A law restructuring the Future of Egypt for Sustainable Development Authority, approved by Parliament last week, establishes a new sovereign fund with special status, the Ahramat al-Nil fund, which will report directly to the authority and, in turn, the presidency. The fund joins the authority’s “sustainable development zones” and a second service fund, Daem, as one of the three primary mechanisms through which Future of Egypt will carry out its expansive mandate. The law’s second chapter sets out the regulations governing the new fund. It describes Ahramat al-Nil as the authority’s investment arm, tasked with “achieving sustainable economic development, maximizing the value of investment assets for future generations and strengthening the economy in the face of crises.” The fund is part of efforts to channel state assets and wealth into investment through sovereign entities operating across sectors including energy, infrastructure, tourism, education and healthcare, both directly and in partnership with private investors. However, the fund itself expands the exceptional position that Future of Egypt has come to occupy through both the new law and the way the authority has operated since its inception. This exceptional position allows the fund to operate more freely, compared to the existing state apparatus and its internal, sometimes contradictory, mandates. And while this freedom may make it easier to pursue investments, it also blurs the line between public assets — which are ordinarily subject to government oversight and whose revenues pour back into public benefit — and assets the law treats as private. The Ahramat al-Nil fund’s assets will primarily be built through presidential decrees transferring ownership of state assets — whether in use or not — from the state or any of its affiliated bodies. The president may also transfer state-owned shares or stakes in companies to the fund. Its capital will consist of the net value of “funds allocated for investing in the capitals of companies and subsidiary funds that it owns wholly or partially.” The fund’s revenues will come from returns on its investments, its share of the net profits of companies it owns or holds stakes in, management and supervisory fees from those companies, as well as loans, grants, donations and any other resources approved by Future of Egypt’s board. An earlier draft of the bill allowed the fund to raise money by issuing bonds and other financial instruments. That provision was removed by the joint parliamentary committee that reviewed the bill before it reached Parliament’s plenary session in order to preserve the Finance Ministry’s authority over issuing such instruments, according to the committee’s report, which Mada Masr reviewed. Structurally, the law does not establish a separate board of directors for the fund. Instead, it falls under the control of Future of Egypt’s board, which will determine the fund’s organizational structure, work plans, objectives and all other affairs “without being bound by the governmental laws, rules and regulations governing the state administrative apparatus or any other body.” Economic advisor and capital markets expert Wael al-Nahhas argues that the new sovereign fund is an attempt to overcome obstacles that faced Egypt’s sovereign wealth fund, which was initially placed under the Planning Ministry when it was established before later being transferred to the Investment Ministry. The Sovereign Fund of Egypt was created in 2018 with an authorized capital of LE200 billion as a state-owned investment fund. Under the law establishing it, state assets can be transferred to the fund by presidential decree following a proposal from the planning minister and the approval of the prime minister, with the aim of maximizing the value of state-owned assets through partnerships with domestic and foreign private investors. The Future of Egypt law allows the Ahramat al-Nil fund to acquire, merge with or assume control of “any comparable national sovereign funds.” That provision could pave the way for Ahramat al-Nil to absorb the Sovereign Fund of Egypt or for the two entities to merge, according to a World Bank source, two parliamentary sources and another informed source speaking to Mada Masr. Nahhas said that while a range of state assets have been transferred to the Sovereign Fund of Egypt over the past eight years, overlapping mandates and disputes between ministries and government authorities have limited its ability to fulfill its intended role. The new law, he argues, gives Future of Egypt far greater room to operate by virtue of its direct reporting line to the president and its “special nature” — enjoying technical, financial and administrative independence — potentially allowing it to sidestep many of the bureaucratic obstacles that constrained the existing sovereign fund. The law classifies the new sovereign fund’s assets as “private,” although they are treated as public funds under certain provisions of the Penal Code. Constitutional law expert Essam al-Islamboly tells Mada Masr that this means the assets remain legally private but receive the same Penal Code protections as public funds. Crimes such as embezzlement or misappropriation are therefore prosecuted under the provisions governing offenses against public money. The law shields the authority’s contracts and transactions from legal challenges. Only parties with personal or property rights in the assets involved can contest them. Anyone else must first obtain a final conviction for a public funds offense against either Future of Egypt or the investor before the contract itself can be contested. In practice, this significantly limits the scope for judicial review of transactions undertaken by the fund, including sales, leases and usufruct agreements. Examining how the Future of Egypt law transforms public assets into private ones, the Egyptian Initiative for Personal Rights highlighted provisions allowing the authority and its sovereign fund to expand their asset base through the transfer of state-owned land, other public assets and state-owned shares or stakes in companies, with those assets to be valued at market prices. Returns generated from those investments, however, will not flow back to the state treasury, as the law exempts both the authority and the fund from legislation requiring certain public bodies to transfer portions of their surpluses or balances. The World Bank source argues that the most dangerous implication of the law — and the Future of Egypt model as a whole — lies in its impact on Egypt’s public finances. By concentrating assets outside the state budget and beyond the government’s financial framework and parliamentary oversight, the law effectively creates what the source describes as a parallel public finance system. For Nahhas, the success of the new fund will depend less on its broad powers than on whether it can assemble a management team capable of overseeing the vast portfolio of assets expected to come under its control. He expects that, through direct presidential decisions, the authority could receive millions of feddans of land, entire state bodies such as the General Authority for Agrarian Reform and the Egyptian Endowments Authority, potentially assets belonging to entire governorates, as well as a number of military-owned companies once they are restructured. These transfers, he says, would form part of a broader strategy to develop what he estimates to be 70-80 percent of Egypt’s currently unutilized state assets.The post Ahramat al-Nil: Egypt’s new sovereign fund first appeared on Mada Masr.
