local capital markets.
In the debt capital market space, Citi has been the only bank on all-African sovereign transactions in 2024 and led several MENA issuances, including Egypt's US$1.5bn inaugural Sukuk offering in 2023. In the ECM space, we were among the lead managers of the $12.3bn share offer by Saudi Aramco and have played a leading role in many of the recent IPOs in the UAE.
We see a fast-growing and maturing regional capital market, which is slowly but surely widening to offer issuers more liquidity and provide greater investment opportunities for local and international investors. I expect this will only continue.
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