Local companies may find comfort in the news that the master developer of Egypts ambitious Capital City project has set new rules for interested developers. But foreign firms wont feel the same comfort as communication from the state-controlled Administrative Capital City of Urban Development (ACCUD) remains typically vague.
It is understood that the ACCUD has started communicating the new rules with local firms that have previously shown interest in the project. Although there is no official statement from a company that is meant to offer transparency to the market.
This has an impact on the appetite of both local and international companies who remain apprehensive following the failure of the government to secure significant private investment in the scheme.
Earlier this year it was revealed that Beijing-based China State Construction Engineering Corporation will not be pressing ahead with a memorandum of understanding (MoU) for the firm to build and finance the government district of the projects first phase. This is the second major agreement with a foreign investor that has failed to be finalised following the breakdown of the initial deal with UAEs Eagle Hills in 2015.
It is understood that the agreement with Eagle Hills failed due to the governments refusal to allow the UAE company to raise funds from the local banking sector. The Chinese meanwhile are understood to have disagreed with the authorities over land prices. But with both situations, very little was officially communicated to the market.
The problem for investors, local and foreign, is not that agreements are breaking down, but rather the lack of official communication following a failed deal. Local and foreign companies need to know exactly why agreements are failing before they can commit to the project with the confidence the government is asking for.
The latest news that the ACCUD has started communicating rules to the market is a positive sign. But in order to attract the level of private investment needed for the project to actually press ahead within the suggested time frame, the authorities will need to do much more in improving its transparency with foreign companies.
This has become more vital than ever as the government finds itself without a major investor, depending on smaller developers to plug the gap.