Education key to solving Red Sea regions devt challenges

Africa has immense growth opportunities which can be profitably exploited with a combination of the right skills investor goodwill, says Dr. Ahmed Heikal.

Heikal, who is the Founder and Chairman of Qalaa Holdings, was speaking at the opening of the World Economic Forum in Davos Switzerland, where he participated in a CEO panel discussion on barriers to investment and the measures needed to get capital flowing to the Red Sea region amid geopolitical uncertainty and a collapse in energy prices.

Heikal noted that With low commodity prices, high debt levels in emerging markets, higher interest rates in the United States of America, sluggish emerging-market economies and slower Chinese growth, one could be forgiven for thinking that for the time being there will be no investment in the Middle East and Africa region, but it is a fallacy that there are no growth opportunities in the region and it is a fallacy that there is no money.

"What we are lacking is the risk appetite and the skillset required on the part of the private sector to undertake the type of Greenfield projects that the region needs," he says.

Addressing the issue of lack of transparency in the region, Heikal explained that important strides have already been made in that respect.

"The Development Finance Institutions (DFI's), Export Credit Agencies (ECA's) and Sovereign Wealth Funds (SWF's) that are now funding projects in the region are requiring companies to abide by stricter codes of conduct."

These sentiments echo the objective of the Red Sea Foundation a non-profit entity that was launched at DAVOS.

The Red Sea Foundation aims to actualise the enormous potential of the region by enhancing the logistics infrastructure, promoting trade among Red Sea region countries and encouraging foreign investment, bringing together the public and private sectors and civic society to build a new growth engine for the global economy.

Uganda, Kenya, Egypt, Burundi, The Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Iraq, Jordan,  Madagascar, Mozambique, Rwanda, Saudi Arabia, Somalia, Sudan, Syria, Tanzania, UAE, and Yemen make up the Red Sea region.

An example of such partnerships is TAQA Arabia the largest private sector energy distributor in Egypt  which Dr. Heikal explained as a fore sight investment by Qalaa Holdings which has earned numerous growth opportunities as a result of the deregulation of the energy sector.  

He said "Governments are now starting to focus on fighting their own battles, dismantling the bureaucracy, playing the role of regulator and letting the private sector do its job. Governments cannot continue to shoulder these funding needs, or else emerging markets will wake up to a large credit crisis in five years".

Qalaa Holdings, has also been able to successfully tap into a wide pool of funding resources under highly challenging conditions to fund large-scale infrastructure projects that are critical to Africa's development such as the Uganda and Kenya railway concession Rift Valley Railways, is another exclusive infrastructure project in East Africa currently at a midpoint of $287m capital investment and turnaround programme that began in January 2012 to revitalise rail transportation in the two countries.

Governments across the region are now entering into a new paradigm, they have come to the realization that they can no longer do it alone, they must partner with or enable the private sector to take on the large megaprojects that were previously only in the realm of the public sector