The International Finance Corporation (IFC) wants in on the state privatization program: The first of as many as 32 privatization sales will start after Ramadan, and while the majority of headlines have centered on potential appetite from GCC sovereign wealth funds, emerging markets investors — hungry for bright spots in a gloomy EM macro climate — are closely watching progress on the program.

That’s according to IFC Regional VP for Africa Sérgio Pimenta, who was in town last week for talks with the government on how the IFC can help. We sat down with Pimenta to discuss his thoughts on the rebooted program, what the World Bank Group’s private-sector finance arm is pitching the Madbouly government, and what else is in the pipeline for the IFC in Egypt.

Edited excerpts from our conversation:

As a development institution we see this program as an important step in the right direction that will create positive momentum, and we are excited and ready to engage in helping to support the program.

We’ve been actively encouraging investors to take part: What we have been doing on our side is talking with private-sector players, encouraging them to participate, telling them that we think this is an interesting program and it’s worth coming, applying, participating and investing.

We’ve expressed to the government our interest in helping out with the program, and they already indicated that they would be very interested in these talks. That’s why I’m here.

We see that we can help in three ways — the first being as an adviser: We have a team that already does advisory work for governments on privatization. So that team can help the government implement the process, give advice in terms of defining what the right structure is, what are the different steps, help to pitch to private-sector investors, and in the bidding and selection process.

The other part that we can do — and what we are more known for — is financing. Private-sector investors that want to come in and acquire a stake can come to us to help fund that acquisition or that operation.

We can also mobilize funding: Meaning we can also mobilize other partners to come and finance this type of transaction.

Theoretically we would help on any of the 32 companies announced in the program, but we will have to decide which ones will have the most value and the biggest impact as well as those that are most aligned with the government strategy and our own, which is very much focused on infrastructure, water and healthcare.

For those EM-weary investors, we have this to say: Egypt has a large and young population coupled with a very interesting geographic location, with many natural and strong competitive advantages that are independent of whatever happens in the short term in the global macro environment. So we think that an investor coming in will look at those circumstances and will say, “Okay, I think it is worth putting money in the country.”

Investors want a clear vision for the program. They want to understand the government’s vision regarding the privatization program. They want details on how it works, what part of the companies are open for investment as well as the future corporate governance for these companies. Having clear ownership structures is something that the private sector companies are going to look at, so that they know what they’re getting into.

We believe FDI will follow the program. The privatization program will provide a strong indication to investors of Egypt’s direction in terms of long-term prospects of growth, of prospects of opportunities and of business. If you improve the business environment in Egypt, not only will foreign investments come in, but Egyptian companies, investors and people will invest. We’ve been helping the government simplify procedures and cut red tape so that investors don’t have to waste their time, money and energy getting what they want.

We expect to have a record year in Egypt and not only this year, but next year also. So we are on track to massively support Egypt with financing for the private sector. I’m quite confident of that. Right now our portfolio in Egypt is USD 1.5 bn, with almost USD 900 mn in new financing done in FY 2022-2023.

We are looking at everything around green construction and green buildings, as well as water. The IFC has a longstanding green strategy in Egypt: All of our work on energy in Egypt is renewable and we did a lot of work supporting the government with the organization of COP27 in Sharm El Sheikh last year.

Gender and supporting Egyptian women’s participation in the economy is also important to us. On the financing side, we are putting together a certain number of projects with financial institutions that we already work with, aiming to support SMEs run by women. On advisory, we have been helping companies have more gender fair policies and increasing the presence of women in the workforce.

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