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Egypt Needs a Technocratic Government: Citadel Capital

Kiran Moodley
Monday, 8 Jul 2013 | 7:07 AM ET

Egypt needs a technocratic government to steer the country through its next phase of transition,according to the chairman and founder of Africa's largest private equity group, Citadel Capital.

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Talking to CNBC Europe's "Squawk Box", Citadel Capital's Ahmed Heikal said: "It is important to have a technocratic government to be able to steer the government through for the next year of transition."

He added that Egypt had erred in its transitional period after the 2011 revolution that deposed former President Hosni Mubarak.

"We started by doing a presidential election, a parliamentary election, and then a constitution. That is ridiculous. You have to put a constitution first, and then you need to put the other two democratically elected institutions."

(Read More: Shooting of Pro-Morsi Protesters Deepens Egypt Crisis)

The Egyptian army overthrew Mohamed Morsi in a coup last Wednesday, following mass protests against his presidency. The Muslim Brotherhood has denounced the coup, leading to a week of bloody battles between the army and the Brotherhood. NBC News reported on Monday that the death toll from the violence stood at 42, with 322 people injured.

In the wake of the violence, the ultra-conservative Islamist Al-Nour party, which initially supported the army's intervention, withdrew from negotiations to form an interim government.

Heikal said the withdrawal of the Nour party was bad news for Egypt's political future. "It is impossible to think of a scenario where the Islamists - either the Muslim Brotherhood or the Salafists (the Al-Nour party) - are not party of a broad coalition to govern the country."

(Read More: Egypt PM Dispute Stalls Government, Islamists Call More Protests)

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He added that Egypt's political situation would benefit from help from the country's neighbors.

"I am sure that the Gulf will step in, for political reasons. Egypt is a centerpiece for the stability of this region and the Gulf wants a stable Egypt," he said. "Indeed, the West wants a stable Egypt; everybody has a big incentive to have a stable Egypt."

Heikal, whose Citadel Capital has over $9 billion invested across Africa and the Middle East, said Egypt was not necessarily a bad investment case.

"I think the situation is, at this point and time, fluid," he said. "There is an underlying positive message here that is taking place: Egypt has learnt a lot over the last two-and-a-half years."

When asked if he would buy Egyptian stock, Heikal said: "I would wait for a couple of days, three days, to see where the events are going."

He said recent events would certainly frighten investors. "The risk is significant and people will probably look at that, and unless there is something absolutely out of this world, I think people will shy away and they will stay on the side line."

Heikal has previously told CNBC that Africa offers a great market for investment, with low competition and a political environment that is slowly improving. He described the continent as a high-risk and high-reward region.

(Read More: Why Washington Is So Aloof on Egypt Crisis)

By CNBC's Kiran Moodley: Follow him on Twitter @kirancmoodley

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