Selling Assets to Foreign Sovereign Funds: a Gain or a Loss?

Selling Assets to Foreign Sovereign Funds: a Gain or a Loss?

In normal circumstances, it wouldn’t have occurred to me to ask this question.

I spent a good part of my career responsible for attracting foreign investment to Egypt. Even after I left that government job, I remained convinced that successful economic development depends on our ability to attract private investment, both local and foreign.

In normal circumstances, I would have welcomed—been delighted, in fact—that we managed to attract a few billion dollars of foreign investment in successful Egyptian companies.

I still think that as a rule, foreign investment is good because it shores up cash reserves in foreign currency, brings higher technical, engineering, and managment capabilities, and connects our national industries with foreign markets thus boosting opportunities for export.

When the investment comes in the form of the purchase of shares of existing firms, it gives Egyptian investors who assumed the effort and risk of starting the company a attractive reward for their work that translates value into a concrete return, which they can then recycle into new ventures.

It also encourages others to undertake similar ventures in the hope of achieving the same success.

In short, encouraging foreign investment is consistent with sound economic logic.

Nevertheless, reports in recent days that Arab sovereign wealth funds have