{"id":18352,"date":"2024-10-31T17:43:36","date_gmt":"2024-10-31T15:43:36","guid":{"rendered":"https:\/\/zawia3.com\/?p=18352"},"modified":"2026-10-08T23:07:37","modified_gmt":"2026-10-08T21:07:37","slug":"sfe","status":"publish","type":"post","link":"https:\/\/zawia3.com\/en\/sfe\/","title":{"rendered":"Unprecedented Investments or Asset Sales? A Look at Egypt’s Sovereign Fund After Five Years"},"content":{"rendered":"

Last January, Egyptian President Abdel Fattah al-Sisi transferred ownership of the premises of 13 ministries and government bodies in downtown Cairo to the Sovereign Fund of Egypt, most notably the headquarters of the Ministries of Foreign Affairs, Justice, Education, Health, Transport and Finance, after these ministries moved to work from the New Administrative Capital. In September 2020, Egyptian President Abdel Fattah al-Sisi issued<\/a> a decree transferring ownership of a number of public assets from the state to the Sovereign Fund of Egypt, and the decree included removing the public-benefit status of some land and facilities in vital areas of the capital and the governorates. The decree, which aimed to expand the fund’s ability to invest these assets and employ them in projects in partnership with local and international investors, sparked continuing controversy about its impact on the local economy and the exploitation of public assets.<\/p>\n

Before the decree was issued, the fund’s executive director, Ayman Soliman, announced the government’s intention to use these assets to ease the burden of public debt by selling them to investors for between EGP 50 and 60 billion. Soliman stated at a press conference that opening the way for investors through the fund would help recycle capital and stimulate the economy.<\/p>\n

The Sovereign Fund<\/a> of Egypt, which manages assets worth up to about USD 12 billion, was established in 2018 as a private investment fund, with the aim of contributing to Egypt’s economic and financial development by managing the funds and assets it owns or that are transferred to it, as well as investing in many different economic activities, in addition to the aim of creating partnerships with local and foreign private sector investors by designing investment products through the optimal use of state-owned assets.<\/p>\n

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The law<\/a> establishing the Sovereign Fund of Egypt, No. 177 of 2018, stipulates that the minister responsible for managing the fund is the minister concerned with planning affairs. The fund has carried out several partnerships in the fields of industry, education, insurance, health services, pharmaceuticals, financial services and digital transformation. The fund’s board of directors is formed by presidential decree, on the proposal of the Prime Minister, and includes the minister responsible for planning affairs.<\/p>\n<\/blockquote>\n

Noha Roshdy Khalil was appointed acting executive director of the Sovereign Fund of Egypt after the resignation of the former executive director, Ayman Soliman. According to the Ministry<\/a> of Planning, the board of directors of the Sovereign Fund of Egypt for Investment and Development, which held its first meeting chaired by Minister Rania Al-Mashat, expressed its thanks to Soliman for his efforts during his management of the fund, after he submitted his resignation on 4 June.<\/p>\n

The resignation of the former executive director raised questions about the motives behind the decision. According to sources<\/a>, the resignation came against the background of “limited progress” in the privatisation programme, while a government source<\/a> indicated that the political leadership seeks to “introduce new faces in key positions”.<\/p>\n

However, a presidential decree<\/a>, No. 158 of 2024, was issued on Thursday 24 October amending some provisions of Law No. 177 of 2018 establishing the Sovereign Fund of Egypt for Investment and Development. Under the amendments<\/a>, Minister of Investment Hassan El-Khatib became the minister responsible for the fund instead of the Minister of Planning, according to the decision of Egyptian Prime Minister Mostafa Madbouly (published in the Official Gazette, issue No. 43 (continued), Prime Ministerial Decree No. 3601 of 2024). Under these amendments, the fund is also affiliated with the Cabinet. The Egyptian Parliament also approved transferring the fund’s affiliation from the Presidency to the Cabinet, allowing the Prime Minister to designate the minister responsible for managing the fund and achieving its objectives.<\/p>\n

Recommended reading:<\/strong> Why Does Egypt Give Priority to the Foreign Investor?<\/a><\/p>\n

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Second in Africa by Assets<\/h3>\n

A study<\/a> titled “The Expected Economic Effects of the Sovereign Fund of Egypt in Light of Global Experiences: Motives for Establishment and Requirements for Success”, issued by the Faculty of Commerce at Ain Shams University, pointed to the expected economic effects of establishing the Sovereign Fund of Egypt. According to the study, the most important economic motives and justifications for establishing the fund lie in its potential to help reduce the state budget deficit, increase gross domestic product and provide productive job opportunities, by bringing public sector projects under it and managing them, in addition to bringing in unused state land and assets and investing their returns in productive projects. The experiences of both the Mubadala fund in the United Arab Emirates and Norway’s Government Pension Fund could be drawn on to support the success of the Egyptian fund in achieving its objectives.<\/p>\n

As for the study<\/a> by the Egyptian Center for Strategic Studies, “The Future of the Sovereign Fund of Egypt in Leading Sustainable Investments”, it showed that sovereign funds were traditionally established by countries with huge oil and gas revenues or external account surpluses, but today the ecosystem of sovereign wealth funds has become larger and more diverse. There are two drivers for the funds: the first is international investors who support investable projects and the various financeable assets in the country, as the increased cash flow generated by foreign direct investment can strengthen the country’s economic environment by acting as a catalyst for economic development, activity and growth.<\/p>\n

The second driver is transforming state-owned companies to make them more efficient and thus enhance their market value. This process involves attracting financing, expertise and ownership from abroad to public sector companies that were previously ineffective, and sovereign funds can restructure and improve local companies so that they are better managed.<\/p>\n

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According to the World Bank<\/a>, the growth of assets managed by sovereign funds increased by 76%, while the number of investors grew by 54%, as African sovereign wealth funds managed USD 300 billion in 2020, representing an important source of investable capital for the continent. The assets of African sovereign wealth funds are small compared with the giant funds in the Middle East and Asia, yet the size of Africa’s sovereign wealth funds is commensurate with its economies.<\/p>\n<\/blockquote>\n

According to the report<\/a> issued by the International Forum of Sovereign Wealth Funds in Africa, the Sovereign Fund of Egypt ranked second in terms of asset size, with capital of USD 12.7 billion, while the Libyan Investment Authority ranked first with USD 24 billion, in 2020.<\/p>\n

Recommended reading:<\/strong> Asset Liquidation: Is Egypt Selling Its Properties to Pay Off Debts?<\/a><\/p>\n

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Positive Expectations for the Fund’s Performance<\/h3>\n

Khaled El-Shafei<\/strong>, an economic expert and head of the Capital Centre for Studies, comments on the fund’s performance over the past five years. He tells Zawia3: “We are still waiting for the fund to achieve an advantage for the Egyptian economy. The Sovereign Fund of Egypt should have a leading and influential role and the ability to make a difference for the Egyptian economy through its participation, contributions and multiple investments, which should be diversified across all sectors that make up the Egyptian economy, to create balance and harmony, increase growth rates and improve the economy’s overall indicators.” He stressed the need for the fund to respond to citizens’ needs for all the services and goods that should be available, through its participation in many industrial and food investments.<\/p>\n

The economic expert and head of the Capital Centre for Studies points out that the fund has the right to contribute, participate and also invest, so it must have an influential role in the Egyptian economy by setting a complete vision for directing contributions and investments towards specific activities to achieve balance and self-sufficiency for the Egyptian citizen and reduce the import bill.<\/p>\n

He adds that there are many sectors in which the fund can significantly strengthen its contributions, especially those with high import rates from other countries, and that it must work to deepen Egyptian industry in them and localise new industries. Its other role is to achieve new investments and profits in existing companies by contributing to them or bringing in new companies through the agreements the fund concludes. He explained that the fund has not achieved complete positivity in the Egyptian street, nor has it met the Egyptian citizen’s ambitions, and therefore it still needs a strong launch in the coming period.<\/p>\n

Recommended reading:<\/strong> A Saudi, Emirati and Local Withdrawal Stalls Huge Projects in Egypt<\/a><\/p>\n

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The Fund’s Investments<\/h3>\n
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The Sovereign Fund of Egypt ranks<\/a> 48th among the world’s 100 largest sovereign funds by authorised capital, as there are more than 170 sovereign funds around the world, more than 50% of them financed by oil revenues, and more than 60 sovereign funds have been established worldwide in the past ten years, more than 20 of them in Africa alone.<\/p>\n<\/blockquote>\n

The fund’s objectives<\/a> are to create wealth for future generations by maximising the return on the unused state assets transferred to the fund, attracting investors from home and abroad (direct investment), and investing in sectors important to the Egyptian economy, such as localising and deepening industry, technology and digital transformation, to create leading local entities in various fields. The fund works to achieve the goals of Egypt Vision 2030.<\/p>\n

The fund owns a number of sub-funds, including the Egypt sub-fund for tourism, real estate investment and antiquities development; the Egypt sub-fund for utilities and infrastructure; the Egypt sub-fund for health services and pharmaceuticals; the Egypt sub-fund for financial services and digital transformation; the green investments fund; and the Egypt sub-fund for asset management and restructuring with multiple issuances. It ranked<\/a> 41st among 100 global sovereign funds in the first quarter of 2021, according to the investment analysis firm “Global SWF”, and joined the list of the 50 largest sovereign funds, ranking 47th globally and 12th in the Arab world, according to the latest update of sovereign wealth funds published by the Sovereign Wealth Fund Institute in 2023.<\/p>\n

The fund<\/a> participates in green hydrogen projects, owns the Tahrir Complex, the National Democratic Party land and the Ministry of Interior land, and holds stakes in three power stations in Egypt built by “Siemens”: Burullus, the New Administrative Capital and Beni Suef. The fund also holds stakes in the National Company for Petroleum Products Marketing and Distribution and the National Company for Natural Water Production and Bottling “Safi”. It also contributes 12% of the capital of the National Railway Industries Company, while it owns 100% of the shares of Misr Insurance Holding Company and 49% of El Ezaby Pharmacies.<\/p>\n

Developing assets is a main goal<\/a> of the fund, as happened with the Ministry of Interior building in downtown Cairo, which is being turned into a hotel and educational centre, and turning the Global Village land into a school complex. The fund has won regional and international confidence and managed to attract foreign investors, a major gain for the Egyptian authorities, as it helped with some of the offerings they made, such as offering the Tahrir Complex, the land of the National Democratic Party building and 14 companies, and work is under way on wind power stations and on restructuring and developing the Siemens company for offering.<\/p>\n

Recommended reading:<\/strong> Investing in Nile Lands: Are Education and Culture Paying the Price of Development?<\/a><\/p>\n

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Criticism<\/h3>\n

“As Egyptian citizens, we do not have sufficient information about this entity.” Malek Adly<\/strong>, human rights lawyer and director of the lawyers’ network at the Egyptian Center for Economic and Social Rights, says that the changes to the fund’s leadership must be related to its general strategic policy for the coming period.<\/p>\n

He stresses, speaking to us, that it is impossible to evaluate the fund’s performance over the past five years, especially as it is not subject to the general budget and is managed privately, and its budgets have not been announced in the past period, which prevents us from assessing its performance. “And which body relies on legal accountability based on the fund’s annual final accounts or the reports of the Central Auditing Organisation?” he asks, adding: “In the absence of this legal data, the fund cannot be held accountable for its management.”<\/p>\n

He explains that there are many reservations about private funds managing public money that are not subject to government and parliamentary oversight, which represents the authority of the people, stressing the need for transparency in the methodology of managing this fund in terms of investment and its budgets of annual profits and losses, how these funds are represented in the state’s general budget, and disclosure of the oversight tools to which the money in the fund is subject, especially as the Sovereign Fund of Egypt is an executive authority and is subject to the oversight of an executive authority as well.<\/p>\n

Five years after the establishment of the Sovereign Fund of Egypt, citizens have not felt its prominent impact on the ground in the public interest, and despite the huge funds the fund holds across various economic sectors, its impact is only evident in selling or leasing the state’s public assets.<\/p>\n","protected":false},"excerpt":{"rendered":"

Five years on, the Sovereign Fund of Egypt holds major state assets and stakes in key companies, while critics question its transparency and its impact on citizens.<\/p>\n","protected":false},"author":11,"featured_media":10937,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"footnotes":""},"categories":[409],"tags":[19302,19299,19298,19306,19305,19300,19304,10257,19303,19301],"kateb":[7839],"class_list":["post-18352","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-economics-en","tag-asset-sales-egypt","tag-ayman-soliman-resignation","tag-egypt-state-assets","tag-egypt-vision-2030-investment","tag-fund-transparency-egypt","tag-law-177-of-2018","tag-minister-of-investment-hassan-el-khatib","tag-sovereign-fund-of-egypt","tag-sovereign-wealth-funds-africa","tag-tahrir-complex","kateb-mai-ali"],"jetpack_featured_media_url":"https:\/\/zawia3.com\/wp-content\/uploads\/2024\/10\/\u0635\u0646\u062f\u0648\u0642-\u0645\u0635\u0631-\u0627\u0644\u0633\u064a\u0627\u062f\u064a.png","_links":{"self":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/18352","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/comments?post=18352"}],"version-history":[{"count":1,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/18352\/revisions"}],"predecessor-version":[{"id":18353,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/posts\/18352\/revisions\/18353"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/media\/10937"}],"wp:attachment":[{"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/media?parent=18352"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/categories?post=18352"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/tags?post=18352"},{"taxonomy":"kateb","embeddable":true,"href":"https:\/\/zawia3.com\/en\/wp-json\/wp\/v2\/kateb?post=18352"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}