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Egypt looks safe for foreign investment, says Heikal Citadel Chairman tells Ahram Online that foreign investment is trickling back despite 'bumps along the road' to recovery
Egypt is sending clear signs that it is safe for foreign investment, the chairman of private equity firm Citadel Capital has told Ahram Online, describing the latest political turmoil as "bumps along the road" to an eventual recovery. "Short-term bumps exist, that is clear," Ahmed Heikal told Ahram Online. "Foreign direct investment will suffer from what we're experiencing now - a lack of a general assembly, a constitution and a president. But it will re-emerge and we're seeing the start of that now with investment from DFIs [Development Finance Institutions]." Heikal was speaking at the signing of what he called a "critical" US$21 million investment deal with Germany's DEG and the European Investment Bank, held at the Four Seasons Plaza in Cairo. The two development finance institutions are jointly investing in a Citadel-controlled fund which deals with the logistics of transporting goods along the length of the Egyptian Nile. The extra equity will be used to scale-up operations, build additional barges and procure new handling equipment for existing ports, said Heikal. "We couldn't have chosen a better time [for the investment]," he added. "It sends a clear signal that European investors are supporting Egypt. It's an opportunity not just for a return on investment but it will create jobs and make the roads safer [by encouraging river transport of goods]." Heikel told Ahram Online it may take a few years for foreign investors to feel entirely secure but that there was a feeling the worst had passed for the business community, now breathing a little easier after a spate of corruption investigations. "All will suffer in the short-term and there is reduced activity right now. I'm taking about foreigners and Egyptians investors and businessmen," he said. The Citadel chairman has himself faced damaging allegations. In mid-April, Heikal, a former managing director of EFG Hermes and onetime associate of Gamal Mubarak, found himself slapped with a travel ban as the public prosecutor probed his alleged role, alongside former prime minister Atef Obeid, in embezzlement of public money and profiteering.Citadel said his ban was lifted on 19 June when investigations turned up no evidence of wrongdoing. Heikal refused to be drawn on whether he was concerned about any future allegations. Despite declaring the $21m commitment a signal to other investors, he was careful to draw a distinction between private foreign investment and the kind being extended on Wednesday by the two European development finance institutions, whose mandate focuses on riskier markets. "DFIs have always supported long-term projects, they are different," said Heikal. Speaking at the event, representatives of the European banks were keen to stress the development aims of the investment, describing the improvement of Egypt's waterway facilities as key to weaning the country from its costly, dangerous and environmentally damaging reliance on road transport. Citadel promotional materials claimed that previously limited investment in river infrastructure and government fuel subsidies had led to a dependency on trucking, with 94 per cent of Egypt's goods transported by road. "This is a safer, more efficient way of transporting goods," said Heikal. The equity firm also revealed a broader plan to help build efficient transport facilities all the way up the Nile, from Cairo to Kampala, Uganda. The only stretch unsuitable for navigation is between Juba in South Sudan and the Ugandan capital, and is likely to be developed with World Bank funding, said a Citadel media spokesman. Citadel Capital is Africa's largest private equity firm, with 19 opportunity-specific funds controlling platform companies with investments in 14 countries worth more than $8.7 billion.