Our headline today is that global investors are rerating Egypt. The premium they demand to hold Egyptian sovereign debt has fallen to its lowest level since 2014 — down about 150 basis points since March. Egyptian bonds have outperformed the wider emerging market universe by more than 3 to 1 since spring. Joining us from the Africa Mindset Reset Forum in Kigali is Mohamed Alaa El Din. Mohamed, welcome back to Fintech TV.
Hello. I am very happy and glad to join.
You are in Kigali right now at a forum whose premise is that Africa needs to finance more of its own development. When African policymakers talk about mobilising capital across the continent, is Egypt treated as part of that conversation?
Egypt has to be part of this conversation — not only because it is geographically in Africa, but because it is economically and financially part of Africa's future. One of the strongest messages I took from Kigali is that we need to move beyond thinking about Africa as a collection of isolated national markets. Egypt has a large banking system, capital markets, development finance institutions, industrial capacity, and significant experience in financing trade infrastructure. The question should not be whether Egypt is part of the capital conversation. The question is how much more integrated Egypt can become. I see a huge opportunity to connect Egyptian capital and expertise with African projects while also attracting African capital into Egyptian opportunities. If we want economic integration, we eventually need financial integration. Africa cannot achieve financial sovereignty while African capital remains fragmented.
Investors are piling into Zambian and Nigerian local currency debt this year, yet institutional investors cap their Egyptian allocations at a fraction of what they put into an African peer at the same yield. Is that a fair read of why the money is not coming?
That is broadly a fair interpretation, but I would make an important distinction. Investors do not price yield alone — they price the entire investment cycle. When institutional investors look at local currency bonds, they ask several questions: can I enter, can I hedge my currency, can I convert my proceeds, can I repatriate my capital, and crucially, can I exit during a period of market stress? Egypt has experienced periods of foreign exchange shortage, exchange rate adjustments, and restrictions that create what I would call institutional memory among international investors. Even with two countries offering similar nominal yields, the investor may assign differences based on the currency and liquidity profile. High yield attracts attention. Predictability attracts institutional capital. What is needed is not necessarily a higher yield — it is stronger confidence that investors can move through the entire investment cycle.
Egypt's foreign minister renewed a call for a dedicated entity to coordinate Egyptian investment across African markets. What would it need to contain to be investable rather than aspirational?
I think this could be an important instrument — but only if designed as an investment platform rather than another administrative body. From a banking perspective, I would give it at least five functions. First, project preparation — Africa has no shortage of projects, but the shortage is often of bankable, investment-ready projects. Second, risk sharing — particularly political risk and currency transfer risk, through instruments that allow commercial banks to participate. Third, investment intelligence — a continental database of projects, regulations, counterparties, and financing structures. Fourth, transaction facilitation — helping Egyptian investors navigate licensing, regulation, taxation, and local partnerships. And fifth, co-investment — bringing Egyptian banking, institutional investors, and private companies alongside development finance institutions and African partners. After twelve months, this entity should demonstrate transactions that would not otherwise have happened. If yes, we have an investment institution. If it only produces reports and databases, we have created another bureaucracy.
What is the single hardest barrier to an Egyptian bank deploying capital into Kenya or Ghana today?
The hardest issue is not regulation by itself. It is the ability to price and manage risk across the entire transaction. Regulation can be understood — a bank can obtain a licence, establish a subsidiary, or work through a local partner. The more difficult question is: can I accurately price currency risk, political risk, transfer risk, sovereign risk, and ultimately exit risk? Because if risk cannot be priced confidently, the investment becomes difficult to underwrite. I would describe the challenge as risk that is difficult to price, difficult to hedge, and sometimes difficult to transfer. That is where African and multilateral development finance institutions can make a major difference.
Egypt's sovereign risk premium just hit its lowest level since 2014. Yet you are saying it is still struggling to attract portfolio money into its own currency. Why?
Because these are two different investment propositions. When an investor buys Egyptian dollar-denominated sovereign debt, the primary risk they are taking is Egyptian sovereign credit risk in hard currency. When they buy Egyptian local currency debt, they are taking sovereign risk plus currency risk. Egypt's improvement in dollar sovereign risk tells us that the market has become more comfortable with the country's external financing position and its ability to meet hard currency obligations. But local currency investors have an additional dimension — what happened to the value of the Egyptian pound during their investment period? I would describe the current situation as Egypt's sovereign credit credibility recovering faster than its local currency credibility. That is not contradictory. It is a very important distinction for understanding emerging market capital flows.
It is always a pleasure having you on the show. Thank you very much.
Thank you. Glad and proud to be with you.
