Skip to content Skip to Search
Skip navigation

Orascom ‘treading water’ in Egypt but remains bullish

El Gouna in Egypt, one of Orascom Development's sites in the country Supplied
El Gouna in Egypt, one of Orascom Development's sites in the country
  • Currency devaluation hits hard
  • Orasacom grows 60% but feels pressure
  • CEO optimistic for long-term growth

The value of Orascom Development’s strong growth in Egypt has been almost wiped out as a result of continued currency devaluations.

But group CEO Omar El Hamamsy remains bullish on the future of the North African country.

The conglomerate, that is based in Switzerland and develops infrastructure at scale, has grown 60 percent in Egypt in the last year, but as a result of the Egyptian pound’s recent devaluation El Hamamsy admitted they were only “treading water” in the country at the moment.

The Egyptian pound against the dollar stands at 30.8, down from 15.7 at the start of 2022. In early 2015 it was valued at 7.6 to the dollar.

The devaluation was accelerated by the Russian invasion of Ukraine, which led to foreign investors selling pound-denominated government debt and exacerbated a longstanding foreign currency shortage.

This has also served to push up inflation levels, which are currently hovering at about 40 percent.

“If the situation doesn’t start improving soon, it will put a lot of pressure on a lot of investors, operators and businesses in the country, over and above the human challenge that represents for citizens,” El Hamamsy said.

In a note this week, Capital Economics said they had penciled in a 12 percent fall in the pound to 35/$ towards the end of this year. 

Orascom Development currently operates Andermatt Swiss Alps in Switzerland, Hawana Salalah and Jebel Sifah in Oman, Lustica Bay in Montenegro, West Carclaze Garden Village in the UK and The Cove Rotana in the UAE.

The company also has four sites in Egypt: three on the Red Sea coast – El Gouna, Makadi Heights and Taba Heights – and Byoum, 120km outside Cairo.

A fifth site, O West, situated 40 minutes west of downtown Cairo, welcomed its first residents this year.

“Maybe we ought to be a little bit cautious and focus on what is necessary in Egypt and not what is nice to have in the short term,” El Hamamsy said.

El Hamamsy has transformed the company since his appointment three years ago, from reported net losses to profits of more than $60 million.

Credit rating downgraded

Earlier this month ratings agency Moody’s downgraded Egypt’s credit rating to “Caa1” from “B3” – seven rungs into junk territory.

Moody’s said its decision was based on the country’s worsening debt affordability.

The International Monetary Fund approved a $3 billion, 46-month loan programme for Egypt in December last year, including an immediate payment of $347 million. The country is in talks to increase the loan to $5 billion, Bloomberg reported last week, citing unidentified sources.

Nonetheless, El Hamamsy remained optimistic around the long-term outlook for the country.

Future growth

According to Capital Economics, Egypt’s working age population is expected to grow by an average of 1.5 percent per year between now and 2050, while the period will also see the working age population increase as a share of the total population.

“This, in theory at least, should lead to greater savings within the economy, and thus more domestic resources to fund investment,” said James Swanston, Middle East and North Africa economist with Capital Economics.

He added that Egypt’s low GDP per capita – equivalent to around 18 percent of that in the US – allows plenty of scope for catch-up growth.

“Egypt can, in principle, make rapid productivity gains by importing or replicating technologies and business practices from abroad,” he said.

El Hamamsy said the country’s close proximity to large, advanced economies in Europe and the government’s huge infrastructure spend also bodes well for future growth prospects.

“It’s a question of, as you get over this, what’s the right pacing of your investments there, what’s the right portfolio of activities that you do there, to get you over this without hurting your prospects of capturing that future growth that we’re bullish about,” he said.

Latest articles

An artist's impression of part of the Diriyah Square development

Diriyah Square planned for historic Riyadh district

A public space featuring 400 retail outlets and 100 restaurants and cafes is planned for the historic Riyadh district of Diriyah. Diriyah Square will be announced next week at the World Retail Congress in Paris and aims to attract a combination of international retail brands and local artisans.  Diriyah Gate Development Authority group CEO Jerry […]

Passengers at Beijing Capital International Airport. Air China will fly from the airport to Riyadh three times a week.

Third Chinese airline to launch flights to Saudi Arabia

Air China is set to begin flights to Riyadh in May, becoming the third Chinese airline to establish a route to Saudi Arabia. It joins China Southern and Eastern Airlines in connecting China with the kingdom.  Air China’s Airbus A330-300 will serve the Beijing-Riyadh route three times a week. The expansion in capacity between the […]

Highway traffic in California. Opec said the upcoming 'driving season' in the US will provide the usual additional demand for fuel

Opec stands by predictions for oil demand growth

Opec predicts robust fuel use this summer and has stuck to last month’s forecast of relatively strong growth in oil demand in 2024 and 2025. The oil producers’ organisation predicted in its monthly report that global demand will rise by 2.25 million barrels per day (bpd) in 2024 and by 1.85 million bpd in 2025. […]

Turkish crude steel output rose 25% year on year to 3.2 million tonnes in January

Turkish steel in the black but EU rules rankle

Turkey’s steel industry has rebounded strongly from a weak 2023, despite facing new emissions standards and competition for important markets.  Crude steel output rose 25 percent year on year to 3.2 million tonnes in January, with domestic consumption of finished steel reaching 3.5 million tonnes, a 20 percent increase.  Exports were also up, increasing 23 […]