The current government succeeded in maintaining economic stability

Adnan Youssef, executive head of the Baraka banking group:

‘The Egyptian economy is capable of growth … employing a variety of resources will assist in achieving rapid economic growth.’

Adnan Youssef, executive head of the Baraka banking group, speaks about the current circumstances of the Egyptian economy, stating that Egypt’s economy possesses the strengths that will help the country through its current economic crisis with notable growth rates. He adds that foreign investors have regained the confidence to invest in the Egyptian market due to the number of new investments in different industries of the Egyptian market and the Gulf States’ fiscal aid to Egypt.

The Egyptian cash reserve is facing great challenges, which as Youssef states, are expected given the current circumstances, especially since the Egyptian economy is, at the present time, largely dependent on foreign aid. The devaluation of the Egyptian pound, together with the rise in imports of both raw materials and of finished goods, has led to an increase in inflation.

With the assistance of funds provided by Saudi Arabia, the United Arab Emirates and Kuwait, the Egyptian government, in Youssef’s opinion, has succeeded in maintaining financial stability. These funds have stabilized the Egyptian cash reserves of foreign currencies in the Central Bank of Egypt to a level that is suitable for the country’s current external obligations.

Youssef is confident that the economic reform plan, adopted by the current Egyptian government to elevate investments in the Egyptian market to 290 billion Egyptian pounds, is an important step but one that will take time until its effects are noticed in the Egyptian economy.

The Egyptian government has issued a number of laws and regulations, which offer guarantees and incentives, which will assist and ensure the success of investments. The most important of these is the tax exemptions for five years on installments, returns on investments and on profits made by companies. This exemption is extended to 10 years for remote industrial areas and new urban communities, with the aim of attracting and encouraging investment and new investors.

Youssef added that the Islamic economic system has reached about eight trillion dollars around the world and about 25% of the world’s population is currently using it as their banking system. The number of Islamic banks is expected to reach about 520 by the end of 2013, with total assets of about 1.5 trillion dollars, and by 2015 about 800 banks valued at about two trillion dollars.

The Islamic banking sector has increased over the recent period and is still increasing across Islamic countries and even in secular ones, which shows its success. This success is due to its credibility, the ability to meet the needs of investors and the returns investors get on their investments.

While confirming his confidence in the Egyptian economy, Youssef insists that the Egyptian banking sector has proven its strength and persistence in times of hardship, especially given the country’s instability. This sector has achieved significant growth rates, a total capital of 15.9%, which suggests strong economic performance and fiscal ability. The market has not witnessed any decline in the presence of the commodity goods; both local and imported.

Despite the current situation of the country, ABG has an ambitious plan for the Egyptian market which aims at expanding all banking sectors with the belief in the ability of the Egyptian market to reach high growth rates while increasing bank profitability and return on capital. Al Baraka Bank has succeeded in gaining a net profit of 32% in 2012. With the opening of a new branch in the Al-Azhar area, the chain now has 27 branches, with four more branches opening before the end of the current year, totalling 31 branches. Moreover, the bank’s five-year plan aims at expanding its network by opening three branches every year which will result in a total of 44 branches by the year 2017.

Youssef concludes by speaking of the success of Al-Baraka Bank in issuing a new type of financial bond Al-Baraka Islamic Sukuk in American dollars in 2011 is equal to that of the Islamic Sukuks in Egyptian pounds that have been issued successfully for 10 years.  The bank has also witnessed great success in signing an agreement of Islamic economic co-operation with the Social Development Fund through the World Bank that equates to 200 million Egyptian Pounds to finance small- and medium–sized enterprises.