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GRADING THE EGYPTIAN AND TUNISIAN

ENTERPRISE FUNDS

HEARING

BEFORE THE

SUBCOMMITTEE ON 

THE MIDDLE EAST AND NORTH AFRICA

OF THE

COMMITTEE ON FOREIGN AFFAIRS 

HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTEENTH CONGRESS

FIRST SESSION

JUNE 21, 2017

Serial No. 115–50

Printed for the use of the Committee on Foreign Affairs

(

Available via the World Wide Web: http://www.foreignaffairs.house.gov/ or

http://www.gpo.gov/fdsys/

(II)

COMMITTEE ON FOREIGN AFFAIRS 

EDWARD R. ROYCE, California, Chairman 

CHRISTOPHER H. SMITH, New Jersey 

ILEANA ROS-LEHTINEN, Florida 

DANA ROHRABACHER, California 

STEVE CHABOT, Ohio 

JOE WILSON, South Carolina 

MICHAEL T. MCCAUL, Texas 

TED POE, Texas 

DARRELL E. ISSA, California 

TOM MARINO, Pennsylvania 

JEFF DUNCAN, South Carolina 

MO BROOKS, Alabama 

PAUL COOK, California 

SCOTT PERRY, Pennsylvania 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

TED S. YOHO, Florida 

ADAM KINZINGER, Illinois 

LEE M. ZELDIN, New York 

DANIEL M. DONOVAN, JR., New York 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

ANN WAGNER, Missouri 

BRIAN J. MAST, Florida 

FRANCIS ROONEY, Florida 

BRIAN K. FITZPATRICK, Pennsylvania 

THOMAS A. GARRETT, JR., Virginia 

ELIOT L. ENGEL, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

ALBIO SIRES, New Jersey 

GERALD E. CONNOLLY, Virginia 

THEODORE E. DEUTCH, Florida 

KAREN BASS, California 

WILLIAM R. KEATING, Massachusetts 

DAVID N. CICILLINE, Rhode Island 

AMI BERA, California 

LOIS FRANKEL, Florida 

TULSI GABBARD, Hawaii 

JOAQUIN CASTRO, Texas 

ROBIN L. KELLY, Illinois 

BRENDAN F. BOYLE, Pennsylvania 

DINA TITUS, Nevada 

NORMA J. TORRES, California 

BRADLEY SCOTT SCHNEIDER, Illinois 

THOMAS R. SUOZZI, New York 

ADRIANO ESPAILLAT, New York 

TED LIEU, California

AMY PORTER, Chief of Staff THOMAS SHEEHY, Staff Director

JASON STEINBAUM, Democratic Staff Director 

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA

ILEANA ROS-LEHTINEN, Florida, Chairman 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

RON DESANTIS, Florida 

MARK MEADOWS, North Carolina 

PAUL COOK, California 

ADAM KINZINGER, Illinois 

LEE M. ZELDIN, New York 

DANIEL M. DONOVAN, JR., New York 

ANN WAGNER, Missouri 

BRIAN J. MAST, Florida 

BRIAN K. FITZPATRICK, Pennsylvania 

THEODORE E. DEUTCH, Florida 

GERALD E. CONNOLLY, Virginia 

DAVID N. CICILLINE, Rhode Island 

LOIS FRANKEL, Florida 

BRENDAN F. BOYLE, Pennsylvania 

TULSI GABBARD, Hawaii 

BRADLEY SCOTT SCHNEIDER, Illinois 

THOMAS R. SUOZZI, New York 

TED LIEU, California 

(III)

C O N T E N T S 

Page

WITNESSES 

The Honorable James Harmon, chairman, Egyptian-American Enterprise 

Fund ...................................................................................................................... 6

Mr. Bowman Cutter, chairman, Tunisian-American Enterprise Fund ............... 16

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

The Honorable James Harmon: Prepared statement ........................................... 9

Mr. Bowman Cutter: Prepared statement ............................................................. 19

APPENDIX 

Hearing notice .......................................................................................................... 40

Hearing minutes ...................................................................................................... 41

The Honorable Gerald E. Connolly, a Representative in Congress from the 

Commonwealth of Virginia: Prepared statement .............................................. 42

(1)

GRADING THE EGYPTIAN AND TUNISIAN 

ENTERPRISE FUNDS 

WEDNESDAY, JUNE 21, 2017

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON THE MIDDLE EAST AND NORTH AFRICA,

COMMITTEE ON FOREIGN AFFAIRS,

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:08 a.m., in room 

2172, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen 

(chairman of the subcommittee) presiding. 

Ms. ROS-LEHTINEN. The subcommittee will come to order. 

After recognizing myself and Ranking Member Deutch for 5 minutes each for our opening statements, I will then recognize other 

members seeking recognition for 1 minute or so. We will then hear 

from our witnesses. And, without objection, the witnesses’ prepared 

statements will be made a part of the record, and members may 

have 5 days to insert statements and questions for the record, subject to the length limitation in the rules. 

The Chair now recognizes herself for 5 minutes. 

When the Obama administration proposed establishing enterprise funds in Egypt and Tunisia in 2011, I admit that I was skeptical. Previous versions of these U.S.-funded entities, first established by the George H.W. Bush administration, following the 

breakup of the Soviet Union, had a mixed track record. Establishing new funds in Tunisia, and especially in Egypt, where the 

Muslim Brotherhood had just taken power, seemed like a risky 

proposition. 

So, despite a rocky start, I am happy to say that these funds 

have made some positive progress. And one thing we learned from 

the previous reviews and hearings on enterprise funds is that the 

capabilities of each fund’s chairman and board of directors may be 

the single most determining factor of that success. 

So I commend both Jim and Bow for their tremendous work over 

the past few years. We are grateful to each of you gentlemen for 

your time and for your leadership. 

And, as Jim and Bow lay out in their written testimony, the road 

getting here was not easy, especially working in two countries with 

rapidly changing political conditions, difficult regulatory environments, and in need of serious economic reforms. 

Although both funds are still in the relatively early stages, it is 

an opportune time to provide congressional oversight and take a 

look at how each fund is fulfilling its dual mandate, making a profit, and developing their respective private sectors. 

2

In Egypt, we are finally seeing some positive economic signs after 

years of being on what seemed to be the edge of a crisis. Foreign 

direct investment is increasing. Investors are buying Egyptian 

bonds, and the foreign currency shortage has abated. With difficult 

austerity measures already in place, it is critical that President 

Sisi continue to make the hard decisions necessary for long-term 

growth. 

In Tunisia, the government is also taking important steps to reform the economy, including raising interest rates and launching 

an initiative to tackle corruption. In addition to corruption, however, there are still many other concerns, including underemployment of educated Tunisians, an extremely high unemployment rate 

among working age youth, and a tourist sector that still has not 

recovered from several devastating terrorist attacks. 

Reforming the economy in both Egypt and Tunisian is no easy 

task, and it is going to take an extraordinary amount of political 

will from each of their governments, in addition to international assistance, to make the necessary changes. That is one reason why 

so many people are excited about the prospect of these enterprise 

funds and the economic assistance opportunities that they can provide. 

In Egypt’s case, the Sisi government continues to prevent programming of regular U.S. economic assistance through both international and domestic NGOs, and we still have a backlog of hundreds of millions of economic support fund dollars. 

And in the case of Tunisia, I am concerned that we are not providing the level of assistance that is required to meet U.S. stability 

and security goals in the region. 

The President’s proposed cuts to both the FMF and ESF accounts 

for Tunisia would unnecessarily hinder our ability to assist with 

our partner’s crucial democratic transition. As important U.S. allies, both Egypt and Tunisia’s economic well-being are critical to 

U.S. interests, and it is important that we find ways to support 

them any way we can. 

Last month, I was proud to introduce, alongside Ranking Member Deutch and a number of our colleagues, a bill that would authorize a new enterprise fund for another U.S. ally, Jordan. With 

the chairman of the Egyptian-American and Tunisian-American 

Enterprise Funds here with us today, I am hoping that, in addition 

to answering questions about their funds and addressing any concerns members may have, they also will provide recommendations 

for setting up a fund in Jordan. 

While enterprise funds should not be looked upon as a panacea, 

it is clear that they can be powerful drivers of economic growth and 

spur the necessary development of sustainable private sectors and 

turn a profit at the same time. I look forward to hearing our witnesses’ thoughts about enterprise funds as a foreign policy tool, as 

well as any lessons that they may have learned along the way. 

And now I am honored to turn to my ranking member, Mr. 

Deutch of Florida. 

Mr. DEUTCH. Thank you, Madam Chairman, for holding this 

hearing today to highlight the work that these two American programs are doing, through USAID and in partnership with local 

leaders and governments. 

3

I am grateful to you both, Mr. Harmon and Mr. Cutter, for taking the time to come here and shine a light on the role these funds 

are playing in advancing American interests and fostering prosperity abroad. 

I just want to say that, as the chairman and I and our staffs prepared for this hearing, one thing was abundantly clear, and that 

is that it is because of the leadership of both of you that these 

funds have been successful. And you do this all pro bono, so we are 

especially grateful for your service. 

Even as we consider the challenges that you face, operating in 

countries where bureaucracy moves slowly and corruption is still 

rampant, the successes of the Egyptian- and Tunisian-American 

Enterprise Funds deserve to be acknowledged, not only as standalone programs, but as examples of innovative U.S. policy. 

While USAID serves many roles through many different approaches, the structure and approach of the EAEF and TAEF are 

indicative of the new direction that the United States development 

assistance has taken, under the leadership of Congress and previous administrations. 

Congress established the Egyptian- and Tunisian-American Enterprise Funds in order to back local innovation, support local entrepreneurs, and strengthen local institutions. This focus on incountry capacity reflects the new emphasis of U.S. foreign assistance laid out under the USAID Forward Initiative, which was 

begun in 2010. By spending our money through carefully vetted 

local banks and businesses, as the EAEF and TAEF are doing, we 

multiply the impact of the dollars spent by achieving the goal of 

economic growth, while also building enduring institutions. 

The funds rely on the knowledge of experts from the private sector who are working to strengthen small and medium enterprises 

in Tunisia and key sectors in Egypt. Both TAEF and EAEF have 

worked hard to build their boards of directors and learn about the 

investment climate in each country. And while some have questioned the slow pace of investments, it seems as if both of you 

learned lessons from the European funds in the 1990s and worked 

to correct many of the mistakes that were made in the past. 

Over the past decade, United States assistance has emphasized 

accountability and returns on investment. The American Enterprise Funds in Tunisia and Egypt are good examples of this principle in action. They seek tangible returns to be reinvested into 

local businesses; and they open their books to regular audits, in the 

interest of transparency. 

In 2015, the GAO issued recommendations for USAID to increase 

its oversight of these funds, all of the recommendations which have 

now been implemented. We look forward to hearing more from both 

of you how the vetting and oversight process works. 

AID dollars are a finite resource, and the United States has redoubled its efforts to spend them in areas where they will best advance our national interest. Security and stability in these countries is critical, and economic turmoil feeds instability. Tunisia was 

the birthplace of the Arab Spring, and its young democracy can be 

a model for other nations seeking to move from authoritarianism 

and oppression to democracy and freedom, but we must address the 

root causes of the uprising; namely, an overeducated, underVerDate 0ct 09 2002 16:24 Aug 16, 2017 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 Z:\WORK\_MENA\062117\25952 SHIRL
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employed youth population, which is a focus of the enterprise fund, 

as I understand it. I look forward to hearing from you about that. 

I am deeply concerned about the proposed cuts to security assistance to Tunisia that might undermine progress being made in 

building democratic institutions and strengthening the economy. In 

Egypt, the relationship with the United States is longstanding, and 

it is of major strategic importance, but it can be fraught with tension, particularly when it comes to spending USAID dollars. 

Support for these funds demonstrates the increasingly bipartisan 

support that international development has enjoyed in Congress. 

The TAEF and EAEF are examples of the broad support for the important work of international development that I hope will continue in Congress, even as this White House attempts to dramatically reduce American engagement abroad. 

There has been a clear effort to make America’s development 

work more efficient and more focused, and at a time when agencies 

like USAID and OPEC are finding their very existence being 

threatened by President Trump it, is good for us to remember that 

fact. In many ways, the Egyptian and Tunisian-American Enterprise Funds reflect this new direction, and I am eager to discuss 

their individual successes as well as their work as part of a broader 

conversation reaffirming the longstanding American commitment 

to a fully engaged foreign policy. 

Again, welcome to the witnesses. 

And thank you, Madam Chairman. 

Ms. ROS-LEHTINEN. Thank you very much. Excellent opening 

statement, Mr. Deutch, as always. 

And now I am pleased to recognize members for any opening 

statements they might have. And we will start with Mr. Issa of 

California. 

Mr. ISSA. Thank you, Madam Chair. 

I am really looking forward to this for a reason that perhaps 

hasn’t yet been explained. Our use of NGOs in these countries, Tunisia, and particularly Egypt, has been problematic on the political 

side. There can be little doubt but that our NGOs, operating in the 

best interest of democracy, were actually part of putting the Muslim Brotherhood into the role they had, by developing naive, liberal 

political organizations that thought that the problem in Egypt was 

the WTO; that, in fact, the problem in Egypt was corruption alone. 

Rather than looking at the narrow band of water that makes up 

the historic economy of Egypt, they simply looked and blamed outside forces. 

An NGO that works on enterprise can help solve that, and I am 

looking forward to the continued progress. But, as I close, I think 

it is important that we understand, unlike the Marshall Plan at 

the end of World War II, which took historic industries and helped 

restore them, and historic skills and helped put them back to work, 

we cannot, in fact, put Tunisians and Egyptians back to work in 

cotton and in other areas that have historically been part of their 

economy. They will not support the workforce, in the case of Egypt, 

of over 87 million people. We have to be part of those new enterprises, being the enterprises of the 21st century and not the 19th 

or 20th. 

And, Madam Chair, thank you very much for your indulgence. 

5

Ms. ROS-LEHTINEN. Good point. Thank you, Mr. Issa. 

Mr. Chabot is recognized. 

Mr. CHABOT. Thank you very much, Madam Chair. 

The Egyptian and Tunisian economies have been pretty abysmal 

for the past several years. In Egypt, we have watched the public 

debt and unemployment rates rise significantly in recent years, 

while Tunisia has faced a litany of obstacles, including terrorist 

threats to their tourism sector, among other things. 

Unfortunately, the economic strife has discouraged young Egyptians and Tunisians from participating in the economy. And, as 

many of my colleagues know, the young and unemployed are ripe 

for conversion by ideological extremists. This is just one of the reasons why I believe it is imperative that we continue to encourage 

these countries to take the necessary steps to attract further investment and stimulate the economy. 

Enterprise funds are one of the tools at their disposal. By 

leveraging the private sector, providing technical assistance to entrepreneurs and offering equity investments, enterprise funds can 

help facilitate real economic improvements in both Egypt and Tunisian and, in fact, other countries as well. 

And I would just note, Madam Chair, I apologize, we have a 

markup in Judiciary, then I have to chair the Small Business Committee at 11. So I will review the testimony. 

Ms. ROS-LEHTINEN. Thank you so much, Mr. Chabot. Don’t worry 

about it. And I am going to introduce Ambassador Wagner, who 

will soon take over for me while I go to the Intelligence Committee 

open hearing on Russia. 

So I am now proud to recognize Ambassador Wagner for her 

opening statement. 

Mrs. WAGNER. Well, I thank you, Madam Chairman. And I will 

tell you that I will waive my opening statement because I have a 

good deal of questions. And just to move the process along, I will 

yield back to the chair. 

Ms. ROS-LEHTINEN. Thank you so much, Mrs. Wagner. And I am 

going to introduce the witnesses, and then if you could take over 

for me, that would be great. 

First, we are delighted to welcome Mr. James Harmon, chairman 

of the Egyptian-American Enterprise Fund. Mr. Harmon is also 

chairman and chief investment officer of Caravel Management. 

Prior to working for Caravel Management, he served as chairman, 

president, and CEO of the Export-Import Bank of the United 

States from 1997 to 2001. 

Mr. Harmon, thank you for coming. We all look forward to your 

testimony. 

And next, we want to welcome Mr. Bowman Cutter, the chairman of the Tunisian-American Enterprise Fund. He is also a senior 

fellow and director of the Economic Policy Initiative at the Roosevelt Institute. Mr. Cutter served with distinction during two 

Democratic Presidencies at the National Economic Council, and at 

the Office of Management and Budget. 

Mr. Cutter, thank you for coming. We look forward to your testimony as well. 

6

Your prepared statements will be made a part of the record. And 

I have read them, so don’t think I am skipping out on that. And 

I hope to come back in time for some questions. 

Thank you, Mrs. Wagner, for stepping in for me. 

Hold on 1 second. 

Mrs. WAGNER [presiding]. Mr. Harmon, you are recognized. 

STATEMENT OF THE HONORABLE JAMES HARMON, 

CHAIRMAN, EGYPTIAN-AMERICAN ENTERPRISE FUND 

Mr. HARMON. Thank you very much. Madam Chair and Acting 

Chair, Ranking Member——

Mrs. WAGNER. Could you please hit the green button. There you 

go. Thank you. 

Mr. HARMON. Madam Chair and acting chair, ranking members 

and members of the subcommittee, thank you for holding this hearing and for inviting me to testify. 

In January 2012, the White House and the State Department 

called and asked me to take on this particular assignment. Some 

few months later, I started the process of visiting former chairs of 

enterprise funds. I visited six of them and, to the man, they said, 

why would you want to do this? The challenges you will have between the Egyptian Government and the U.S. Government will be 

great. We didn’t have those challenges in the European enterprise 

funds back in the 1990s, and they pointed out all of the difficulties. 

It actually proved to be a good reason why I would take on this assignment, because we could do a lot better in building relationships 

between Egypt and the United States. 

In March 2013, we signed the Grant Agreement with USAID. 

That year, we made a critical decision not to place Americans in 

Cairo to seek and manage investments. We were fortunate, indeed, 

to meet a very talented Egyptian investment banker who would 

prove critical to the success we have had to date. He organized the 

management company, Lorax, to lead the search for and management of the Egyptian-American Enterprise Fund assets. In time, he 

would add five additional professionals. Only 3 years later, it is on 

the way to becoming one of the leading private equity asset managers in Egypt. 

In 2013, we organized a board of directors, in compliance with 

the legislation. Credit to Congress for its guidelines and the terms 

of our Grant Agreement. Three Egyptians and six Americans, three 

of whom are Egyptian-American. This board has been highly engaged in our efforts. None of the board members receive compensation for their time. We are grateful to our directors for their service 

and dedication. 

And 3 years ago, we were fortunate to recruit an Egyptian 

woman who was graduating from the Harvard Business School and 

had prior experience at the Ministry of Finance in Egypt. She came 

in and has become our director in New York City, and is sitting 

behind me. I am grateful for the good work that she has done. 

Egypt’s private sector remains underdeveloped. It suffers from a 

gap in financing, infrastructure, and talent. This curbs its ability 

to expand and grow the economy. An underdeveloped private sector 

results in underserved markets, high unemployment rates, and low 

financial inclusion. 

7

Egypt has the largest population in the Arab world, and the 

third largest in Africa. The youth accounts for 44 percent of the 

population, of which 31.3 percent are unemployed, leaving 51 percent of the population living in poverty. Alarmingly-6high unemployment rates are a great loss of human talent, a growing burden 

on the economy, and a threat to social stability, all of which hinder 

the country from realizing its full potential. 

Furthermore, only 13.7 percent of the population owns a bank account, which represents one of the lowest financial inclusion rates 

in the Middle East and around the world. Small- to medium-size 

enterprises account for 99.6 percent of the companies in Egypt. 

However, they are greatly underserved, especially in the financial 

sector, limiting their ability to scale. 

It is rare for anyone to hit a home run in their first at bat, but 

I think we did it with our first investment for the fund—Fawry, 

Egypt’s largest electronic bill payments platform. Fawry extends 

basic financial services to Egypt’s unbanked population and promotes financial inclusion, a major part of our mission. Traditionally, Egyptians have had to wait hours in line to pay their bills in 

cash. Fawry’s digital platform saves time for consumers by allowing 

them to not only make payments and pay bills, but also to add 

credit to their cell phone accounts, buy plane tickets, and other 

services. It does this via its online Web site and its more than 

65,000 kiosks located across the country. 

In 5 years’ time, this little company, which started with no Egyptian customers, now has 20 million Egyptians using the service. It 

is my prediction that within the next 5 years, half the population 

of Egypt will be using the Fawry service. So it is a good illustration 

where technology has played a critical role for the developing countries, and particularly for Egypt. 

In 2015, we also made a large investment in Sarwa Capital, a 

consumer finance company that extends financial services such as 

lending to SMEs and to Egypt’s large unbanked population. In fact, 

since our investment, it has provided loans to 9,000 new clients, 

mainly to Egyptian youth, to help finance, for example, finishing 

and furnishing new homes, which would otherwise be unaffordable 

to this growing group. Half of the Sarwa clients did not have a 

bank account before receiving a loan from Sarwa. Sarwa also provides funding to several hundred SMEs, which help to meet our 

commitment to creating jobs and improving the lives of Egyptians 

by providing access to financing. 

Last but not least, we have seeded a venture capital fund, 

Tanmiya Capital Ventures, that invests in small- and medium-size 

enterprises and Egyptian entrepreneurs. By investing in this new 

venture and other VC firms, we are enabling new fund managers 

to seek our investments not only in Cairo, but across Egypt, even 

in more rural locations. 

We have invested today $100 million, and we have brought in an 

additional $100 million from two institutions that had heretofore 

not invested in Egypt. It is my expectation that we will invest an 

additional $100 million by the end of this year. We will have invested $200 million of the original 300 and another 110 that we 

have brought in. 

8

I would add that these investments come as the Egyptian Government has embarked on an ambitious economic reform agenda 

that has seen the phasing out of long overdue energy subsidies and 

a floating of the Egyptian pound, and to their credit, the signing 

of the agreement with the IMF, a $12 billion loan to Egypt. 

The Egyptian Government deserves additional credit for all these 

tough but necessary decisions. I think the fund will produce significant profits over its life. It is my opinion that, upon liquidation, 

proceeds should go first to return to the United States its original 

capital, and thereafter, profits should be divided between both 

countries. 

Finally, economic development is critical to the growth and prosperity of developing countries. Enterprise funds, with their development mission, can be an important weapon in the war on terror. 

Thank you. 

[The prepared statement of Mr. Harmon follows:]

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Mrs. WAGNER. Thank you, Mr. Harmon, for your testimony and 

opening statement. 

Mr. Cutter, you are now recognized for 6 minutes. Thank you. 

STATEMENT OF MR. BOWMAN CUTTER, CHAIRMAN, TUNISIANAMERICAN ENTERPRISE FUND 

Mr. CUTTER. Madam Chairman, thank you. I will cough my way 

through the presentation. 

I want to thank——

Ms. ROS-LEHTINEN. Again, could I please ask you to hit the green 

button and move your mike a little bit closer to your mouth, sir. 

Mr. CUTTER. Okay? 

Ms. ROS-LEHTINEN. Perfect. 

Mr. CUTTER. Thank you very much for holding this hearing and 

for taking the time to be part of it. It is an honor to be at the hearing, and I should say right at the onset that it is an honor to chair 

the Tunisian-American Enterprise Fund. I was delighted to have 

been asked, and I am delighted at serving over the last 5 years and 

at what we have accomplished. 

I probably should simply include, by reference, most or all of my 

friend, Mr. Harmon’s presentation, since our experiences, in significant ways, parallels his, as you will find at the questioning session. 

So I will talk more about mission and strategy. 

Turning first to our mission, we are expected to function as a private sector institution, to invest our funds in the private sector of 

Tunisia and to be a partner in the revitalization of the Tunisian 

economy, to help focus on employment, on women entrepreneurs, 

on young people, and on geographic diversity, and earn a profit. We 

are an investment fund, not a grant-making program. 

Moving to strategy, in brief, our strategy has been an exclusive 

focus on Tunisia’s small- and medium-enterprise sector. I should 

underline that I firmly believe that for all countries, a healthy 

SME sector is the magic bullet. It is the key to true and equitable 

economic growth in Tunisia, the U.S., and everywhere else. 

My TAEF, Tunisian-American Enterprise Fund, colleagues and I 

have tried from the start to be both rigorous and innovative in 

finding ways to invest across the full spectrum of this sector. So let 

me say how we invest across the sector. 

To invest in the smallest of enterprises—and I have in mind here 

the pushcart businesses, the really tiny family enterprises—we 

have helped to finance Tunisia’s quite new, I mean, brand new 

microfinance efforts. We have invested both debt and equity in 

these microfinance businesses. We have helped them to find their 

operations and think through how to deal with very small enterprises. Through our board, we bring enormous expertise in microfinance, and I think our Tunisian colleagues would say that we 

have been extremely helpful in helping shape that industry. 

Second, to invest in the whole middle range of the SME sector. 

And these would be businesses ranging from roughly $150,000 a 

year in annual revenue to perhaps $2 million a year in annual revenue. And as in Egypt, it is this core, which is probably close to 

99 percent of the GDP of all of the businesses in Tunisia. 

We created our own investment vehicle, which is called TASME, 

the Tunisian-American Small and Medium Enterprise company. 

17

Through this vehicle, we are pioneering in Tunisia a new and innovative approach, which has been quite well-received and allows us 

to tailor investment to the precise needs of entrepreneurs. 

As one example, one of our investments is a very high-quality 

date processing business in the south of Tunisia, a region that has 

seen almost no real private sector activity and that badly needs 

economic growth. Another is in a porcelain manufacturing business. A third manufactures customized packaging. We have a long 

pipeline now and are investing at quite a high rate. 

And finally, to reach the top end of the SME sector, businesses with, say, $10 million in annual revenue, we have partnered with 

high-quality Tunisian businesspeople. We helped create a fund 

called Croissance, which is growth in French, and through it leveraged other money from other institutions. And we are now in the 

process of creating, with others, a follow-on fund that will also leverage equal amounts of money. 

We are—and I hope that Mr. Issa is able to see or read this part 

of my presentation—we are testing the opportunity for true 

startups in Tunisia. We have partnered with others in Tunisia and 

with an Egyptian firm to create the first full-scale incubation, acceleration, and financing effort for startups in Tunisia. Our first 

class of startup businesses and entrepreneurs begins in the first 

week of July. We narrowed down to eight people who will enter our 

class from 200 proposals that we received in mid March. We plan 

to start a new class every quarter for the next several years. This 

is the first effort in Tunisia to create a kind of full-blown ecology 

for startups. 

None of this is without challenges, and I have thought about the 

challenges as falling into three baskets: First, what we are doing 

is essentially a complete from scratch startup of a financial business. This doesn’t differ much operationally, in my experience, from 

any other start-up, including enormous time demands. And we are 

doing it in the area of finance, as is Mr. Harmon, which in both 

the U.S. and in Tunisia involves grappling with enormously complicated regulatory systems which we have to comply with at every 

step along the way. 

Second, within the U.S. Government system, enterprise funds 

are unfamiliar animals. The first set of them, the first tranche of 

them were negotiated and put together in the Bush one administration. Like Mr. Harmon, I know and have talked to almost all of 

the previous chairs, but there has been little institutional memory 

over the 25 years from then to now. So I think—and we can talk 

about this—that our principal difficulties at the start were really 

that, the absence of an institutional memory. And I hope now that 

has been codified. 

And finally, it is fair to say that the Tunisian administrative bureaucracy is particularly difficult. I have had the enormous good 

fortune of working with Tunisian Government officials who are extremely supportive of America, and who understand what we are 

trying to do, but it doesn’t make the bureaucratics any easier. 

Basic Tunisian law works on different principles than American 

common law. And, more importantly, Tunisia endured for a generation a kleptocratic ruler, which ate the heart out of the center of 

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quires vast reform. They are embarking on that. I talk to government officials all of the time. I understand what it is they are trying to do, but in the meantime, we have to figure out how to operate within it. 

I will conclude by reflecting on enterprise funds, although, obviously, I really only understand just one. They are important economic development tools. They are valuable both for the host company and for America. And while I am not a scholar and I hate 

even to mention the word ‘‘terror,’’ I think that building economies 

that work for ordinary people, which is the heart of what we are 

trying to do, is one of the best ways to combat extremism. It is not 

trivial to emphasize that these funds can be supported by the 

American taxpayer because they can be run at a profit. 

I will underline the last point. We make our investments only 

after rigorous due diligence. We track our investees carefully. We 

know they will experience ups and downs. We haven’t yet, but we 

know we will see failure, but we fully expect at the end of this to 

earn a modest profit when we are finished. And we expect, upon 

liquidation, that it will be dealt with in the same way that Jim 

Harmon proposed at the end. Thank you very much. 

[The prepared statement of Mr. Cutter follows:]

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Mrs. WAGNER. I thank you, Mr. Cutter, for your testimony and 

your opening statement. We will make sure that Representative 

Issa sees every word of it. 

Mr. CUTTER. Thank you. 

Mrs. WAGNER. I now recognize myself, in the capacity of the 

chair, for 5 minutes. 

Promoting financial stability and building the capacity of the private sector in the Middle East and North Africa are key concerns 

of the U.S. Government, and I appreciate Mr. Cutter and Mr. Harmon for their hard work in managing the enterprise fund. 

Mr. Cutter, unemployment in Tunisia may be as high as 37.6 

percent among working age youth, and there is a real lack of highskilled jobs. To what extent is the enterprise fund focused on addressing those needs, and what steps can the Tunisian Government 

take to reduce the youth unemployment rate and create more highskilled jobs? 

Mr. CUTTER. I will try not to filibuster. I will be short, but I am 

happy to engage in this as long as you would like. It is a very, very 

important topic. May I say first that I would be suspicious of any 

Tunisian statistic that has a decimal point in it. I don’t think——

Mrs. WAGNER. I will round up to 38. 

Mr. CUTTER. I don’t think anybody knows. But I accept—I certainly take your point that it is way, way too high. 

I don’t think that the answer to this kind of unemployment problem stems from a magic bullet. I don’t think there is going to be 

one giant investment that solves that. It is going to come because 

the SME sector works better. 

To be trivial about it, if there are 500,000 Tunisian small businesses, and every one of them hires 10 or 20 people, you have 

solved the problem. And that speaks to the guts of the problem, 

which is that the SME sector is heavily burdened. It has not been 

the focus of government effort, and for 30 years it was essentially 

the source of depredation by governments. 

There is far too much casual corruption, which this government 

today has made a big deal of. But corruption really is a tax particularly—on small businesses. Every step along the way of creating a 

business or running a business has some tiny amount of corruption 

attached to it. 

And one of the great benefits of an enterprise fund is we know 

this. We talk to the entrepreneurs all the time. They tell us this. 

So there is the problem that the SME sector is not going to focus, 

there is the corruption, and it is quite hard to do business in Tunisia. 

Mrs. WAGNER. Thank you, Mr. Cutter. I have got several more 

questions. 

Mr. Harmon, I understand that half of all EAEF investment is 

in one company, Sarwa Capital. This company offers consumer 

credit services to finance auto loans, home furnishings, insurance, 

and, basically, general consumer spending. Are these services utilized by Egyptians from all social classes, or just by those who already are considered middle to upper middle class? And why has 

this particular company received such a substantial amount of 

funding? 

Mr. HARMON. We realized——

30

Mrs. WAGNER. Button, please. 

Mr. HARMON. Thank you. I think we realized very early, you cannot solve this problem by going out and trying to put small 

amounts of money into various different small businesses in Egypt, 

in our opinion. We needed to have a vehicle that could reach thousands and thousands of Egyptians. Thirty-one percent or so of the 

youth population is unemployed. So our first preference was to look 

for a bank, but we were not allowed to do that, so we bought a consumer finance business, which was in a position, through its auto 

activities, its leasing activities, to reach the small- and middle-size 

enterprises. 

So I would say, through Sarwa, we have now, most recently, 

reached some 9,000 SMEs, and we are reaching a very significant 

amount of SMEs. We could not do it any other way without using 

some kind of vehicle, but an active, growing consumer finance business can reach out. 

We had some of the same problems when I was at the Ex-Im 

Bank. We didn’t know how to reach in sub-Saharan Africa the 

large number of smaller enterprises and the banks didn’t want to 

make loans to them. So we had to find a vehicle. We lent money 

then to that vehicle. That vehicle onlent it to the many SMEs that 

were in all of the sub-Saharan Africa. But that is the approach we 

have taken in Egypt. I think over a period of time, we will reach 

a large number of the SMEs in Egypt, one way or the other, that 

will help them to provide the funding. SMEs do not have the funding, obviously, and the banks don’t want to loan money to them. 

Mrs. WAGNER. Thank you, Mr. Harmon. I will continue until our 

ranking member returns. Mr. Cutter, my home State is Missouri, 

and agriculture is very important to us. So I was interested in your 

insights on the Tunisian agriculture industry. As foreign investors 

in Tunisia cannot own agricultural land, how have agricultural restrictions impacted the fund’s activity? 

Mr. CUTTER. As I said in the prepared testimony, it precludes—

this provision precludes some investment, because you simply cannot—some you simply can’t manage around. And in others, it has 

required us, working through Tunisian regulatory authorities, to 

essentially structure a deal so that we are investing in the nonagricultural part, and we can show that we have no ownership of 

the land. 

Mrs. WAGNER. Are you having success in dealing with the Tunisian Government in this regard? 

Mr. CUTTER. Yes. But we haven’t been able to change the basic 

law. And I think the basic law is a holdover from a long time ago 

when there were Colonial attitudes about buying and owning land, 

and I think they are an anachronism. 

Mrs. WAGNER. Thank you. Mr. Harmon, what impact have terrorist incidents, the fear of terrorism, and political uncertainty, had 

on the operations of the enterprise funds in Egypt? And to what 

extent has the political environment discouraged other investors 

and sources of credit for the private sector? 

Mr. HARMON. Significantly. The tourist business was down, at 

one point, as much as 50 percent. 

Mrs. WAGNER. Fifty? Five-O? 

31

Mr. HARMON. Five-O at one point. It is coming back a little bit 

now. The tourist business is still impacted, and a very important 

part of the Egyptian economy. We talk all the time about what we 

are going to do about that. We are exploring right now with a 

major hotel chain there creating a school for training young Egyptians on hotel activities as a way to create jobs, but also as a way 

to stimulate the growth of the hotel business. But there is no question that terror has frightened foreign direct investors and frightened visitors. 

We have come away, in the last 6 months, with an IMF agreement, which is a credit to the Egyptian Government, the decision 

to let the currency float, which meant a significant decline in its 

value. It’s credit to our investments that they are still worth more 

than what we paid even after the devaluation. But the devaluation 

makes traveling to Egypt much cheaper. So people are looking, obviously closer at the opportunities to travel there. 

I suspect that if they can manage to keep terror from reappearing, that the tourist business will return to Egypt. But all 

of this had an impact on the Egyptian economy, and only now, with 

the program that President Sisi has done, which is not only the 

IMF agreement but the international loan that was done, which 

was very successfully received, and a number of other moves at the 

cabinet level. There is one particular minister, the Minister of 

International Cooperation, Minister Sahar Nasr, who has done a 

very good job. She understands what the enterprise fund is doing, 

and understands the issues that we are talking about now. 

So good people at the government level, and the kinds of reforms 

that the government have taken will lead to a recovery of the economy. 

Now, it is interesting that the enterprise fund is somewhat of a 

beneficiary. We invested at the low point. So it didn’t take a genius 

to invest well when we did it. I think that we will show very significant profits as a result of that. But our goal is more than just 

showing profits. Our goal is how do we help, on the development 

side, to bring in more investors which is one of our major efforts 

by seeding of the funds that will do that. But there is no doubt that 

this, the terror activities there, had a major impact. 

Mrs. WAGNER. To that point, Mr. Harmon, foreign direct investment in Egypt, it is no secret, has rebounded from a significant dip 

in late 2015. What developments have contributed most significantly to this increase in FDI, and how is the EAEF taking advantage of this? 

Mr. HARMON. Well, the most important thing is what I alluded 

to a moment ago, and that is the agreement with the IMF, which, 

concurrent with allowing the currency to float, that meant that the 

Egyptian pound is down very significantly, and that meant it was 

much more attractive to invest. It has slowed up the enterprise 

fund from investing. After our first two major investments and a 

few of the smaller ones, then management, knowing that there was 

a devaluation coming, paused. Now we are back into the market, 

which is why I think we will—we, as well as other investors, will 

invest more actively in Egypt. And we brought along two major institutions for $100 million invested. Many other institutions from 

around the world come and visit us now in New York or in Cairo 

32

and ask: Is this the right time to invest in Egypt? The answer is, 

yes, it is the right time, in my judgment, after the devaluation, because it is much cheaper to invest. 

So I would predict that you will see foreign direct investment recover more, significantly more, and by the way, the market in 

Egypt, the stock market has also done very well. All of this speaks 

well. Now, we have to do more, obviously, in order to help create 

jobs and help on the development side. But I am cautiously optimistic about the economy now. 

Mrs. WAGNER. Thank you, Mr. Harmon. Final question here, Mr. 

Cutter. In your testimony, you wrote that flexible funding is important to the success of the enterprise fund. Are there additional 

ways to improve the fund to make it more flexible? 

Mr. CUTTER. I hate to be Polyannaish, but from the point of view 

of what the U.S. could do, I feel as if I have all of the flexibility 

I need, and shame on me if I can’t figure out how to engineer anything. 

It is the case that, like a lot of financial systems in many countries, the Tunisian financial system is out of date, and there are 

ways that it could allow more flexibility. And I have made this 

clear in my testimony, but also in Tunisia. 

Mrs. WAGNER. Thank you very much. At this point, the chair 

would now recognize Mr. Connolly, the gentleman from Virginia, 

for 5 minutes. 

Mr. CONNOLLY. I thank the chair and am delighted to be with 

you, and all of our colleagues. 

Mrs. WAGNER. I have plenty more questions. 

Mr. CONNOLLY. Okay, good. Let me see. Mr. Cutter—no, actually, 

I am sorry, Mr. Harmon. Congresswoman Ileana Ros-Lehtinen and 

I had requested a review of the whole Egyptian assistance program. Have you seen that report? 

Mr. HARMON. No. 

Mr. CONNOLLY. What percentage of the—how much and what 

percentage of our bilateral assistance is in the form of cash grant 

transfer? 

Mr. HARMON. I don’t know the answer to that question. I can 

only tell you that the amount that has been allocated, the Egyptian-American Enterprise Fund, we have received $212 million. We 

expect to receive the full $300 million. 

The amount of financial aid to Egypt for economic assistance has 

been declining. So it has been cut back. I think military has been 

held even, but the amount—I remember some numbers, but I have 

to really see that. But it has definitely come down. 

Mr. CONNOLLY. Well, I used to work on the Hill and I used to 

write the foreign aid bill on the Senate side when I was a committee staffer a number of years ago when we started sort of 

ratcheting up the percentage of the ESF fund that was provided as 

a cash grant transfer. And I always worried about that, because if 

we need to—if we are going to show a peace dividend, you know, 

for Camp David to the people of Egypt, it is never going to be in 

the form of a check written to the Egyptian treasury to, you know, 

stabilize their budget. I mean, maybe the controller of the treasury 

is happy, but the average Egyptian sees none of that. And that was 

33

the nature of my question, you know, where are we today. But that 

is not something you follow? 

Mr. HARMON. It is a very complicated question. On my first visit 

to Egypt, the Egyptian Government kept making the statement 

that the $300 million that was allocated to the enterprise fund was, 

in fact, really money that should be given to the Egyptian Government to be spent as they wished to do it. And I debated that point 

with them. We have since come to some understanding about that. 

Our investments have been able to reach millions of Egyptians. 

So on one investment alone, the Fawry investment, where it is a 

pace like PayPal, a pay service allows Egyptians to pay their bills, 

borrow a little bit of money on the telephone call, has changed the 

lives of 20 million Egyptians. It is growing at such a rate and it 

will reach, in my judgment, in the next 5 years, 40 million. So half 

of the population will use this financial service. That is a very important addition that we have been able to do, and we are going 

to get all of our money back, plus a profit on that investment. 

So we are trying to impact the so-called financial inclusion question. If you take the other investment we made, most of the loans 

that Sarwa has made were to people who do not have a bank account. Thirteen percent of Egyptians have a bank account. So it is 

the smallest number probably of any of the poorest countries in the 

world. So Egypt needs financial inclusion, and we have been addressing that. We are addressing it in a way which I think the 

United States is going to get all of its money back. 

Mr. CONNOLLY. When you have 13 percent of the population with 

bank accounts, that tells me that the informal economy dominates 

most people’s lives. 

Mr. HARMON. Yes, that is true. Certainly is true in Egypt. It also 

tells you that banks don’t want to make loans, because they can 

buy treasury securities, which give them 12, 13, 14, 15 percent return, why take a risk in making a small business loan which is 

why we sought to make this investment in the consumer finance 

business, where we now are positioned to take the risk needed to 

reach the poor and the number of unbanked clients. 

So we are going after that very market that you are referring to 

as a way to make a difference. When they write the history book 

on enterprise funds and on Egypt, I think that will be our most important contribution. It won’t be because we made money. It won’t 

be because the United States got its money back. It is because we 

made a difference in reaching the average Egyptian and changing 

the quality of life for the Egyptians, because we gave them the 

money needed for them to finish their home, or them to buy an 

auto, or for them to do a lot of basic things. 

Mr. CONNOLLY. My time is almost running out, but I want to—

presumably, you are involved in the tourism industry in some fashion. Can you tell us a little bit about what is happening to tourism 

in Egypt, because it is such a huge source of foreign exchange. And 

presumably the current climate has depressed tourism in Egypt. 

Mr. HARMON. The tourist business dropped 50 percent. 

Mr. CONNOLLY. 50 percent. 

Mr. HARMON. Five-0. That is a huge drop in any country. The 

western world has never experienced anything of the magnitude of 

that kind of percentage decline. Now, you have to factor in, there 

34

were various different terror attacks specifically cutting back on 

Russian tourists, and cutting back on most western tourists. If I 

tell people of my very first trip to Egypt—I sometimes, in loose moment, explain to them I was there, oddly enough, to meet with the 

Muslim Brotherhood, and I had a meeting that night. And security 

took me in a car with two of the young people from the State Department. We went in front of the square. We were blocked immediately because of the protests. 

Security said to me when the tear gas comes, stay in the car, because you would not live to get to the corner. For 21⁄2 hours, we 

stayed in that car. Tear gas was all around us. By the time I got 

out, needless to say, I was wondering what I had ever agreed to 

do to take on this assignment. I met with the head of the Muslim 

Brotherhood, and I leveled in saying, If you are now the leadership 

of this country, you are never going to attract foreign investment 

if you can’t even drive, if you are frightened about it. I never even 

shared it with my family. It was such an experience. 

Now, recent trips are much better. People can go to Egypt and 

feel comfortable. They have come a long way. But if you lived 

through—I happened to say that was the day of the Benghazi attacks, so there was a lot of action going on in Cairo and all over. 

But that kind of experience and people who saw it and read about 

it, it will frighten people from going to a country like Egypt. That 

has changed very significantly, because, fortunately, people have a 

good memory, and because of the IMF agreement and new money 

coming in and investment pouring in, you can overcome that. But 

if you have terror, it will discourage almost anybody from going. 

And I think we have come a ways. We still have a further way to 

go. 

Mr. CONNOLLY. Just to, if I may, Madam Chairman, just quick 

addition. And is it your observation that the Egyptian Government 

has beefed up security at obvious tourist sites? 

Mr. HARMON. Yes. I think the Egyptian Government doesn’t get 

appropriate credit for a lot of good things they do. Of course, they 

get criticized for the NGO law. I, too, am saddened by it. But I 

think what they have done in the financial area, in terms of the 

IMF agreement, in terms of allowing the currency to float, in terms 

of reducing the subsidies, is to their credit. What they have done 

on security is also to their credit, but you don’t read too much 

about that in the newspaper. Newspapers want to write about the 

worst part about it, and that is somewhat unfortunate. I hope, in 

due time, there will be further reforms in Egypt on the issues of 

the NGOs. But right now, they have done good work in security 

and good work in the financial area. 

Mr. CONNOLLY. Thank you so much. 

Thank you, Madam Chairman. 

Mrs. WAGNER. Thank you, Mr. Connolly. 

As was mentioned in the opening statement of our chairman, 

Ileana Ros-Lehtinen and the ranking member Deutch, they recently introduced a bill that would authorize a new enterprise fund 

in Jordan. Considering your experiences over the past 5 years, is 

Jordan a good candidate for the enterprise fund? I will let you decide who would like to answer. 

Mr. CUTTER. I will start. 

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Mrs. WAGNER. Mr. Cutter. 

Mr. CUTTER. I think it is almost an ideal type. 

Mrs. WAGNER. An ideal type. 

Mr. CUTTER. An ideal type. It is small enough so an enterprise 

fund can have enormous effect. It has the beginnings of the right 

institutions. It has a nascent but reasonably sophisticated, in the 

sense of being nascent, financial sector so you can actually function 

there. And it is receptive to innovation, all of the kinds of things 

that I have found in Tunisia. So I would have thought, looking 

across the Middle East after—obviously because I am biased, but 

after giving preference to Tunisia and to my friend, Mr. Harmon, 

and to Egypt, I would have thought Jordan was where you ought 

to go next. 

Mrs. WAGNER. Thank you. Mr. Harmon, any additional? 

Mr. HARMON. Were I to be in a position to decide where we go, 

I would be more aggressive. We can do enterprise funds so it 

doesn’t cost the taxpayer anything. We are going to have profits in 

Egypt so the money will come back to the United States. That’s 

one. 

Two, there is a lot of talent available in many of these countries, 

who are working together with someone like Mr. Cutter or myself, 

and could do a very good job running enterprise funds. So I would 

go bigger. I would look at Iraq. I would think a lot. I would have 

a team in the United States Government studying which countries 

we should do. Should we consider, some day that is a long time 

from now, but some day we will do it in Syria. Some day we will 

have it in Afghanistan. But I would have a planning stage right 

now for all of the failing States. And there is a lot of talent. We 

would love to participate in such a study group at any time at no 

cost to the United States Government, but there should be more 

plans for somewhat larger countries because this does not cost us 

anything to do. So it is almost a no-brainer. 

There is too much focus, in my judgment, at State or at the 

Council on Foreign Relations, on conflict resolution, and not 

enough focus on economic development. Economic development is 

successful and you create jobs, that is a major force for reducing 

conflict in the future. Enterprise funds are the model for that. 

Mrs. WAGNER. Thank you, Mr. Harmon. I appreciate your optimism. Many observers have suggested that finding the right chairman and board of directors is the single most important element 

in achieving long-term development goals and financial profitability 

of an enterprise fund. 

What can you tell us about the composition of your boards and 

how the directors are chosen? Mr. Cutter? 

Mr. CUTTER. I certainly think, thinking about my colleague, that 

finding the right chairman is extraordinarily important. Whether 

or not it applies to me or not, I will leave alone. But our board—

I think our board is fantastic. By law, it is six American citizens 

and three Tunisian citizens. All of them come from diverse backgrounds. All of them are experienced in business. Some are quite 

senior players in the financial industry from the United States, and 

from Tunisia. They have all taken risks in their lives. They have 

all been entrepreneurs. They understand, and I think almost all of 

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prise sector. Some from the perspective in Tunisia of family businesses of their own, some as investment directions from the United 

States. 

So what I have found—and it is a little bit like the board membership of one of these is like the shortstop who can’t hit, but on 

the other hand can’t field—is that these are jobs that don’t pay 

anything but, on the other hand, take an enormous amount of time. 

And what we have found——

Mrs. WAGNER. Thank you. Mr. Harmon, anything to add on the 

board and board members, chairman? 

Mr. HARMON. Yes. I would advise future chairs when you think 

of a board, try not to take high-profile people who are very busy, 

because you need people who can get engaged. 

Mrs. WAGNER. Workhorses, not show horses. 

Mr. HARMON. You need people who are going to work on that. 

The first thing we look for is very big names, and I am so glad we 

didn’t do it, because the people who really do the work are critical. 

And they have to have a real interest in the country. So we found 

that Egyptian-Americans were quite valuable. But the Americans 

that we had, some had real good private sector experience. A board 

is one of the most important parts of an enterprise fund, much 

more so than the private sector boards. They are important too, but 

boards here, if they are engaged, really can help you a lot. 

Mrs. WAGNER. According to the Egyptian fund’s 2015 financial 

statement, approximately $56 million of its funds were being held 

in Mauritius. Is this still the case? And what is the rationale for 

holding funds in Mauritius rather than Egypt and the United 

States? Mr. Harmon? 

Mr. HARMON. I am sorry. I didn’t hear the question. If you could 

say it again. 

Mrs. WAGNER. According to the financial statements of the Egyptian’s fund, their 2015 financial statements, they said approximately $56 million of the funds were being held in Mauritius. Is 

this still the case, and what is the rationale for doing so, for not 

holding it, I suppose, in Egypt or in the U.S.? 

Mr. HARMON. I think part of that might be reflective of the fact 

that in anticipation of a devaluation, there were funds being held 

outside the country, because if you were holding Egyptian pounds, 

you were about to suffer somewhat. There was a long pause in investing, and many companies, including some we know very well, 

kept dollars outside of the country in Mauritius, waiting for the devaluation to take place, which took place really only 6 months ago. 

Money is coming back into Egypt right now. So there was conservatism in keeping money in banks in Mauritius as an example as 

one of the explanations. 

Mrs. WAGNER. Do either of your funds hold cash or own companies outside of your host countries or the U.S.? Mr. Cutter? 

Mr. CUTTER. No. 

Mrs. WAGNER. Mr. Harmon? 

Mr. HARMON. No. 

Mrs. WAGNER. My last question, finally, it is my understanding 

that the Egyptian fund is still waiting on a delayed tranche of 

funding from USAID. What can you tell me about this? 

37

Mr. HARMON. I think you really have to ask State and AID about 

it rather than myself. We have a pipeline right now where we are 

ready to make investments, but it in fairness to them, that pipeline 

didn’t exist until maybe last 4 or 5 months, as we maximized our 

efforts after the devaluation. There may have been some reason to 

feel that we weren’t going to deploy it quickly enough. But right 

now, I hope that it will get disbursed to us so that we can accelerate our investment program now that we have the pipeline that 

we are having. 

If I may be allowed just to correct one thing I said earlier, I 

didn’t want to imply to anyone that I wasn’t supportive of the Jordan enterprise fund. I think it is very worthwhile to do. I just felt 

that we could also be reaching to an even larger size. And I also 

wanted to encourage a little bit more study of how many other 

countries we could do enterprise funds in. If I were running the 

program, I would be—I would expand the enterprise funds concept 

very significantly. 

Mrs. WAGNER. Great. Thank you, very much. 

Mr. Connolly, anything else? 

Mr. CONNOLLY. If I just could with Mr. Cutter, Madam Chairman? 

Mr. Cutter, you have been involved in Tunisia for how long? How 

long have you been involved in Tunisia? 

Mr. CUTTER. Five years. 

Mr. CONNOLLY. Five years. You go there a lot? 

Mr. CUTTER. Yes. 

Mr. CONNOLLY. You think it is an important relationship? 

Mr. CUTTER. Absolutely. 

Mr. CONNOLLY. So any comments on the proposed budget the 

President submitted that would cut aid to Tunisia by 62 percent? 

Mr. CUTTER. I try my best to stay out of politics with respect to 

the Fund, but I think it is short-sighted, that Tunisia is strategically important. The Tunisian Government, if you kind of run down 

a list of the kinds of things that you use as indicators of countries 

you ought to invest in: Two free elections; an open, liberal constitution; the most open society in the Arab world to women’s rights; all 

of the economic indicators turning up; a recent IMF agreement; a 

real anticorruption direction; and financial reform, this is a country 

we should invest in. 

Mr. CONNOLLY. And that litany you just read—and I am sure we 

could add to it—all of that is after the Arab Spring? 

Mr. CUTTER. Yes, sir. 

Mr. CONNOLLY. And it is the only country emerging from that, 

you know, big, hopeful turmoil——

Mr. CUTTER. I think Egypt has a pretty good—but you are right. 

Mr. CONNOLLY. It is the only—yeah. But it is the only one that 

kind of had a happy ending from a democratic point of view? 

Mr. CUTTER. Absolutely. And if you talk to people in Tunisia 

now, the mood, from the top levels of the government, all the way 

down to the entrepreneurs that we deal with—some of whom are 

street entrepreneurs—the mood is up in a way that was really 

quite different 2 years ago. 

Mr. CONNOLLY. Sounds like a country we ought to be supporting, 

not cutting back in. Thank you. 

38

Mr. CUTTER. May I say one other thing? 

Mr. CONNOLLY. You certainly can. 

Mr. CUTTER. I forgot to mention that—but particularly given 

your background—I am an eighth generation Virginian from Augusta County, Virginia. 

Mr. CONNOLLY. Good for you. 

Mrs. WAGNER. A kissing cousin, Mr. Connolly. 

Mr. CONNOLLY. Lord Almighty, Madam Chairman. I should have 

come earlier. 

Mrs. WAGNER. Thank you very much, Mr. Connolly. 

And I thank our witnesses very, very much for their testimony. 

I know that the ranking member—I just received a note—has been 

held up in the judiciary markup. We have a number of markups 

going on this morning. I am running to one in Financial Services 

myself. Do know that we are grateful for the work that you are 

doing; we are grateful for your testimony here today, and I know 

that other members will be submitting questions in writing. 

So, with that, the subcommittee on Middle East and North Africa 

stands in adjournment. 

Mr. CUTTER. Thank you very much. 

[Whereupon, at 11:11 a.m., the subcommittee was adjourned.] 

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40

f


25952n.eps
41

f


25952m.eps
42


25952c-1.eps
43

Æ


25952c-2.eps