IMF’s limitations diminishing Africa’s development potential, says EGAAD CEO

“The IMF has different rules to maintain the risk of default in a structured way. Nevertheless, the urgency and the actual need to execute solid infrastructure projects in Africa needs huge investment that cannot be realised today with limitations the IMF imposes,” he tells The Africa Report.

Numerous African countries have either reached or been in talks over agreements with the Fund over the past couple of years, during which the pandemic and the current Ukraine war have taken a heavy toll on the continent’s fiscal health.

“We have to calibrate with such limitations from the IMF by other means of direct investment or economic models. This is why we [EGAAD] are working to help African countries realise sustainable development. We have different models and we are flexible to execute different development projects in Africa,” Boulos says.

Established in 2019, EGAAD has under its umbrella 33 companies of different nationalities, mostly from Egypt including Orascom Construction, from which comes the initiative’s largest portion of foreign direct investments. The Sawiris family-owned company is currently involved in four real estate and energy projects through EGAAD, Boulos says.

Multilateral institutions such as Afreximbank also support EGAAD. “We have agreements with local banks in different countries and good relations with multilateral” institutions and companies, cooperating with original equipment manufacturers (OEMs) including Siemens and Samsung, says Boulos.

Eight countries, more to come

The consortium has so far pumped 12 development projects in eight African countries, spanning different fields including construction, energy, water treatment, agriculture, mining, logistics, and healthcare, among others.

“We have started from east to west, it’s what we’re calling the central belt of Africa”, tapping Madagascar, Kenya, Ghana, Senegal, Congo, DRC, Ivory Coast, and Burundi, Boulos says, revealing plans to expand into Angola and Zimbabwe, mostly in 2023.

“We don’t have accurate estimates [of the value of our projects] in all countries but the largest portion of our investments is currently in Madagascar, where we are working on two projects that will be announced pretty soon, one of them is in healthcare and the other in infrastructure.

“In DRC, Benya Capital is installing fibre optic designated for students; the first phase of the project is valued at $65m, in addition to a water treatment project.”

It’s our vision from the beginning to be able to do what the Japanese did after World War II and compete with these huge companies.

Last July, Sabbour Group, another company from Egypt, in collaboration with EGAAD penned an MoU with the Ivorian housing ministry for designing and constructing 20,000 social and economical housing units along with administrative office towers in Abidjan.

“We are very interested in different infrastructure projects such as roads, water treatment, and energy transmission,” Boulos says. “We have some investors who are more and more having an appetite for […] green energy projects such as wind farms and solar stations. We are also studying investing in touristic destinations in Africa to expand our safe investment strategy.”

Japanese inspiration

In 2013-2014, after the late President Mohamed Morsi was toppled, Egypt embarked on a multitude of mega infrastructure projects, under the leadership of President Abdel-Fattah El-Sisi.

In the process, many Egyptian companies have gained know-how and financial capacity, and wanted to expand beyond the Egyptian market, says Boulos, who takes inspiration from the Japanese economic boom after World War.

Today, Africa has to be developed at the hands of African companies.

“It’s our vision from the beginning to be able to do what the Japanese did after World War II and compete with these huge companies,” Boulos says. “Back then, the Japanese didn’t have this financial capability, and the only way for them was to group themselves together.

“This is what we are doing today with companies like Orascom, Hassan Allam, and others with the help of international companies. Being grouped together, we have a very powerful financial and execution capacity. With all our consortium members, counting their turnover and financial capacity, we are exceeding $50bn.

“Continents must reconstruct themselves. Europe after World War II had to reconstruct itself, of course with the help of the US at the time but the sustainability of development has been assured by the local know-how. The same thing for Asia. Today, Africa has to be developed at the hands of African companies.”

The world need an industrialised Africa

Headwinds over the past couple of years have shown that an industrialised Africa would actually bode well for the global economy, which has been dealt major consecutive blows, including massive Covid-induced disruption of supply chains, Boulos says.

“Covid-19 has shown the fragility of the global supply chains; once they stop, so will the transformation of raw materials. Why are the manufacturers in Asia while the raw materials are in Africa?”

Sitting on a wealth of raw materials, the energy-rich Africa is capable of turning into an alternative industrial hubs, especially that it’s a young continent — nearly 60% of the African population i aged below 25, Boulos points out.

“Everybody has suffered. And Europe has been suffering even more than Africa, which was hit hard by energy prices and the lack of hard currency but it can be the solution for the economic problems in Europe and the world…What is missing is infrastructure in multiple fields” all across Africa, he says.