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SEPTEMBER 2016
ALSO INSIDE: BETTING ON THE FUTURES
IT’S NOT EASY BEING GREEN EGYPT GOES TO THE DOGS
Home improvement
Clearing the ashwa'yat
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n the occasion of inaugurating Mountain View Diplo Ras El Hikma in the North Coast, “Mountain View” the Real Estate Development and Investment Company has organized “IL CONCERTO” live performance. The event took place on a Friday afternoon August 5th, in the presence of ambassadors, diplomats and Mountain View clients. The ceremony, which was held at Mountain View Diplo Ras El Hikma North Coast, was attended by 22 ambassadors and diplomats from different countries, including Switzerland, Mexico, Ecuador, Finland, Venezuela, Ukraine, Paraguay, Chile, Japan, Croatia, Senegal, Mexico and Uzbekistan. Furthermore, a large number of socialites joint among which were politician and TV presenter Moataz Abdel Fattah, Radio presenters; Sherif Nour El Deen and Yara El Gendy, lifestyle TV presenter Sherif Madkour and Egyptian Premier league footballer Muhammad Zidan, as well as a number of celebrities and Mountain View clients. Razan Maghraby, the diva Lebanese artist was the MC. Razan expressed her tremendous admiration for Mountain View’s leading projects in the Egyptian real estate market. She also talked with enthusiasm about Mountain View’s ability to meet customers’ needs, as well as their delivery dates. She stressed on how the company wows clients with new and outstanding innovations. “I urge you not to miss the
Eng Amr Soliman Chairman and Founder of Mountain view
opportunity to book a unit. I will definitely book one!” Mountain View’s Founder and Chairman, Amr Soliman highlighted that Mountain View has a clear message which is “to bring happiness to our customers”. He stated that this is Mountain View’s secret of success and competitive standpoint. Soliman also honored a number of ambassadors from the Egyptian Youth Diplomats Association founders during the event. Undersecretary of State, Ambassador Ayman Kamal expressed his pride in Mountain View’s project, the company’s ability to achieve so much in such a short time, changing their innovative dreams a beautiful reality. He added that Mountain View is an Egyptian company that always generates new ideas and significantly supports the growth and development of the national economy. Finally, the ceremony, which was attended by society’s elite, was complemented by the music of renowned musician and composer Zade Dirani, who rocked the event with his vibrant music. Dirani expressed respect for Mountain View Diplo Ras El Hikma, which according to him, measures up to various glamorous projects in Europe and the US. He was also pleased to perform for the first time before Egyptian audience. Dirani kicked off the performance by playing “Oman”, then “Heya” musical pieces. He concluded the event by playing Dalida’s song “Helwa ya Baladi” accompanied by a delightful audience enjoying a Tuscany style setup and glamorous gourmet food. Flavor, a French band who came all the way from France, to attend the event concluded the event with their high energy dancing songs to dazzle the audience in Mountain View Diplo Ras El Hikma private party.
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SEPTEMBER 2016 VOLUME 33
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ISSUE 9
Cover Stor y Sandcastles The government plans to move 100,000 Egyptian slum-dwellers into Al Asmarat, a new housing project paid for in part by the Tahya Misr fund. But without markets, cafés or jobs, the new desert settlement offers few chances for actual upward mobility.
Cover Design: Nessim N. Hanna
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Inside 14
Editor’s Note
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Viewpoint
The Newsroom 18
In Brief The news in a nutshell
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Region Notes News from around the region
© Copyright Business Monthly 2016. All rights reserved. No part of this magazine may be reproduced without the prior written consent of the editor. The opinions expressed in Business Monthly do not necessarily reflect the views of the American Chamber of Commerce in Egypt.
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Business Monthly – September 2016
THER E I S A R ENA I SSA NCE AT R I STOR A NTE TUSCA N Y.
E L EG A N T ‘ B E L L E E P O Q U E ’ A N D A W E LC O M I N G R U ST I C WA R M T H … B OT H C A P T U R E T H E E S S E N C E O F T H I S I TA L I A N R EG I O N W H E R E SIMPLE, WHOLESOME FOOD IS P A R T O F T H E H E R I TA G E .
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SEPTEMBER 2016 VOLUME 33
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Market Watch
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Stock Analysis Looks can be deceiving
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Capital Markets A glance at stocks and bonds
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Money & Banking Forex and deposits
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Key Indicators The economy at a glance
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Egypt-U.S. Trade Imports and exports
In Depth 24
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ISSUE 9
Looking to futures for a better one A new effort to breathe life into the stock market Pulling the plug on Egypt’s feed-in tariff Govt’s refusal to budge threatens investment in renewables
Business Monthly – September 2016
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Executive Life 46
Dining Out The story of O’s
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Trends Dog days
The Chamber
Corporate Clinic
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Member News
Banking on reform Inside the IMF loan agreement
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New Members
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Classifieds
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Media Lite An irreverent glance at the press
Editor’s Note
Director of Publications & Research Khaled F. Sewelam
IF YOU BUILD IT
Editor-in-Chief Rachel Scheier
D
uring World War II, the Allied forces set up temporary military bases on remote islands in the Pacific Ocean, introducing isolated peoples to Western manufactured goods. Military equipment and supplies were airdropped or flown in, drastically changing the lifestyle of the natives, many of whom had never seen outsiders before. Suddenly, they had access to manufactured clothing, medicine, canned food, tents, weapons and other goods that arrived in vast quantities for the soldiers, who shared these items with the islanders in exchange for being their guides and hosts. When the war ended, the armies abandoned the bases, and the supplies disappeared. Hoping to bring them back, some of the tribes formed “cargo cults,” as they’re now known, mimicking the behaviors of the strangers. In one famous example, the Tanna people of Vanautu devised elaborate religious rituals in which they acted out U.S. military drills, recreating runways and even life-size airplanes built out of wood, bark and vines. To us, the idea of native islanders marching around in formation with makeshift rifles and wearing radio headphones made from coconut shells in an attempt to make clothes and medicine fall from the sky seems funny, and perhaps a little sad. But in truth, we may be more susceptible than we realize to cargo-cult thinking—a metaphor that has come to refer to any attempt to create a successful outcome by replicating the circumstances associated with it, even if those circumstances didn’t have anything to do with creating the favorable outcome in the first place. In this month’s Cover Story, Edmund Bower writes about the government’s efforts to uplift poor slum-dwellers by moving them into suburban-style apartment towers. In the shiny new Al Asmarat housing complex, informal workshops and tuk tuks and all the other trappings of Cairo’s poverty-ridden slums have been banned—replaced by tidy paved roads and sports fields. Trouble is, simply putting people in middle-class surroundings is unlikely to make them middle class. (Just as propping up the Egyptian pound at LE 8.8 to the dollar won’t make it the actual exchange rate and widening the Suez Canal won’t increase shipping traffic.) While the relocated residents of Al Asmarat are surely grateful to have a stable roof over their heads, they will need much more than that if they are to climb their way out of poverty. As well as new homes, they need better schools and public transportation and realistic opportunities to make a decent living. Otherwise, we are simply hoping for a miracle.
Contributing Editors Kate Durham Tamer Hafez Staff Writer Edmund Bower Senior Art Director Nessim N. Hanna Graphic Designer Emy Emile Advertising & Business Development Director Amany Kassem Advertising Coordinators Tasneem Abo El Ezz Nada Auf Photographers Soha El Gabi Production Supervisor Hany Elias Market Watch Analyst Amr Hussein Elalfy Chamber News Contacts Nada Abdalla, Azza Sherif, Susanne Winkler
R ACHEL S CHEIER
U.S. address: 1615 H Street, NW • Washington, D.C. 20062 Please forward your comments or suggestions to the Egypt editorial office:
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Business Monthly – September 2016
Viewpoint
OLYMPICS
T
he Olympic Games started in Ancient Greece over 3,000 years ago and were reorganized in the 19th Century in the format we know today. The first games took place in 1896 in Athens; only 13 countries participated, represented by 280 athletes! In 2016, 206 National Olympic Committees representing 11,339 athletes were participating. As opposed to other sporting events, teams represent countries, although individuals receive medals, they carry their respective flags and are recognized as such. This year, due to the European migrant crisis, the International Olympic Committee allowed athletes (refugees) to compete as independent Olympians under the Olympic flag. I had the privilege to attend some of the final week’s events, and the closing ceremony of the 2016 Olympics that took place in Rio de Janeiro. It was a true life-time experience. This trip being my first time at the games as well as my first visit to Latin America, my impressions were affected by the novelty syndrome in many ways; however, they represent the feelings of many attendees who came from all walks of life and have had different experiences. The home teams have an unbeatable advantage, the vast majority of spectators cheer for them, loud local music is incessantly played and the national colors are dominant all around the stadium. (God only knows how much Brazilians can move and sing!) All these factors put together must make any competitor feel at a disadvantage. I was impressed by the fact that all Brazilians were singing their national anthem with extreme pride, without missing
neither a word nor a beat, regardless of their different socioeconomic backgrounds, education levels or ethnic origins. And with no exception, the whole stadium respectfully stood up for all foreign national anthems. I was impressed by the logistics. Special lanes were dedicated to the games on every highway, visitors zoomed through in spite of the heavy regular traffic, and nobody tried to beat the system. I was impressed by the fact that nobody tried to pull rank on the security staff. Searches were conducted diligently by welcoming, smiling officers. I was extremely impressed by the prime seats assigned to handicapped individuals, and by the attention they received. An amazing number of immaculate restrooms were set up outdoors and indoors and were constantly manned and supplied. Considering that, in many ways, Brazil is a developing country that would often remind you of Egypt (social gaps, shantytowns and overpopulation), the constant obvious question that I could not stop asking myself was, “Can we organize Olympic games?” And if not, why not? The answer to this question reflects many complicated, deeply rooted problems! Culture, habits and crowd behavior are the most difficult things to change … the more we observe differences, the more we realize that we need a lot of patience and compromises. The fact that all these nations can compete within a regulated framework and recognize all winners equally confirms that the hope of a terror-free, war-free world can be a reality. A NIS A. A CLIMANDOS
President, AmCham Egypt
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Business Monthly – September 2016
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Cabinet approves VAT law
Egypt, IMF reach loan agreement
“On support of the government’s economic reform program, the Egyptian government, the Central Bank of Egypt and the IMF team have reached a stafflevel agreement on a three-year Extended Fund Facility in the amount of SDR 8.5966 billion (422 percent of quota or about $12 billion),” International Monetary Fund Chief of Mission Chris Jarvis announced in an August 11 press statement. The deal, Jarvis noted, is still subject to approval by the IMF executive board. The program agreed upon by the two parties seeks to reduce general government debt from 98 percent of GDP to
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around 88 percent of GDP by fiscal 2018/19 and also calls for the adoption of a value-added tax and subsidy reform. The Central Bank’s monetary policy will move toward a flexible exchange rate and “aim to improve the functioning of the foreign exchange market, increase foreign reserves, and bring down inflation to single digits,” Jarvis added. Planned reforms also aim to strengthen the private sector, while using budgetary savings to strengthen the social safety net for vulnerable citizens. “Egypt is a strong country with great potential, but it has some problems that need to be fixed urgently,” Jarvis said. The plan has faced some opposition, including from a group of left-leaning political parties and public
Business Monthly – September 2016
BUSINESS MONTHLY ARCHIVES
After weeks of debate, Egypt’s cabinet voted last month in favor of a value-added tax. The initial base rate was set at 13 percent for 2016/17, below the 14 percent proposed by the Cabinet. According to state-owned Ahram Online, the law approved by the cabinet exempts 56 items from the tax. Parliament kept exemptions for basic goods including essential foods, dairy products, infant milk and nutritional supplements for babies. It also added exemptions for tuition at international schools, local and imported medicines, adapted cars and other equipment for people with disabilities as well as recycled goods produced from waste products. However, goods that were previously exempt will now be subject to tax, including TV and radio production, imported vegetables and wheat and cosmetic surgeries. Some items will also be taxed above the base rate, including a 21-percent levy on mobile phone services, 150 percent on wine and spirits and 250 percent on beer. The finance ministry previously predicted that a 14- percent VAT would earn LE 32 billion in revenue for the current fiscal year, while increasing the cost of living by 0.5 percent for low-income Egyptians and 2.3 percent for the wealthy.
figures, who wrote an open letter last month calling on President Abdel Fattah el-Sisi to suspend loan talks due to the impact austerity policies could have on Egypt’s population. In interviews with local media, Sisi vowed that he would not hesitate to take difficult steps to cope with Egypt’s economic crisis.
Inflation up again in July
Annual headline consumer price inflation inched up to 14 percent in July, after recording 13.97 in June, the highest rate since November 2013. The monthly rate registered 0.74 percent in July, compared to 0.78 percent in June
In Brief
and below the average monthly pace of 1.27 percent for the first half of 2016. According to the Central Bank of Egypt, the bulk of the increase was driven by higher prices for fresh fruits and vegetables, rice and paid services, partially offset by lower prices for poultry, which was down 7.84 percent during the month. Meanwhile, annual core inflation eased slightly to 12.31 percent from 12.37 percent in June, with a month-on-month increase of 0.25 percent.
Egypt has once again roiled the global wheat market by reinstating a ban on imported wheat containing even trace amounts of ergot, a naturally occurring fungus that can be harmful in large amounts and that some officials claim could contaminate the local crop. International standards, which Egypt has followed for years, allow for trace ergot contamination of up to 0.05 percent. Egypt has repeatedly shifted its ergot policy recently. Last December, officials from the agriculture ministry’s quarantine authority announced a zero-tolerance policy for the fungus, resulting in market confusion and failed wheat tenders and eventually prompting public statements from the agriculture and supply ministers stressing that cargoes containing up to 0.05 percent ergot would be accepted. However, Egypt reportedly rejected two wheat cargoes in June, despite ergot levels being measured at less than 0.05 percent. A July decree formally returned Egypt to international standards. On Aug. 28, Egypt’s agriculture minister officially announced that Egypt will once again adopt a zero-tolerance rule for the fungus. “The ban will be applied to every grain of wheat entering the country. As of now no infected wheat will enter either from upcoming tenders or previous ones,” ministry spokesman Eid Hawash told Reuters. Following the reinstatement of the ban, an Aug. 31 tender by Egypt’s state wheat buyer was canceled after it
BUSINESS MONTHLY ARCHIVES
Egypt reinstates ergot ban
CYPRUS WILL SELL NATURAL GAS TO EGYPT.
failed to attract enough sellers. The move to tighten import regulations comes as Egypt is embroiled in a scandal over corruption in the procurement of subsidized local wheat. It led to the resignation of former supply minister Khaled Hanafy and has seen officials from the Ministry of Agriculture accused of colluding with silo owners to embezzle subsidy funds.
Egypt and Cyprus sign gas transport deal
Striking a deal that Egypt’s Minister of Petroleum says will help unlock the potential of the Eastern Mediterrean, Egypt and Cyprus on Aug. 31 signed an agreement of intent to transfer Cypriot natural gas to Egypt. The deal is a preliminary step in the transport of gas from Cyprus’ marine gas holdings to Egypt via a subsea pipeline, according to a Ministry of Petroleum statement. The gas will then either be transferred to Egypt’s natural gas grid or re-exported through underused gas liquefaction facilities in Egypt. Cyprus’ Aphrodite gas field is located near to Egypt’s Zohr field, opening up the possibility of joint development and infrastructure use if the bilateral agreement progresses.
UAE to boost reserves with $1 billion deposit
The United Arab Emirates agreed on Aug. 22 to deposit $1 billion at the Central Bank of Egypt for the next six years. The transfer will come as Egypt waits for a final ruling from the IMF executive board on a $12-billion loan and will help shore up Egypt’s dwindling reserves of hard currency. Egypt’s official foreign-currency reserves fell by $2 billion in July, closing the month at just $15.54 billion, the lowest level since March 2015. The steep drop in July was due largely to scheduled loan payments as well as the repayment of Central Bank deposits from Libya and Qatar. Central Bank Governor Tarek Amer said the UAE deposit was “timely” and will help maintain the stability of Egypt’s currency.
Gov’t continues war on black market dollars
Illegal foreign-currency traders now face up to 10 years in prison after Sisi approved amendments to the banking law aimed at cracking down on the underground forex market. Bankers caught violating currency laws can be fined up to LE 5 million or sentenced to
Business Monthly – September 2016
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In Brief
STREET SENSE What should be done about the ashwa’yat? I think that in the long run, relocation will work. The new projects have water, roads and safe, functional housing. My problem is with how the government is forcing people to move. Will it actually make people's lives better? The government should hold orientation sessions where they explain the benefits to people so that they don’t see it as a forced relocation. Kamal Salem, 60, shop owner
Ashwa’yat residents should have their own government representation. The state is making a mistake by trying to relocate them. It’s a waste of time—people who have lived in these places their whole lives are not going to just leave everything behind. What’s more, they don’t trust the government, since it’s never done anything good for them, so of course they won’t want to move. They need to take their fate in their own hands. Sarah Zien, 29, economic researcher I think the people living there need to take matters into their own hands to improve their living conditions. The government can’t get rid of slums by moving people or forcing them to make improvements. The only thing they can do is support the residents by giving them licenses to organize for, say, garbage collection and other general improvements. Then the people could act based on their own priorities and move at their own pace. Rashid Hamed, 46, lawyer I think the government should give money to improving these communities and help them develop a better standard of living. No one wants to live in a falling-down house on a small dirty street without any lighting. The government needs to take aggressive steps toward making these slums better places to live. I unequivocally reject the idea of relocation. Habiba Qassem, 23, marketing executive The new government housing may have all the facilities, but people will still reject it. These new complexes are nothing more than apartment buildings, with no services or access to public transportation. When they tried to move the Ramses street vendors to the new site, the vendors rejected it because it didn’t have enough foot traffic, and the vendors couldn’t make a living. It will be the same story here. Ismail Wael, 29, parking attendant Nothing. I live in Nahya, and I have everything that I need nearby. My dad built my home, and I’ve lived there my whole life. We are used to our life. Sure, we could do with better garbage collection and better roads, but that’s about it. No one—not the government, or NGOs or anyone else—has ever done anything to help us, and we don’t need their help now. Abdel Tawab Taha, 41, office boy
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We as residents of ashwa’yat really want the government to come in and solve our problems where we live instead of moving us. We have built our lives around the neighborhood; it has all the facilities, transportation, kiosks and markets we need. If you relocate us, we have to start new lives all over again from scratch, which is a lot of pressure when people are working two or three jobs and then have to worry about things like how to get to work and where to buy food. Yassin Abdel Rahman, 56, kiosk operator
TE WILL PAY LE 7 BILLION OVER FOUR YEARS FOR A 4G LICENSE.
up to three years in prison, reports Aswat Masreya. With dwindling currency reserves and a steady demand for hard currency to finance imports, Egypt faces a serious currency crunch. In recent months, dollars have traded on the black market for between LE 12 and LE 13, while the official rate holds steady at LE 8.88 per dollar. With scarce supplies of dollars available at official rates, businesses and private individuals must resort to the parallel market, an avenue the government has attempted to close by passing an array of laws including transfer and deposit limits as well as imposing harsh punishments for violators. Last month, officials reported closing down 53 foreign exchange bureaus that were caught making illegal currency trades.
TE secures 4G license
After years of delays and false starts, Egypt has finally sold its first fourth-generation mobile license, to state-owned landline operator Telecom Egypt. 4G technology allows higher data transmission speeds than the 3G technology currently in use in Egypt. After initial approval in June, TE confirmed on Aug. 31 that it had finalized the terms of the agreement and would pay LE 7.08 billion over the next four years, half of that in dollars. The initial
Business Monthly – September 2016
license will last for 15 years, and TE has to make the service available within six months. The license will allow Telecom Egypt to become Egypt’s fourth mobile phone operator. The other three mobile players have been offered priority for the remaining 4G licenses. If they do not reach agreements by Sept. 22, international operators will be allowed to submit bids. TE’s statement on the deal did not clarify what will happen to the company’s 45-percent stake in competing mobile network Vodafone, but previous reports suggest that the firm will be allowed to keep it.
Foreign reserves steady in June
Despite a hard-currency shortage hobbling local businesses and prompting a thriving black-market dollar trade, Egypt’s official foreign reserves inched up in June, recording $17.55 billion at the end of the month, the Central Bank reports. Reserves stood at $17.52 billion the previous month. Reports indicate that the government is counting on support from its allies in the Arab Gulf, including installments of a $2.5 billion grant from Saudi Arabia, to tide it over while it negotiates financing deals with multilateral funders . ■
Region Notes Caspian Sea
Black Sea
TURKEY
TUNISIA
MOROCCO
Mediterranean Sea
CYPRUS LEBANON
SYRIA
IRAN
IRAQ
ISRAEL JORDAN LEBANON
ALGERIA LIBYA
SYRIA
KUWAIT PALESTINIAN TERRITORIES
ISRAEL EGYPT JORDAN
Persian Gulf
BAHRAIN QATAR UAE
SAUDI ARABIA
OMAN
Red Sea SUDAN
YEMEN
Arabian Sea
SOUTH SUDAN SUDAN
Map intended for illustrative purposes only and may not accurately depict national boundaries or disputed territories.
Atlantic Ocean
■ Sudanese pound sinks against the dollar Sudan’s currency hit record lows on the black market last month as the country struggles to source hard currency for imports. While the Sudanese Central Bank has kept the pound at 6.4 per dollar for the past year, it sank past 16 pounds per dollar on the parallel market in August, Reuters reports. The drop in the pound’s unofficial value has raised the price of imports and contributed to an overall increase in the cost of living. According to official figures, Sudan’s annual inflation rose to 16.5 percent in July, up from 14.31 percent the previous month, driven by rising prices for food and services. Analysts attribute the fall of the pound to conflict and political unrest in the country—an armed conflict is ongoing in the southern states of South Kordofan and Blue Nile. Sudan has faced rising prices since 2011, when South Sudan seceded, taking threequarters of the country’s oil output with it.
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■ Tunisian PM warns of austerity In an Aug. 26 address to Parliament, Tunisian Prime Minister Youssef Chahed warned that his country faces an austerity program if it is unable to turn around its economy. With Tunisia facing dwindling tourism and labor protests in its crucial phosphate industry, Chahed predicted that economic growth would not exceed 1.5 percent this year, a level far below the official target of 2.5 percent. “If the situation continues like this then in 2017 we will need a policy of austerity, and dismiss thousands of public-sector employees and impose new taxes,” Reuters quoted Chahed as saying. “The IMF and the World Bank have been lending Tunisia lots of money with repayment scheduled for next year, so the only solution is to implement austerity programs, even if the outcome sounds negative,” political analyst Youssef Cherif explained an interview with the website Tunisia Live. The prime minister also vowed to crack down on unsanctioned industrial
Business Monthly – September 2016
actions, further inflaming tensions with Indian Oceanlabor unions. the country’s powerful
■ IMF loans Jordan $723 million The Executive Board of the International Monetary Fund approved a financing agreement to provide Jordan with around $723 million dollars over the next three years. The first tranche of $72.3 million dollars was made available immediately following board approval on Aug. 25, with the balance to be distributed following six periodic reviews. The IMF had a generally positive assessment of Jordan’s economic policies but noted that the country has been weighed down by regional instability. “Economic performance remains below potential and the hosting of Syrian refugees weighs on the economy and public finances,” First Deputy Managing Director David Lipton said in a press statement. Lipton also urged Jordan to reform its labor laws, strengthen public financial management and increase transparency. ■
SOHA EL GABI
INVESTING
LOOKING TO FUTURES FOR A BETTER ONE
M BY TAMER HAFEZ
ost mornings, Said Mohamed, a 45year-old fruit trader, drives his 1 9 6 0 s - e r a Chevrolet pickup truck to Obour Market, the wholesale produce depot for Greater Cairo. Most locally grown fresh fruits and vegetables pass through Obour on their way to street stalls or supermarkets across the capital. At dawn, trucks loaded with
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tomatoes, lemons, onions and other crops line up at the market gate, hoping to sell their shipments at a profit, or at the very least, break even. Thanks to Egypt’s quirky produce pricing system, which harks back to the 10th century, wholesale prices are determined solely by the opinion of one man per crop, respected “dons” who briefly inspect the produce and—before a nervous, hushed crowd of buyers and sellers— declare the minimum auction price for
Business Monthly – September 2016
the day’s shipments. On a recent August morning, Mohamed hoped to elicit a favorable price for his truckload of red grapes following a three-week string of losses. “Working like this is even more risky than gambling,” he declares. “You really have no clue how much money you are going to make—or if you’re going to make any.” If all goes well, traders like him may be able to mitigate this risk via Egypt’s new futures exchange. Announced by
In Depth
financial regulators in July, the proposed futures market, in which investors buy and sell futures contracts to deliver commodities for a set price on a specific date, would be one of just a handful of such exchanges in the Middle East and Africa. Officials hope the new market will “increase the number of investors on the stock market by giving them more options to invest in the EGX,” Sherif Samy, chairman of the Egyptian Financial Supervisory Authority, told reporters at a press event in July. He explained that the proposed futures exchange—which is still subject to the approval of the finance and investment ministries before it can open in November as scheduled—is part of a larger effort to overhaul and improve the country’s capital markets. It could also help guard against the wild price swings of commodities that are not uncommon in Egypt—and have helped keep many investors away. Essentially, futures markets provide an insurance policy to suppliers and producers like Mohamed, while passing the risk—and also the potential rewards—of a volatile market to willing investors. For example, Mohamed could sign a futures contract under which he is obligated to deliver a certain amount of grapes three months from now at a fixed price based on his best guess on how much grapes will be going for in six months—say LE 20 a crate. If, when next spring rolls around, the market price of grapes is LE 15, he has protected himself from a loss, which the investor covers. On the other hand, if grapes suddenly shoot up to LE 30, the investor pockets the extra profit. Mohamed foregoes the benefits of an unanticipated windfall for the security of a guaranteed, fixed profit—an insurance policy that also allows producers and manufacturers to anticipate costs. As Mohamed puts it: “Knowing how much money I am getting is profit enough.” Egypt’s ongoing hard-currency shortage have made prices more volatile than ever. In addition to the weakened pound, economists expect that Egypt’s long-awaited value-added tax, which is currently being picked over by parliament for implementation in October, according to officials, will fuel rocketing
inflation. “Futures will not bring prices down, but they should help stop sudden big jumps,” says Hany Tawfik, director of the Egyptian Private Equity Association. Futures contracts can be bought and sold like stocks. In the developed world, modern futures exchanges don’t just trade contracts on commodities; they also involve the buying, selling and hedging of contracts on currencies and financial products—even on interest rates. The EFSA has for now limited futures contracts to eight agricultural and energy commodities, but Samy said futures on stocks will eventually be introduced. Financial regulators argue that adding a futures exchange in Egypt will broaden investors’ options and encourage other kinds of investment as well by offering a tool that enables stockholders to insure themselves against dramatic price dips. In fact, it would not be the nation’s first. The Cotton Exchange was formed in 1883 in Alexandria, in the era when Egypt was a British protectorate, in order to capitalize on Egypt’s then-thriving cotton trade. However, the government’s policy of heavily subsidizing the local industry led officials to finally shut down the Cotton Exchange in 1992, as the gap between state-mandated cotton prices and those of the free market became unrealistically wide. “Egypt lost a lot of foreign investors when that exchange closed in 1992. And those investors never came back,” says Atef Yassin, a former chairman of the board of directors of the EGX. Today, in the Middle East and Africa, only Kuwait, South Africa, Morocco and now the UAE have active futures markets that aren’t limited to specific types of agricultural produce, with the latter joining the pack only this month with a new Dubai-based futures exchange. While this relatively small club makes Egypt appear ahead of the curve regionally, analysts say that given the size and diversity of Egypt’s economy—now the continent’s second biggest—it should have made the move long ago to revitalize a relatively stagnant stock market in which a handful of stocks for the vast majority of transactions. “EGX investors have
been in a rut for some time now, either losing money or not making more money,” says Hesham Hassan, head of technical analysis at Acumen Securities. “The stock market needs new tools to revitalize it.”
“EGX INVESTORS HAVE BEEN IN A RUT FOR SOME TIME NOW, EITHER LOSING MONEY OR NOT MAKING MORE MONEY.”
On average, daily trading volumes and values in the EGX are barely half of what they were pre-2011. Just like commodities, futures contracts can complement stock investments by protecting against wild price fluctuations. Increased liquidity in the stock market is crucial for the handful of Egyptian firms planning to go public in the coming year. Investment bank EFG-Hermes says it’s underwriting four planned IPOs through the first half of 2017, while oil ministry officials announced in July that eight state-owned petroleum companies are being assessed for stock market debuts. Over the last 20 months, 11 big local firms went public on the Egyptian Exchange, including developer Emaar Misr; packaged-food giants Juhayna, Edita Food Industries and Domty as well as the Cleopatra Hospital Co. While all the new stocks were initially oversubscribed and saw impressive jumps on their first day of trading, ultimately they failed to spur greater longterm interest in the market. Analysts think a futures exchange could. Another reason they could be a big investment draw is simply because Egypt imports so many commodities—more than 60 percent of consumer goods are imported to fill the needs of a 90-millionstrong population, the country’s supply minister said in a speech last year. If Egypt’s commodities trade is governed by highly regulated futures contracts, it
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could encourage foreign investors, who have avoided Egypt in recent years thanks to unpredictable government moves and changing regulations. Take the confusion that erupted last December after Egypt unexpectedly turned back a 63,000tonne shipment of French wheat because it carried trace amounts of ergot, a common grain fungus. The sudden policy departure after years of following the international standard of accepting ergot levels of up to 0.05 percent has imperiled grain supplies in Egypt, the world’s largest wheat importer, after foreign suppliers backed away. Analysts believe that the presence of a properly regulated futures exchange could help bring them back. Moreover, if the state’s various proposals to transform the Suez Canal area into a regional trade hub come to fruition, a futures market could complement those plans. The new exchange should naturally promote the export and import of commodities by providing a sort of central market for goods in the form of a modern futures exchange. It could also facilitate the buying and selling of commodities among Egyptian firms, making such transactions “faster, easier and more secure,” says Amr Aboul-Enein, managing director and head of asset management at CI Capital Holding. A centralized, properly regulated financial market should be preferable to “the current opaque and unregulated trading environment” in which prices are often set “based on informal negotiations.” In futures trading, unlike stock investing, licensed individuals can buy or sell without having to pay a broker. In an economy that staggers under the weight of too many middlemen, this could serve as a draw for a broader class of investors. Still, a futures market could provide local brokerages with “an excellent opportunity for them to increase their client base.” That doesn’t mean that ordinary Egyptians will suddenly be empowered to invest in futures. Because these assets depend on predicting whether prices rise or fall in the future, trading them requires tight regulation. “Developed nations worldwide have evolved this
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SOH EL GABI
In Depth
market over four decades to prevent manipulation and achieve transparency,” says Yassin. Egypt will have to make sure its futures exchange complies with global regulatory standards if it is to benefit investors and the economy. Indeed, the EFSA has put in place strict conditions for trading licenses, and even licensed traders will have to show proof of financial solvency—that they can cover the agreed upon price at delivery—and put up collateral, according to regulators. “Only large, tech-savvy farmers in good financial shape,” will fit the bill, says Ayman Fouda, head of the capital market committee at the African Economic Council. Meanwhile, brokerages would have to have at least LE 10 million in working capital to qualify for a license to trade on the new futures exchange. Nonetheless, Fouda predicts that, if approved, it will register some 2 million transactions in its first year. Amr Elalfy, global head of research at Mubasher Financial Services, stresses that especially because individuals would be allowed to trade futures without a broker, it’s critical that all the potential players from financial managers to traders and farmers be educated on how futures trading works. Otherwise, ill-informed, erratic moves could cause the futures market to crash,
which could send ripples through the stock market and the economy. The use of financial derivatives such as futures in developing economies like Egypt is still in its infancy, for a host of reasons. A study published in 2012 by the University of Cape Town on the use of derivatives by Egyptian companies cites a longstanding business culture of “secrecy” and “a need to restrict information disclosures so as to avoid conflict and competition and to preserve security” as factors that have contributed to Egypt being a relatively “closed” economy. However, many in the business community have sought to reverse this state of affairs in recent years, and analysts believe that launching a futures exchange could serve as a step toward greater transparency—and ultimately prosperity—among Egyptian firms, but the clock is ticking. The futures market that opened this month in Dubai, the Middle East’s business hub, will be a direct competitor for investors in the region. The question is whether the EGX can evolve from a simple equity market into a more sophisticated bourse that offers diverse investment options without being marred by corruption. On the other hand, “Efficient futures trading should definitely help paint a more positive view for investors,” says Elalfy.
RENEWABLE POWER
BUSINESS MONTHLY ARCHIVES
PULLING THE PLUG ON EGYPT’S FEED-IN TARIFF BY TAMER HAFEZ
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n September 2014, following a long Egyptian summer of frequent, sweltering blackouts, the government delivered a muchneeded bit of good news by passing a feed-in tariff, which encourages the development of green energy by guaranteeing that producers can sell it to the state at a certain price. Almost overnight, Egypt’s renewable energy sector went from being a pipe dream to one of the country’s best hopes for luring back foreign investment—a potential silver bullet that could at once revive the ailing economy, solve
a worsening power shortage and help save the environment. Egypt is one of the sunniest countries on earth, while its massive, growing population has an urgent need for more power. So the feed-in tariff—a strategy that has been extremely successful promoting renewables in cloudy northern climes such as Germany’s, with relatively stagnant electricity needs—prompted a tangible sense that Egypt’s solar market was on the verge of exploding. Before the feed-in tariff, “We never saw large-scale global renewable energy developers investing in Egypt,” says
Wael Hamdy, general manager of Cairobased ElSewedy Electric. Suddenly, major international companies like Scatec Solar, EDF and First Solar were signing on to invest in projects under the first phase of Egypt’s feed-in tariff. “This is the time for investing in energy,” Rana Alaa, co-founder and technical director of SolarizEgypt, said in an April 2015 report by the World Economic Forum. “It’s not simply a question of responding to an energy crisis. The government is extending its arms to the private sector and is actively seeking its involvement.”
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In Depth
By last month, however, Egypt’s red hot solar market appeared to be cooling considerably. An unsuccessful negotiation session between Minister of Electricity Mohamed Shaker and renewable energy investors failed to resolve the latter’s concerns about the government’s terms on financing and dispute arbitration for projects under phase one of the FiT, resulting in at least six companies officially announcing that they were pulling out, with many others expressing serious doubts about continuing. Meanwhile, international backers including the International Finance Corp., an arm of the World Bank; the European Bank for Reconstruction and Development; the European Investment Bank; and the OPEC Fund for International Development quietly withdrew commitments to provide funding for the projects, according to energy executives. The first sticking point, according to frustrated investors, was the state’s requirement that any disputes with firms be resolved locally, in the Egyptian justice system, rather than through international arbitration. But the real nail in the coffin was its insistence that at least 85 percent of funding come from abroad. One local bank, CIB, which had allocated money to lend to projects under the scheme, told reporters following the deadlocked August meeting that investors had been calling en masse to cancel their loans. “We are losing a lot of business and money because of the stubbornness of the government,” says Hisham Tawfik, head of Cairo Solar, which recently pulled out of a $100-million plant in Benban in Upper Egypt due to the state’s refusal to back down on the issue of the local financing restrictions. Early in 2014, before passing the feedin tariff, officials announced that Egypt, once a natural gas exporter, was now consuming more gas than it produced. Egypt’s cash-strapped government faced increasing pressure to provide incentives for the private development of renewable power. The Egyptian General Petroleum Corp. estimated last February that it was spending an average of $700 million a month on imported fuel, while Egypt’s abundant sun and wind went largely
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unharnessed. The government has been nominally committed to developing renewable energy resources since at least 2008, when the electricity ministry said it aimed to increase green power to account for 20 percent of Egypt’s energy mix by 2020, though it has since extended the timeline to 2022. It was still an ambitious target, given that the country still gets 94 percent of its power from fossil fuels, especially natural gas, which runs its aging electricity plants and most factories—though some have switched to coal in recent years, to the dismay of environmentalists—to fill the gap.
“WE ARE LOSING A LOT OF BUSINESS AND MONEY BECAUSE OF THE STUBBORNNESS OF THE GOVERNMENT.” With the feed-in tariff, Egypt became the fifth country in the Arab world to adopt such a program. In the first phase of the FiT, 136 companies were selected from 167 applicants to build projects under the scheme, which was supposed to produce 4.3 gigawatts of power from solar and wind projects over the next three years. Meanwhile, the IFC estimated last year that Egypt's renewable energy projects could cost $8 billion over the next four years, presenting a significant opportunity for investors and lenders. A big barrier to the expansion of solar energy in Egypt has been the up-front cost, but Maged Mahmoud, head of the state-run Regional Center for Renewable Energy and Energy Efficiency, said that, as part of the feedin tariff’s first phase, Egypt also plans to provide incentives for the building of factories that manage solar equipment, including panels, sensors and control units. In the meantime, officials also promised to ease customs on imported solar equipment and streamline licensing procedures. The government even
pledged to provide free land for green energy projects under initial 25-year leases in exchange for selling 2 percent of their output to the state free of charge. Yet, from the get-go, the feed-in tariff was criticized for heavily favoring solar over wind projects and big, splashy projects over smaller ones. In fact, Egypt’s rate for large-scale solar developments is one of the highest in the world—more than twice the feed-in tariff rate in Dubai, for example. This was a major reason that investors were willing to stomach the risk of Egypt’s unstable currency, because its tariff rate was so generous. But the euphoria began to fade as capital controls imposed in early 2015 made it difficult for foreign firms—which were investing in dollars but being paid in Egyptian pounds—to repatriate profits. In the spring, media reports began to emerge that international lenders and developers were at odds with the government on the mechanism for resolving legal problems. International arbitration, which is a standard requirement for global lenders, was reportedly allowed in the government’s first draft of the terms and conditions for the projects, according to Faisal Eissa, chief operating officer at Solar Shams, which is still officially signed up to build a $200-million plant but is wavering. So investors and lenders were taken by surprise when officials changed their minds on the issue, creating confusion and unexpected losses on projects on which initial funds had already been spent in some cases. “The way the issue was handled led investors to lose confidence in the ministry,” says Eissa. Wael el Nashar, CEO of Onera systems, another solar company that’s likely to cancel its FiT project if the impasse isn’t resolved, explains that international developers simply aren’t willing to risk being held hostage to a slow, opaque local justice system. In April, Saudi Arabia’s Abdel Latif Jameel became the first to announce it was pulling out of its $700-million worth of Egyptian solar projects, while Italy’s Enel Green Power canceled a 50megawatt plant in Upper Egypt. Both companies said they were exiting the
Egyptian market altogether. Nonetheless, the government announced at a July press event that it was going ahead with phase two of the feed-in tariff. Mohamed el Sobky, CEO of the New and Renewable Energy Authority, told reporters that officials had turned down investors’ offer to take a lower tariff for their energy in exchange for the state allowing international arbitration. Responding to questions about the firms that had pulled out, Sobky said: “The remaining companies are still going forward with their projects. This means the project is a success,” speculating that the firms that had bowed out were probably experiencing “internal problems.” Nonetheless, he said: “We are keen to communicate with all investors to solve their problems if we can to prevent more companies from leaving.” It wasn’t until after the news broke of the 15-percent limit on domestic financing in mid-August, however, that the real exodus began—as Cairo Solar, ACWA Power, Orascom Technology Media and Technology Holding and a consortium consisting of SunEdison and Orascom Construction were among those to drop out. A domino effect seemed to take hold, with dozens more firms saying they were thinking about jumping ship, calling into question the viability of the entire program. “I think that a lot more companies will exit simply because the ministry isn’t being professional and transparent,” says Mohamed el-Deley, head of projects at Desert Technologies, which had not signed on to participate in the feed-in tariff in the first place. However, a handful of firms told Al Mal that they were looking for creative ways to meet the foreign financing requirement. Infinity Solar was reportedly appealing for backing from German insurance companies, while Scatec, a Norway-based solar company whose CEO told reporters a few months ago that it planned to pump a total of $650 million into five Egyptian renewables projects that were to be financed mostly with internal funds, was staying in, reported Al Mal.
BUSINESS MONTHLY ARCHIVES
In Depth
So far, officials have shown conflicting responses to the mass defection. At a press conference following a meeting with Prime Minister Sherif Ismail a few days after the August stalemate, Shaker seemed to indicate that the government was digging in its heels. “There will be no changes,” to the terms, he said. Ismail, however, stressed the importance of providing “incentives for renewable energy investors,” and added that officials were working with them to solve their problems. For his part, Tawfik, of Cairo Solar, says he still hopes to participate in the second phase of the feed-in tariff, which will perhaps feature more investor-friendly terms. One potential silver lining if the first phase of the feed-in tariff does fall apart, say some observers, is that smaller local firms
might pick up on some of the opportunity left behind by the departure of big players. From the beginning, some analysts criticized the setup of Egypt’s feed-in tariff for giving small local renewables firms little incentive to get involved. This is the opposite of FiTs in most other countries, where higher tariffs are usually offered to small-scale power producers in order to support homegrown SMEs. “If you use the feed-in tariff to empower small and medium projects, then these will be implemented by small and medium companies that are coming from Egypt,” Khaled Gasser, the founder of SEDA, an NGO that pushes for solar development, told Business Monthly following the passage of the feed-in tariff law. “That means you are injecting money into your country.”
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Home improvement
A few months ago, the first low-income residents moved into Al Asmarat, a public-housing project that will help rid Egypt of informal slums in two years, according to the president. But is relocating poor people to suburban high-rises the way to solve Cairo’s affordable-housing shortage?
By Edmund Bower
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EDMUND BOWER
Cover Story
CITY OF DREAMS: THE INFORMAL AREA OF MANSHIYET NASSER IS HOME TO MORE THAN HALF A MILLION RESIDENTS.
early 40 years ago, Khalif Osman Abdullah built his home in Al Doweqa, a sprawling informal neighborhood in eastern Cairo. The red-brick building, like many in this working-class informal settlement in Manshiyet Nasser, has grown over the years, as Osman Abdullah added on new dwellings to accommodate the spouses and offspring of his sons and daughters. Today, the place is a four-storey apartment housing 50-odd relatives, plus a couple of shops on the ground floor. Money is tight, concedes Osman Abdullah, a 57-year-old retired metal worker, but after decades of investing time and money into the building, he takes pride in his family home. Ten years ago, officials outfitted the crowded neighborhood with running water and electricity and even a paved road—improvements that many saw as proof of the government’s tacit acceptance of Al Doweqa
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and informal areas like it, which provide homes for growing millions of poor residents in one of the most densely populated cities in the world. But last month, a group of local officials paid Osman Abdullah a visit and informed him that he was being relocated to Al Asmarat, a LE 1.5-billion public housing project in Moqattam. Al Asmarat, which, like other statesponsored developments over the years that promised to provide better, safer low-income housing, is eventually supposed to house around 100,000 residents of informal “slum areas,” said President Abdel Fattah el-Sisi in a speech at the May ribbon-cutting ceremony for the project. A mini-city of freshly painted orange-and-cream-colored apartment towers, Al Asmarat’s 16,200 units represent a big step, the president explained, toward “solving the problems” of the ashwa’yat, the makeshift residences that house an estimated two-thirds of Greater Cairo’s population. Long synonymous with poverty and blight, these informal
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neighborhoods have long been a thorn in the side of the state, which has sporadically attempted to get rid of them practically since they first expanded on a large scale back in the 1960s. Al Doweqa in particular has become infamous since 2008, when a rock slide killed more than 100 inhabitants. But partially thanks to Al Asmarat, which is part of an ambitious, LE 14-billion project to relocate residents of informal settlements, President Sisi promised that in two years, there would be “no slums left in Egypt.” However, human rights groups and others have widely criticized the Egyptian government for staging forced evictions in informal neighborhoods like Al Doweqa—with frequent stories of residents being kicked out of their homes with little or no notice, often without being provided with someplace else safe and affordable to stay. When people are relocated, they are often moved to remote areas “far from their social networks, schools and sources of income,” according to a
EDMUND BOWER
Cover Story
HOMESICK: KHALIF OSMAN ABDULLAH WAS GIVEN 18 DAYS TO VACATE HIS FAMILY’S HOME OF 35 YEARS IN INFORMAL AL DOWEQA.
2009 report by Amnesty International following the rock slide. State-sponsored housing projects that are supposed to better the lives of the poor have tended to lack the sort of planning that could allow for residents—who mostly make a living in the informal sector as artisans, vendors, construction workers, garbage collectors or daily wage laborers—to continue to earn a living. In 2008, after falling boulders tumbled down upon his neighborhood, Osman Abdullah and his family watched as the government cleared hundreds of residents from the base of the rocky Moqattam cliffs. Luckily, his building, some 90 meters away from the danger zone, was spared. All these years later, he can’t see the government’s logic in uprooting his entire family from a home and a neighborhood where they were reasonably happy. “Can you give me a better apartment than I have now?” he asks. “We have separate bedrooms, a living room, electricity, everything. We’re not in danger.”
Image is everything
While far from the first such government-housing project, Al Asmarat is unique in that it’s being partially funded by the Tahya Misr, or Long Live Egypt Fund, an initiative that was launched by Sisi soon after he was elected president in 2014 and asked citizens and businesses to donate cash to improve the lives of the needy. With its cookie-cutter high rises and wide boulevards bordered with flower beds and bright-green soccer pitches, Al Asmarat is modern and suburban—the opposite of the filthy, crammed image of the ashwa’yat. Built on a breezy patch of military-owned desert at the southeastern edge of the Moqattam plateau, it commands impressive views across the desert. “Even the president’s entourage want to live there,” enthused TV talk-show host Ahmed Moussa on the project’s opening day. Areas like Al Doweqa, meanwhile, have long been painted as synonymous with poverty and crime. Seeking
to solve Cairo’s chronic affordable housing shortage, the government has been building low-income “popular” housing since the 1950s. Efforts intensified in later decades, with the construction of satellite cities in the desert. “New urban communities” like 6 October City and New Cairo were initially conceived as havens to house millions of working-class Cairenes, but since neither community was planned with any kind of public-transport network, its residents have overwhelmingly hailed from Egypt’s top economic tiers—people who can afford to commute in air-conditioned cars from their gated condos to jobs in central Cairo. The crowded red-brick ashwa’yat represent a more organic response to ordinary people’s need for affordable housing. Without an alternative, the state more or less turned a blind eye as informal districts expanded rapidly outward over the years—even laying infrastructure in the slums. However, after the 2008 rock slide disaster,
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BUSINESS MONTHLY ARCHIVES
Cover Story
GHOST TOWN: AL ASMARAT LACKS SCHOOLS, MARKETS AND AHWAS, AND RESIDENTS ARE STRICTLY FORBIDDEN FROM OPENING THEIR OWN BUSINESSES.
anger was heaped on authorities for failing to protect the nearly one million poor residents of Manshiyet Nasr, the area that contains Al Doweqa, despite repeated warnings about the high risk of rockfalls in the area. In the years that followed, hundreds of Al Doweqa residents were forcefully moved to state-sponsored housing in 6 October City, some 15 kilometers away, to complexes that were devoid of basic public services. Without affordable transportation to get to their old jobs in Al Doweqa, many were forced to quit and take their kids out of school. “When the government decided to relocate the people, they had no sense of what their community meant,” says Omnia Khalil, a co-founder of 10 Tooba, a local urban-planning think tank. “There were markets in Manshiyet Nasser; there were pharmacies and schools.” With no way to make a living or educate their children or even shop for meals conveniently and affordably, says Khalil, many simply moved back to Al Doweqa.
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With Al Asmarat, say critics, the government has repeated the same mistake. There are plans to open schools and a marketplace as part of the project, plus community centers, preschools, a mosque and a single coffee shop. But as of yet, there is no sign of these things, and the thousands of residents who’ve already been moved in seem to know little about any proposed timeline. The residents are forbidden from starting their own businesses, in an attempt to keep the informal economy of the slums from sprouting anew. At the moment, the new residents of Al Asmarat have little to do but sit in their freshly painted two-bedroom apartments or watch their children play in the clean, newly paved streets. Reda Zakaria, a former resident of Al Doweqa who was moved to Al Asmarat in June, says that security in the complex is tight. “The place looks nice, but it’s a prison,” says the 40-year-old, who used to run a coffee shop back in Al Doweqa before the authorities razed his home in 2014.
Business Monthly – September 2016
Like Osman Abdullah, Zakaria had built his home himself in Al Doweqa, back in 1982, a building that by the end housed some 70 relatives and was equipped with power, running water and indoor plumbing. Zakaria earned extra income renting out two spaces on the ground floor to shopkeepers, bringing in a respectable total of LE 5,000 a month, while still managing to put a little money aside for an apartment for his son’s future family. When he tried to protest his home being destroyed, “They handcuffed me,” says Zakaria. He was told that he and his family would be moved into new government housing, but in the end, that took two years. In the meantime, the family struggled to get by on a LE 300-per-month compensatory stipend, plus whatever Zakaria could make selling second-hand clothing at a roadside market in Ataba. Constantly moving from one temporary dwelling to the next, his children stayed out of school.
EDMUND BOWER
Cover Story
NO PLACE LIKE HOME: WITHOUT STEADY LOCAL WORK, ASMARAT RESIDENT REDA ZAKARIA SPENDS MOST OF HIS TIME IN HIS NEW APARTMENT.
Zakaria’s functional two-bedroom apartment is smaller than his old home in Al Doweqa. The flats at Al Asmarat come furnished; tenants aren’t allowed to bring any furniture from their old homes. Two months they moved, the Zakaria family’s living room still looks bare, with little more than a sofa, a coffee table, a dining table and four chairs. Wires dangle from the ceiling where a lamp has yet to be installed. Zakaria pays LE 300 a month plus utilities for the place—a rent he could easily have afforded back in the days when he ran an ahwa and rented to shopkeepers but now struggles to cover. Zakaria must also factor in the time and expense of commuting, since working within Al Asmarat is all but forbidden. Small-scale industrial workshops of the sort by which many Al Doweqa residents make their living— carpentry, metalworking and automotive shops, which can be found in residential areas all over Cairo—are prohibited in Al Asmarat. Laila Iskander, a
former government minister who was involved in the planning of the project, says that local workshops were outlawed in order to reduce pollution. With informal sources of transportation like micro buses and tuk-tuks not allowed inside Al Asmarat either, residents must rely on one state-run bus route in order to travel around the 206acre project. Zakaria says he once saw the police rough up a resident who was caught driving a tuk-tuk. Indeed, one of the few services that’s up and running at full strength in Al Asmarat is law enforcement, with a heavy police presence guarding the entrance and patrolling throughout the development. A group of friends from the old neighborhood came to visit one day, says Zakaria, and the next day the cops came round to question him. Urban planner Yahia Shawkat, also of 10 Tooba, argues that trying to force poor, urban residents who are accustomed to bustling, if chaotic, informal neighborhoods into a sterile suburban existence is short-sighted. “There
should be workshops within walking distance,” he says, “and retail space, coffee shops, office spaces and a completely mixed-use community. With Al Asmarat, the government “wants to impose a certain social fabric” that’s 180 degrees different than the gritty street life of Manshiyet Nasser. But in doing so, they’re also overlooking the way these informal districts function as working ecosystems. In the new development, “You’re not allowed to sell food,” laments Zakaria, “even though there’s no market!” In order to go shopping, residents must leave the project. Back in Al Doweqa, Zakaria lived in a poor neighborhood, but there was a coffee shop on every other corner. In Al Asmarat, residents must either stay in their apartments or lounge on the concrete steps outside. The notion of allowing cafés and other common informal businesses to flourish, says Iskander, “disturbs the notion of orderliness.” There are certainly residents of Al Doweqa, on the other hand, who are
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EDMUND BOWER
Cover Story
MIRAGE: JUST A FEW HUNDRED METERS FROM THE SLUM OF AL DOWEQA IS THE PALM-TREE LINED LUXURY DEVELOPMENT UPTOWN CAIRO.
desperately in need of an orderly roof over their heads. Just up the road from where Zakaria’s apartment once stood, Alaa Abdullah, whose home was wrecked in the aftermath of the rock slide, sleeps each night together with his pregnant wife and three kids in one room of a rickety five-room dwelling he shares with four other families. A tarpaulin sheet functions as the roof, and there is no running water or electricity. Abdullah, who is 36, manages to earn around LE 30 a day collecting scrap metal. He and his family are fervently hoping for a spot in Al Asmarat but have yet to get one. “We have to leave,” he says. “We don’t want our children growing up here.”
On the rocks
Iskander, who was the minister of urban renewal and informal settlements during the planning stages of Al Asmarat, says the point of moving people out of Al Doweqa wasn’t to clear slums but rather to relocate people from a dangerous
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area. “The government’s policy is to move people who have built on unsafe land,” she says. In 2009, after the tragic rock slides, a state-sponsored study on informal settlements concluded that 208,000 families were living in unsafe areas in Egypt. The land that houses Al Doweqa, like other parts of Moqattam, is unstable and prone to rock slides because the hillside is made of soft, soluble limestone. But Shawkat, of 10 Tooba, argues that the slums razed by the government in Manshiyet Nasser weren’t necessarily the most dangerous spots. “Some areas are too dense to keep as they are,” he says, referring to the buildings along the edge of the cliff in Al Doweqa, “But looking at the satellite images of the area, there are houses that have been evicted that don’t appear to have been in danger.” Moreover, there are a number of other, less drastic steps officials could take to shore up settlements in the rock-slide zone—such as reinforcing the cliffside and improving drainage systems that experts believe could have speeded erosion.
Business Monthly – September 2016
It’s not lost on the present and former residents of Al Doweqa that rock slides or no, the settlement is occupying valuable land. Just a few hundred meters west of the red-brick buildings of Al Doweqa is the luxury development Uptown Cairo, where palm-tree lined villas sell for LE 18,000 a square-meter. Featuring golf courses, swimming pools and a 35-acre park, the project touts its “Santa Barbara, California-style ambience.” But its major selling point is its proximity to the city center. Unlike 6 October City and New Cairo, which entail hour-plus commutes from jobs near the center of town, Uptown Cairo provides easy access to downtown as well as other upscale districts. The developer, Emaar Misr, is still expanding the project, with more homes coming on the market by 2021. The presence of neighboring upscale developments provides yet another powerful incentive to get rid of sprawling informal slums like Al
EDMUND BOWER
Cover Story
MIDDLE GROUND: ZINHUM WAS THE RARE PUBLIC HOUSING PROJECT THAT INVOLVED COOPERATION BETWEEN OFFICIALS AND LOCAL RESIDENTS.
Doweqa. However, bulldozing slums and moving the residents to isolated state-owned housing isn’t just unpopular, it’s expensive, critics point out. Shawkat calls the approach “a very expensive solution that cannot be scaled up.” Moreover, it has drawn widespread criticism for allowing the residents of the ashwa’yat virtually no say in where or how they live. “The communities have not been provided with any information or opportunities to participate in decision-making or been consulted on possible resettlement options,” quote Amnesty International in its 2009 report. Uprooting informal communities also destroys complex social and economic webs that have taken decades to weave. Iskander argues that Al Asmarat is providing safer, better housing for thousands of poor Egyptians. But she concedes that “Nobody likes to be evicted from their home.” More successful have been in-situ
programs that re-house people without moving them away. In 1999, work began on renovating Zinhum, an impoverished shantytown in Sayeda Zeinab that at the time housed around 20,000. The settlement was originally spawned in the 1970s, when people permanently occupied wood huts that had been erected by the government to provide temporary shelter to people from other areas whose homes had collapsed. Spearheaded by then-first lady Suzanne Mubarak, the Zinhum project was rare in that it involved cooperation between government officials, civil society groups, local business owners and residents. The latter were provided with temporary housing while their ramshackle huts were being destroyed and the land levelled. The government provided the property free of charge to developers, who were allowed to sell a certain number of units in the newly built multi-story apartment buildings,
thereby providing an incentive for the private sector to help the poor while simultaneously making a profit, meanwhile, the government renovated the area and provided decent housing for thousands of low-income Egyptians without draining public resources. Most importantly, by allowing the Zinhum community to stay where it was, the project re-housed the residents with a minimum of disruption. Today, Zinhum is a quiet, working class neighborhood with relatively clean, tree-lined streets, where people wear galabeyas and breed pigeons as a hobby. There are grocers, ahwas and public schools. Unlike Al Asmarat, Zinhum doesn’t feature modern high-rises or spacious fields made of AstroTurf. In other words, it looks like a neighborhood in Cairo.
With additional reporting by Makarios Nassar
Business Monthly – September 2016
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37
Stock Analysis
Looks can be deceiving
I
nvestors are still fretting about the long-awaited devaluation of the Egyptian pound, which has become not a question of if but when. When the Central Bank let the pound slip by 12 percent in March, stocks reacted in kind, climbing by around the same percentage. However, in U.S. dollar terms, the value of Egyptian assets stayed the same pre- and a post-devaluation. Likewise, calculated in local currency, the market looked to be up year-to-date at the time, but if you considered the falling value of the pound, the stock market was actually in negative territory. For the first time this year, after the period from July 15 to Aug.15, the market’s year-to-date performance was in the black in both currencies—at least on paper. During the period, the benchmark EGX 30 was up by 11.5 percent, for the first time registering year-to-date jumps in both pounds (20.7 percent) and dollars (6.3 percent). Don’t pop the champagne just yet, however. The true value of the pound is much lower than the official rate. The EGX 30’s encouraging dollar performance during the period was based on the bank exchange rate of LE 8.88 per dollar, while the black market rate conservatively averaged LE 12.5 per dollar. Figuring in the parallel rate, the EGX was actually down year-to-date by a whopping 25 percent at the end of
the period. By that metric, the EGX 30 ranks as the thirdworst performing global index, behind those of Venezuela and Nigeria—countries that, not coincidentally, have currency problems of their own. Moreover, a closer look at the EGX 30’s performance reveals that some 69 percent of its increase during the period was driven by Commercial International Bank (COMI) shares, by far its largest driver. Without CIB, the EGX 30 would have been up by just 3.6 percent during the period (vs. 11.5 percent thanks to CIB stock). Other big players ended the period in the red, led by Edita Food Industries (EFID), which was down 30 percent. During a reconstitution of the EGX 30 in early August, five stocks were replaced, including Juhayna Food Industries (JUFO), which was down 22 percent, and Oriental Weavers Carpet (ORWE), which was up 23 percent. In short, the market’s overall seemingly positive performance during the period was not broad-based. The EGX 70, which consists of mostly small-cap stocks, was up just 1.4 percent during the period. Once again, the only true prescription for what ails Egypt’s stock market is a renewed flow of capital that would lure back more foreign investors. Until that happens, don’t expect much change.
IN THE SPOTLIGHT
Beltone Financial Beltone Financial Holding (BTFH) and the Egyptian Financial Supervisory Authority have been at loggerheads recently over unexplained swings in the firm’s stock. Shares jumped more than fivefold earlier in 2016 in just a two-month period, only to fall more than 60 percent in the subsequent two months. Beltone filed a lawsuit against the Egyptian Exchange and the EFSA earlier in the year for suspending trading of its shares due to the volatility. During the reporting period, meanwhile, the stock jumped again by some 32 percent to LE 10.41, with some 200,000 shares worth LE 1.6 million changing hands.
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Business Monthly – September 2016
Market Watch
Capital Markets Egyptian price indices - EGX 30
8454
EGX 30
Egyptian price indices - EGX 70
365
EGX 70
Selected sector performance
Business Monthly – September 2016
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39
Market Watch
Capital Markets Corporate News TMG Holding announces new investment plans Talaat Moustafa Group Holding (TMGH) said it will adopt an ambitious LE 2.5 billion investment program in the latter half of 2016. The four-pronged plan will address the company’s residential, hospitality and retail segments with the opening of a new five-star Four Seasons Hotel in its Madinaty development that’s set to open in three years and a new commercial mall to open in 2018. It also plans to build 15 new schools and a hospital in Madinaty by the time the project is finished. Around 41 percent of the units have been sold, while the infrastructure is complete, according to TMG.
Misr Cement kicks off coal trials Misr Cement Qena (MCQE) commenced trial operations at its newly installed coal unit, with plans to begin commercial production by the year’s end. The company has finished importing its first 40,000 tons of coal for the trial and will need around 150,000 tons annually for commercial operations.
GB Auto reveals development plans GB Auto (AUTO) announced plans to build facilities making two- and three-wheelers as well as tires. The firm has finalized studies on manufacturing the vehicles and raised its estimated vehicle-production capacity by 50 percent to 360,000 units (240,000 motorcycles and 120,000 tuk tuks). Production is scheduled to start in the first quarter of 2018. GB Auto aims to expand its tire-making capacity to 6 million passenger-car tires and one million bus tires.
EFSA demands independent stock valuations The Egyptian Financial Supervisory Authority is requiring companies listed on the Egyptian Exchange to submit “fair value” reports if their stocks move inexplicably up or down in a short period of time. Companies must now provide fair value reports
if their shares go up or down by more than 50 percent in three months or 75 percent in six months, especially if it’s an isolated performance and there is no obvious reason for the fluctuation. Prompted by big swings in Beltone Financial Holding (BTFH) shares, regulators have already asked four firms, including Beltone, to hire independent financial advisors to audit their stock.
Elsewedy Electric to build Saudi transformer plants Elsewedy Electric (SWDY) said one of its subsidiaries has signed a contract worth 80 million Saudi Arabian riyals to design, supply and establish transformer substations in Saudi Arabia. The project will be implemented over 15 months from the signing date.
Oriental Weavers reveals five-year expansion plan Oriental Weavers Carpet (ORWE) announced a five-year expansion plan to cost an estimated total of $83 million to be financed from the company’s excess cash as well as via shortterm and mid-term loans. Among other things, the growth is supposed to increase the firm’s annual capacity by 33 million square meters.
Edita buys land for new factory Edita Food Industries (EFID) has acquired a 12,878-squaremeter plot of land in 6 October City for a new factory for the production of raw materials. The land cost LE 19 million, including infrastructure, and is to be paid for within six months in three installments starting Aug. 3.
Arab Moltaqa to set up new firm Arab Moltaqa Investments (AMIA) will set up a new company to manage and operate medical labs, in cooperation with a specialized German firm, with Arab Moltaqa owning 60 percent of the new LE 13-million concern.
International stock price indices Aug. 15
July 15
May 15
March 15
value
% change
value
% change
value
% change
DOW
18,636.00
18,516.00
0.65%
17,535.30
6.28%
17,251.00
8.03%
NASDAQ
5,262.00
5,029.59
4.62%
4,717.68
11.54%
4,728.67
11.28%
S&P 500
2,190.15
2,161.74
1.31%
2,046.61
7.01%
2,015.93
8.64%
FTSE 100
6,941.19
6,669.24
4.08%
6,138.50
13.08%
6,139.97
13.05%
NIKKEI 225
16,869.56
16,497.85
2.25%
16,412.21
2.79%
17,117.07
-1.45%
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Business Monthly – September 2016
Market Watch
Money & Banking INTEREST RATES
BANKING & RESERVES (in millions of LE) 2015
2016
October
November
December
January
February
March
Apri
May
Reserve Money
425,386
431,665
420,638
418,881
410,150
430,378
442,281
464,664
Int'l Reserves (net, US$ mln)
16,423
16,445
16,478
16,534
16,586
17,011
17,521
17,546
Domestic Liquidity
1,868,174
1,876,828
1,905,464
1,909,422
1,922,685
1,987,839
2,006,632
2,044,293
Foreign Assets (net)
1,348,830
1,361,759
1,384,872
1,391,490
140,230
1,457,994
1,466,460
1,491,322
Domestic Assets
1,868,174
1,876,828
1,905,464
1,909,506
1,922,685
1,987,839
2,006,632
2,044,293
17.99
17.49
17.28
17.29
17.03
18.77
18.83
18.61
End of
Dollarization Rate (%) Discounted Bills (except CBE)
4,295
4,419
4,844
4,602
4,623
4,749
4,660
4,963
778,098
780,417
786,655
793,064
799,755
847,574
860,783
920,697
Securities (except CBE)
1,051,821
1,067,142
1,105,680
1,112,928
1,121,730
1,179,715
1,199,345
1,254,065
Currency in Circulation
326,756
323,893
324,569
326,179
325,132
331,977
342,842
352,896
Bank Loans (except CBE)
EGYPTIAN POUND EXCHANGE RATES Currency Australian Dollar Bahraini Dinar British Pound Canadian Dollar Chinese Yuan Euro Indian Rupee Japanese Yen (100) Jordanian Dinar Kuwaiti Dinar Lebanese Pound (100) Russian Rouble Saudi Riyal Turkish Lira UAE Dirham US Dollar
Aug. 15 6.774 23.491 11.439 6.835 1.335 9.882 0.132 8.740 12.456 29.339 0.575 0.137 2.360 2.989 2.411 8.858
July 15, 2016 Amount change 6.754 0.31% 23.314 0.76% 11.730 -2.48% 6.848 -0.19% 1.325 0.75% 9.841 0.43% 0.132 -0.07% 8.425 3.74% 12.452 0.03% 29.262 0.26% 0.576 -0.17% 0.140 -2.67% 2.368 -0.35% 3.062 -2.39% 2.411 0.02% 8.857 0.01%
May 15, 2016 Amount change 6.435 5.28% 23.4924 -0.01% 12.7151 -10.03% 6.845 -0.13% 1.356 -1.56% 10.012 -1.29% 0.132 0.19% 8.149 7.25% 12.467 -0.09% 29.369 -0.10% 0.585 -1.71% 0.136 0.60% 2.361 -0.06% 2.980 0.30% 2.413 -0.04% 8.858 0.00%
March 16, 2016 Amount change 5.783 17.14% 20.091 16.92% 11.010 3.90% 5.789 18.08% 1.180 13.12% 8.538 15.75% 0.114 15.77% 6.743 29.62% 10.788 15.46% 25.459 15.24% 0.499 15.23% 0.109 25.48% 2.044 15.44% 2.666 12.09% 2.088 15.49% 7.671 15.47%
Aug. 15, 2015 Amount change 5.759 17.63% 20.557 14.27% 12.198 -6.22% 5.975 14.40% 1.219 9.47% 8.699 13.60% 0.120 10.41% 6.280 39.17% 10.983 13.41% 25.772 13.84% 0.511 12.52% 0.120 13.33% 2.080 13.46% 2.756 8.43% 2.125 13.47% 7.808 13.44%
Business Monthly – September 2016
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41
Market Watch
Key Indicators DEMOGRAPHICS 2007
2008
2009
2010
2011
2012
2013
2014
Total Population (millions)
77.5
79.1
83.5
84.5
88.0
90.2
92.2
94.7
Labor Force (millions)
23.9
24.7
25.4
26.2
25.8
27.0
27.6
28.4
Labor Force / Population (%)
32.5
32.8
33.1
33.4
33.0
32.7
32.7
31.3
8.9
8.7
9.4
9
12.0
12.7
13.2
13
Unemployment Rate (%)
SOURCE:
CENTRAL BANK OF EGYPT
BALANCE OF PAYMENTS (in millions of U.S. $) 2015/16
2014/15 Trade Balance
Q1
Q2
Q3
Q4
End of year
Q1
Q2
Q3
-9,742.1
-10,430.3
-9,385.4
-9,227.6
-38,785.4
-9,985.9
-9,561.6
-9,858.5
Exports
6,469.2
5,769.7
4,617.7
5,201.6
22,058.2
4,646.1
4,399.1
4,275.5
Imports
-16,211.3
-16,200.0
-14,003.1
-14,429.2
-60,843.6
-14,632.0
-13,960.7
-14,134.0
Services (net)
2,109.8
1,775.8
341.6
500.6
4,727.5
1,686.8
543.7
177.9
Receipts
6,448.8
6,008.3
4,385.0
5,182.5
22,024.6
5,142.9
4,131.6
3,513.9
Payments
4,339.0
4,232.5
4,043.4
4,682.2
17,297.1
3,456.1
3,587.9
3,336.0
Balance of Goods & Services
-7,632.3
-8,654.5
-9,043.8
-8,727.3
-34,057.9
-8,299.1
-9,017.9
9,680.6
Transfers
6,188.6
5,797.2
4,963.1
4,926.8
21,875.7
4,318.8
3,992.7
4,131.4
Balance of Current Account
-1,443.7
-2,857.3
-4,080.7
-3,800.5
-12,182.2
-3,980.0
-5,025.2
-5,549.2
Capital & Financial Account
811.4
72.4
6,067.2
10,682.6
17,633.6
1,500.5
7,816.9
8,224.8
Foreign Direct Investment
1,773.2
960.0
2,947.9
689.9
6,371.0
1,385.5
1,718.5
2,772.9
410.0
-1,427.0
-29.1
4,771.0
3,724.9
3,656.7
-251.6
235.4
Overall Balance
SOURCE:
CENTRAL BANK OF EGYPT
NON-PETROLEUM TRADE (in millions of U.S. $) Exports (Q3 2015-16) Total
Imports (Q3 2015-16)
Balance ( Q3 2015-16)
4,275.5
14,134.0
259.6
634.7
-375.1
1,354.5
4,531.0
-3,176.5
Other European countries
286.7
1,135.9
-849.2
Russian Federation & CIS
59.1
832.0
-772.9
1,401.6
2,426.0
-1,024.4
Asian countries (non Arab)
489.7
2,797.6
-2,307.9
African countries (non Arab)
119.5
165.5
-46.0
4.5
73.4
-68.9
300.3
1,537.9
-1,237.6
U.S.A. E.U.
Arab countries
Australia Other countries
-9,858.5
SOURCE:
INFLATION
The CPI (Consumer Price Index) and PPI (Producer Price Index) are based on the results of surveys of expenditure and consumption and relevant baskets of goods and weights. SOURCE:
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CENTRAL BANK OF EGYPT
Business Monthly – September 2016
GDP GROWTH
Gross Domestic Product (GDP) growth rates are based on 2001-02 prices.
SOURCE:
CENTRAL BANK OF EGYPT
CENTRAL BANK OF EGYPT
TOURISM VISITS
Year 2013-14 2012-13 2011-12 2010-11 2009-10
Tourists 7.97 million 11.96 milion 10.95 millon 11.93 millon 13.7 millon SOURCE:
Change -34.7% 9.2% -8.2% -12.9% 11.4%
CENTRAL BANK OF EGYPT
Market Watch
Egypt-U.S. Trade EGYPTIAN EXPORTS TO THE U.S. (in millions of U.S. $)
EGYPTIAN IMPORTS FROM THE U.S. (in millions of U.S. $)
U.S.-EGYPT TRADE DEFICIT (in millions of U.S. $)
EGYPTIAN EXPORTS TO THE U.S. DURING JUNE 2016
EGYPTIAN IMPORTS FROM THE U.S. DURING JUNE 2016
SOURCE:
US INTERNATIONAL TRADE COMMISSION (USITC)
Business Monthly – September 2016
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Economy
BANKING ON REFORM Inside the IMF loan agreement By Tamer Hafez
I
n April 2011, with popular uprisings rippling across the Middle East and North Africa, the International Monetary Fund announced it was ready to lend $35 billion to so-called Arab Spring countries, including Egypt. Five years, three presidents and an uncountable number of “will we or won’t we?” rumors later, Egypt has a tentative deal with the IMF to borrow $12 billion over three years—the largest loan ever given to a MENA country, should the IMF Executive Board approve it. While the money amounts to a much-needed infusion of hard currency, its real value is to bolster investor confidence, since such loans are conditioned on economic reforms. Nonetheless, some economists are not comfortable with doubling Egypt’s foreign debt from what it was two years ago. “This is an unprecedented increase,” wrote economist Ziad Bahaa el Din in an August op-ed in Ahram Online, pointing out that the money needs to transform Egypt’s long-term economic growth trend and achieve prosperity for the state to pay back the money without hurting the economy at large. Egypt’s cabinet finally confirmed in a July 26 statement that the country is in negotiations with the IMF for a threeyear financing package. The loans come at an interest rate of 1 to 1.5 percent, finance minister Amr Garhy clarified in a television interview. They are to be part of a larger, $21-billion financing package that includes international bond issuances, support from the World Bank and African Development Bank and floating shares in public sector enterprises. The loan, Garhy said, will help meet Egypt’s financing needs and serve as a stamp of approval from the IMF that will encourage an inflow of funds from foreign investors.
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Business Monthly – September 2016
Throughout the discussions, both the IMF and the government have been careful to bill the reforms as home grown, pointing to the economic program presented to Parliament as well as the steps taken toward lifting fuel and electricity subsidies in 2014. Further subsidy cuts have since stalled, however. “What is wanted is a more aggressive reform agenda and the IMF may be the catalyst that brings this about,” former Minister of Finance Ahmed Galal told Al-Ahram Weekly in early August. The so-called Extended Fund Facility from the IMF to Egypt “supports the authorities’ comprehensive economic reform program as approved by the parliament,” wrote Chris Jarvis, the IMF mission chief for Egypt, in an Aug. 11 statement. The money aims to help “improve the functioning of the foreign exchange markets, bring down budget deficit and debt, and raise growth,” wrote Jarvis. “It also includes strengthening the social safety net to protect the poor and vulnerable groups.” Since 2011, Egypt has massively depleted its foreign reserves—which have fallen from more than $36 billion before the revolution to around $17 billion—by propping up the currency in order to curb inflation and stave off social unrest. The IMF wants a “flexible exchange rate regime” driven by market supply and demand, said Jarvis. “Moving to a flexible exchange rate regime will strengthen competitiveness, support exports and tourism and attract foreign direct investment. This would foster growth and jobs and reduce financing needs.” The IMF has explicitly said that it will not dictate how Egypt should implement a flexible exchange rate. “Going directly into free float is possible, but it’s risky,” said Reham
Economy
Nasser era, Egypt’s 7-million strong public workforce has El Desoki, a Cairo-based senior economist at Arqaam Capital, grown over the years into an increasingly wasteful drain on to Bloomberg in late August. Allowing the price of the pound public resources, with government salaries alone sucking up to spike would likely cause rampant short-term inflation and nearly a third of the budget. At the end of August, lawmakers public pushback against any further reforms. The IMF team approved an amended version of the so-called civil service asserts that if the program benchmarks are achieved on time, law, legislation that has sought to reform the public sector but the inflation rate would be in the “single digits” during the has been met with protests from government workers. three years of implementation, compared to almost 14 perOn the revenue side, the state is expected to pass longcent recorded at the end of July. awaited tax reforms. “This will be led by the value-added Speaking to Bloomberg, Hany Genena, head of research at tax,” as well as proposed real estate tax and mining tax,” Beltone Financial, believes the government needs to adopt a wrote Abou Basha. The Parliament-approved VAT rate for managed float by the end of the year. “By that I mean we’re year one is 13 percent, increasing to 14 percent year two going to see weekly volatility in the Egyptian pound,” he preand for onward. The new tax is likely to mean higher prices, dicted. An EFG-Hermes note issued after the IMF announcesay analysts, as the VAT rate is higher than the current 10 ment predicted that the official exchange rate would eventupercent sales tax, with more goods and services being ally settle at around LE 11.5 to the dollar. This is far cheaper taxed. Finance minister Garhy predicts that the VAT will than the current official rate of LE 8.89—where the Central increase inflation by 1.3 percent. However, it will also boost Bank has kept the pound since March, when it finally capitutax revenue by LE 20 billion a year to eventually equal 1 lated to mounting pressure, allowing the pound to fall by percent of GDP. around 15 percent—but stronger than the current black market rate of around LE 12.7 to the dollar. “This would be in line with parallel market trends and our own calculations,” said EFGHermes head of research Mohamed Abou “The discussion should explore how the state can change its economic Basha in his comments on the note. This approach, so it’s not just a matter of taking on more foreign debt and new rate would be come after the government receives the first tranche of the IMF further burdening the middle and poor classes without a genune loan, expected to be around $7 or $8 billion improvement in economic management.” in October. The reform program also targets reductions in government spending to bring down the budget deficit and government debt. In Egypt, the deficit has failed to drop below 10 percent of GDP “The government’s fiscal policy will be anchored to placing since 2011, peaking at 13.5 percent in 2013 before dropping public debt on a clearly declining path toward more sustainto 11.5 percent at the end of fiscal 2015/16; between 2006 able levels,” wrote Jarvis. Government debt is projected to and 2010, the deficit didn’t exceed 8.1 percent. “The persisdrop by LE 182 billion from 98 percent of GDP in fiscal tence of budgetary shortfalls during a long period… should 2015/16 to 88 percent of GDP in fiscal 2018/19, if IMF set the alarm bells ringing,” the IMF statement noted. benchmarks are met. Public debt levels have been steadily “Furthermore, projected increases in the cost of government rising since the end of 2010, when Egypt’s debt was at 73.7 programs, as populations age and economic growth lags, give percent of GDP. cause for further concern.” The IMF expects savings from the reforms to be earmarked While the IMF hasn’t set a benchmark for reducing the for two main purposes. The first is funding social support prodeficit, EFG-Hermes’ Abou Basha notes that the government grams such as food subsidies, and targeted subsidies for needs to target a 5.5-percent budget deficit by the end of the social and health insurance, medicine, and vocational trainIMF program. The 2016/17 budget calls for cutting the deficit ing among other things. The priority for the rest of the savings to 9.9 percent of GDP, slashing spending by almost LE 30 bilis investment in public infrastructure. lion from the previous year. In the current fiscal year, subsiThe key is whether the government will really go through dies spending was supposed to decrease 14 percent to LE 130 with reforms without yielding to public pressure. “The disbillion. Energy subsidies alone, which have been widely cussion [now]… should explore how the state can change shown to mostly benefit the wealthy, accounted for almost 19 its economic approach, so it’s not just a matter of taking on percent of national spending in fiscal 2015/16. Egypt’s bloatmore foreign debt and further burdening the middle and ed public sector payroll is another critical yet politically senpoor classes without a genuine improvement in economic sitive area of proposed reform. Operating under a cultural management,” says Bahaa el Din. leftover from the patriarchal state envisioned in the socialist
Business Monthly – September 2016 I
45
SOHA EL GABI
Dining Out
THE STORY OF O’S
L
BY KATE DURHAM
ately, upscale Cairo restaurants seem to be in and out faster than government ministers. Writers at this magazine last month attempted to review no fewer than two different recent additions to the capital’s culinary scene, only to learn that they had already closed down. So by the time I went in search of O’s Pasta, that opened not long ago in Zamalek, I had my doubts as to whether the restaurant even still existed. First of all, we had trouble finding it.
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Despite its 26th of July Street address, O’s Pasta is actually located a short distance off the main thoroughfare, on a narrow side street across from Abou El Sid, a rare Zamalek eatery that has endured. Fortunately, once you know where to look, the giant cursive O above the restaurant’s blue antique wooden doors is hard to miss. That O is the biggest thing about the place. The restaurant is a oneroom wonder. An open kitchen takes up one-third of the room, with five tables comprising the dining area that fills the rest of the space. The proprietors have made good use of a precious meter or so
Business Monthly – September 2016
beside the front door by squeezing in a refrigerator containing soft drinks and ingredients, which is partially concealed by a chalkboard listing specials. Walking in at the unfashionably early hour of 6:30 p.m. on a recent Thursday, we were surprised to get the last free table. It takes a special kind of magic to cram 20 diners into two-thirds of a small room and not have your customers feel like they’re sitting on top of each other, but O’s somehow accomplishes it without any mirrored walls or other tired décor tricks used create the illusion of spaciousness. Rather, the walls—one
that’s painted a vibrant spring green and another a summer sky blue—are spruced up with quirky artworks such as a framed collection of tree-trunk slices. Simple wooden chairs and tables are painted in cheerful shades of red, blue and green. The ceiling is sporadically decorated with rustic wood-framed mirrors. The refreshingly simple menu is printed on the placemats, and it won’t take you long to decide. There are two types of soup, five salads, 10 pasta dishes and two desserts. Or you could just follow your nose and decide, as the space is infused with aromas from sauces simmering a few meters from your table. We started with two standards: a Greeks in Egypt side salad (LE 30) and a Caprese salad (LE 62). The Greek salad, with crisp, fresh tomatoes, peppers, cucumbers and whole Kalamata olives, won high marks for its dry, semi-hard feta cheese, as opposed to the frequently substituted soft Egyptian white cheese. We just wished there were more of it. The Caprese, which is my test of an Italian restaurant, got the most important part right, with discs of firm, slightly grainy mozzarella di bufala. These were centered on slices of local tomatoes, dressed in olive oil and oregano powder, and topped with a small nest of shredded basil and marjoram. In my perfect world, the tomatoes would be Roma, but happily, the Egyptian tomatoes were flavorful enough to support the mild saltiness of the mozzarella. The four-man team—one waiter, two chefs and a dishwasher—kept everyone’s meals well-paced, an advantage, I suppose, of the chefs being able to see every table. A brief but comfortable pause followed the appetizers, and our pasta arrived. My Monsieur Baehler (LE 95)— named for the restaurant’s location in one of Zamalek’s famous twin Baehler mansions—consisted of calamari in a spinach and cream sauce over fusilli corkscrews. I was pleasantly surprised to find that the sauce heavily favored the puréed spinach, with the cream base providing a rich base for its robust, slightly acidic taste. Concealed amid the dark green spirals of pasta were two whole cloves of garlic, cooked just enough to temper
SOHA E LGABI
Dining Out
their pungency. Amid this interplay of flavors, the calamari seemed unnecessary, except as a source of animal protein. The strips of squid were tender and chewable without being rubbery, but the seafood was little more than a bland vehicle for the spinach sauce. My companion had the Filetto Verdi (LE 93), featuring strips of beef tenderloin, fresh mushroom chunks and sun-dried tomatoes in a “tri-pepper sauce” over linguini. The rich, golden brown sauce packed a kick anchored by ground peppercorns, but it still managed to let the earthy flavors of the vegetables shine through. The meat was stew-pot tender, no knife needed. This was a heavy dish with a lot of zing, and I was satisfied with sampling a couple of bites, though my friend managed to polish it off his suitably generous portion. I’ll admit that I didn’t have high expectations for the desserts, which are Lemon Bar Extraordinaire (LE 37) and Spicy Chocolate Fudge (LE 35). Given the setup of the restaurant, the desserts would obviously have to be prepared off-site, and more than once I’ve had an otherwise enjoyable restaurant meal only to be let down at the end by a prepackaged sweet. My reservations grew when two identically sized, perfectly square confections were set in front of us, with powdered sugar dusting sprinkled over the lemon bar and coarse sea salt on the chocolate. They looked a little too perfect.
However, while not “extraordinaire,” the lemon bar turned out to be very good. The gel-like filling was a nice balance of tart and sweet, while the thin cookie crust was solid yet discreet, not overshadowing the lemon. The real surprise, however, was the fudge. Real melt-in-your-mouth fudge—as opposed to plain old chocolate— is a rare in Egypt; in fact, I hadn’t thought it existed. I carved off a corner of the square with just a little fork pressure and placed it on my tongue. “Wait. Don’t chew,” I thought. “It’s… melting in my mouth.” A rising tide of creamy chocolate, just a little on the dark side and flecked with small bursts of salt, engulfed my taste buds. As my eyes rolled upward in my head, an aftershock of chili appeared like a starburst. This wasn’t just a dessert; it was a fireworks finale playing across my palate. O’s Pasta celebrates its first year anniversary this month and seems to have won a loyal following; we noticed several customers greeting the chefs by name. I admit I feel slightly hesitant about outing this truly hidden gem, given how little space it has to accommodate new fans. On the other hand, considering how fast some of its brethren have been vanishing, O’s deserves all the love it can get.
O’s Pasta 159 26th of July St., Zamalek 2736-5756 or 010-0415-5756 Open daily, 4 p.m. to midnight
Business Monthly – September 2016 I
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DOG DAYS BY EDMUND BOWER
D
r. Abdo’s pet shop has done business on Qasr Al Aini Street for close to half a century. On a stretch of shops lining two lanes of dense traffic, its tiny storefront is cluttered with cages of squawking song birds, longhaired Persian kittens and pudgy-faced Rottweiler puppies. A couple of fullgrown German Shepherds lie chained to cages on the ground outside, panting in the 37-degree shade. Purebred dogs have always been fashionable among Egyptian pet owners. But in recent years, with the widespread perception that the streets are less secure since the 2011 revolution, big dogs have become Dr. Abdo’s bread and butter, says the pet shop’s 62-year-old proprietor. “It’s because of all the thieves,” he says with a wry chuckle. Guard dogs are especially popular— with breeders, trainers and even organized dog theft rings exploding as a result of the trend. The most sought-after breeds are those known for their fierceness,
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including Rottweilers and Doberman Pinschers and German Shepherds. Other breeds commonly associated with fighting, such as Pit Bulls, are also in demand, as well as more esoteric breeds like the Husky, the Dogo Argentino (also known as the Argentinian Mastiff) and the Caucasian Shepherd, a muscular mountain dog that can weigh up to 100 kilograms. Originally bred in the snowy forests of Russia, where it was used to protect livestock, the shaggy Caucasian Shepherds have thick coats that are not exactly suited to the Egyptian climate. But while such breeds are prized ostensibly for protection purposes, it’s clear that the trend is mostly about having “a status symbol,” as Amina Abaza, founder of the Society for the Protection of Animal Rights in Egypt, or S.P.A.R.E, puts it. And with pedigreed German Shepherds fetching anywhere from LE 1,000 to LE 150,000 depending on the animal’s lineage, the buyers are obviously not necessarily residents of crime-ridden slums. In
Business Monthly – September 2016
particular, big thoroughbred dogs have become a symbol of manhood among male 20-somethings from a wide array of economic backgrounds. It’s not uncommon these days to see exotic breeds strolling beside their owners on the streets of well-heeled Cairo neighborhoods. However, the obsession with pedigree dogs has some unfortunate side effects, from overbreeding and animal abuse to canine-related crime rings. Dogs bred within an unvaried gene pool often have a higher chance of developing health problems. Certain types of German Shepherds, for example, are bred with distinctive curved spines. Trainers and breeders say it’s become highly soughtafter trait among Egyptian dog buyers, but they often develop serious hip problems as they age. Meanwhile, the heightened demand for certain breeds has opened up opportunities for unscrupulous opportunists looking to make a quick buck. The enormous Souq al-Goma’a, or Friday Market,
near the Sayeda Eisha mosque has long been a favorite destination for backpacker tourists, but the adjacent dog market, which is separated from the rest of the souq by an alleyway, is a dodgy place— with muzzled Pit Bulls growling at the end of chains and dead-eyed traders slouching against walls as customers glance nervously around before producing their cash. Many of the dogs on sale are stolen—rampant dog theft has become another unpleasant side effect of the purebred canine trend. Abaza, of S.H.A.R.E., estimates that there are 35 dog-theft gangs operating out of the market, the main depot for the city’s illegal dog trade. Dog breeder Wagdy Ishak’s interest in animals began at the age of eight, when he started raising homing pigeons on his rooftop in Garbage City in Muqattam. Today, the 30-year-old Kouka, as he is known by all, runs a comfortable sideline selling Rottweilers. Unsurprisingly, animal breeding and sales are all but completely unregulated in Egypt, which Kouka learned the hard way when he bought his first German Shepherd some 12 years ago at the Friday dog market. Kouka recalls how he thought he’d nabbed a bargain by picking up a oneyear-old German Shepherd with a rare black coat for just LE 400. It was only when he bathed the dog a week or so later and watched the ink-stained water run down the drain that he realized he’d been had—his prized black hound was actually a mutt. He cut his losses and decided to stick with breeding, paying LE 2,000 for a pair of Rottweilers that he housed in an empty apartment in his redbrick walk-up building. Three months later, the Rottweiler couple produced six little black-and-tan furballs, and Kouka sold the puppies for LE 1,000 each. He’s been in the dog business ever since. Increasingly, the new owners of Rottweilers and German Shepherds request “protection” training—the word is spoken in English—says Adam Adam, the owner of the Schutz Dogs Training School in Giza. In some countries, such as the United Kingdom, there are laws against training dogs as vicious attack animals, the practice is widely accepted in Egypt. “The country is under threat,” Adam reasons, “so the government supports people staying safe.” Adam says he
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can teach his trainees—which range from 20 to 25 dogs that stay at his facility for about two weeks—to stay alert and bark at intruders, and also to attack on command. “If you train a dog well,” he says, “it can be more dangerous than a gun.” Still, it’s difficult to make the argument that training dogs to injure and kill is making the streets of Cairo safer. “A dog can attack anyone,” says Adam. One of Kouka’s studs was originally owned by a friend who bought a Rottweiler to train as an attack dog after growing tired of being bullied in his working-class neighborhood in Islamic Cairo. Not long afterward, he asked his younger brother to feed the animal while he was out of town for a week. When the brother opened the door of the room where the animal was kept locked, the 50-kilogram snarling dog launched himself at the young man, who ended up needing 47 stitches in his abdomen.
Business Monthly – September 2016
In a traffic-clogged city with few green areas for people—let alone animals—to stretch their legs, it’s difficult even for responsible dog owners to give their pets the daily exercise they need. Ahmed Sheltoon, founder of The Dogs Network, a website for local dog lovers, recommends at least an hour of outdoor exercise daily for large breeds, but he concedes that it can be dangerous to walk aggressive dogs, which are all too likely to attack other animals or even people. Sadly, a lot of people buy large dogs as cute puppies without realizing the sort of care they’ll need when they get bigger. Often, these animals end up living out their days in small rooms in high-rise apartment buildings, chained up in garages or left alone on rooftops. The Egyptian capital, says Sheltoon, simply “is not the place for big dogs.” Additional reporting by Makarios Nassar
Chamber news BOARD OF GOVERNORS
PRESIDENT Anis A. Aclimandos, Transcentury Associates
EXECUTIVE VICE PRESIDENTS Curt Ferguson, Coca-Cola Egypt – Atlantic Industries Ahmed Abou Ali, Hassouna and Abou Ali Law Offices VICE PRESIDENT, MEMBERSHIP Amr Allam, Misr Sons Development – Hassan Allam Sons VICE PRESIDENT, PROGRAMS Tarek Tawfik, International Company for Agricultural Production & Processing VICE PRESIDENT, LEGAL AFFAIRS Said Hanafi, Orascom Hotels & Development
MEMBERS OF THE BOARD Aladdin El-Afifi, ASEC Company for Mining (ASCOM) Hashem El Dandarawy, Team 4 Security Nevine Loutfy, Abu Dhabi Islamic Bank Egypt Omar Mohanna, Suez Cement Group of Companies David Chi, Apache Egypt Companies PAST PRESIDENT M. Gamal Moharam, MGM Financial & Banking Consultants
COMMITTEE LEADERS
(July 2016 to June 2017)
Insurance Chair: Alaa El-Zoheiry, Arab Misr Insurance Group (gig) Co-Chair: Elena Butarova, MetLife Alico (Pharaonic American Life Insurance Co.)
ADVISOR TO THE BOARD Hisham A. Fahmy CHIEF EXECUTIVE OFFICER Tamer El Naggar
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TREASURER Sherif El Kilany, Allied for Accounting and Auditing- Ernst & Young
Investment Chair: Hazem Badran, CI Capital Holding Co. Co-Chair: Sherif El Kholy, ACTIS
Agriculture and Food Security Chair: Abdel Hamid Badawi Demerdash, Magrabi Agriculture Company Co-Chairs: Hatem El Ezzawy, PICO Agriculture Seif ElDin Saad ElSadek, Agrocorp For Agriculture Investment
Energy Chair: Khaled Abu Bakr, TAQA Arabia Co-Chairs: Ali Bakr, ExxonMobil Egypt Ayman Khattab, General Electric International Operation Emad Ghaly, Siemens Ian LePetit, Total Egypt
Banking and Finance Chair: Nadir Shaikh, Citibank Co-Chairs: Ahmed Issa, Commercial International Bank (CIB) Zeinab Hashim, Abu Dhabi Islamic Bank - Egypt
Entrepreneurship and Innovation Chair: Alaa Hashim, Egyptian Center for Economic Studies (ECES) Co-Chair: Dina Sherif, Ahead of the Curve
Capital Market Chair: Karim Awad, EFG-Hermes Holdings Co-Chair: Sharif El Akhdar, Beltone Private Equity
Corporate Sustainability and Responsibility (CSR) Chair: Mohamed El Kalla, Cairo for Investment & Development Co-Chair: Shereen Shaheen, Pepsi-Cola Egypt
International Cooperation Chair: Sherif Kamel, The American University in Cairo (AUC) Co-Chairs: Rafeh Saleh, CID Consulting Sherif El-Tokali, UNDP
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Marketing Chair: Dalia Wahba, CID Consulting Co-Chairs: Karim El Tawil, Orange Tamer El-Araby, Nielsen Egypt Real Estate Chair: Mohamed Abdallah, Coldwell Banker Affiliates of Middle East & Greater Africa Co-Chairs: Abdalla El-Nockrashy, Majid Al Futtaim Properties-Egypt Magued Sherif, SODIC
Health & Pharmaceuticals Chair: M. Maged El Menshawy, Manapharma Co-Chairs: Mohamed Roushdy, Amoun Pharmaceutical Co. Ramy Koussa, MSD Egypt Tamer Said, GE Healthcare Human Resources Chair: Somaya El Sherbini, Microsoft Egypt Co-Chair: Maisa Galal, General Motors Egypt
Customs and Taxation Chair: Hassan M. Hegazi, Master Trading Co-Chair: Hossam Nasr, Allied for Accounting and Auditing- Ernst & Young
Industry and Trade Co-Chairs: Ashraf Bakry, Unilever Mashreq Karim Kamel, Proctor & Gamble Egypt, Ltd. Mostafa El Halwagy, The Egyptian Company for International Touristic Projects (Americana) Omar El Derini, FAOM Consult/Red Wing
Education Chair: Tarek Khalil, Nile University Co-Chair: Shahinaz Ahmed, Amideast Egypt
Information and Communications Technology Chair: Amr Talaat, IBM Co-Chairs: Ayman ElGohary, Cisco Systems International Reem Asaad, Raya Holding
Legal Affairs Chair: Hani Sarie-Eldin, The Middle East Center for Law & Development Co-Chairs: Girgis Sarwat Abd El Shahid, Shahid Law Firm J. Michael Lacey, Dentons
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Transport and Logistics Chair: Marwan El Sammak, Worms Alexandria Cargo Services Co-Chairs: Ahmed Elfangary, DHL Express Osama Fawzy Hegab, Triangle Trading & Engineering Tarek Fahmy, Mediterranean Shipping Company Willfried Wienholt, Siemens
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Travel and Tourism Co-Chairs: Cees Ursem, Air France KLM Karim El Minabawy, Emeco Travel Nelly El Kateb, Astra Travel Radek Cais, The Nile Ritz-Carlton, Cairo Women in Business Chair: Dina El-Mofty, INJAZ Co-Chair: Yasmine Mowafy, Beltone Financial
American Chamber of Commerce in Egypt – Tel: (20-2) 3338-1050 – Fax: (20-2) 3338-1060 For more information about AmCham services and news, please visit www.amcham.org.eg or our US mirror site www.amcham-egypt.org
Member News ARAB MISR INSURANCE GROUP The Arab Misr Insurance Group, a subsidiary of the Gulf Insurance Group, has received a B1 rating with a stable outlook from Moody.s Investors Service. Among Egyptian insurance firms, this is the highest current rating. It.s two notches above Egypt.s sovereign rating and three notches above the rating of local banks.
ROYAL MAXIM PALACE KEMPINSKI Kempinski Hotels has appointed Gerhard E. Mitrovits as the general manager of the Royal Maxim Palace Kempinski. With over 40 years of experience, Mitrovits was most recently the managing director for Kempinski.s leading property in China, the Kempinski Hotel Beijing Lufthansa Center. He has worked for the chain since 2007 in a variety of top management positions.
ABB Recognizing the importance of clean energy, power and automation firm ABB has donated a solar installation to the Cairo University Faculty of Engineering that.s due to come online later this year. ABB has also installed a solar plant with a capacity of around 120 kilowatts on the roof of its Cairo offices.
JUHAYNA Adventurer Galal Zekri Chatila and his main sponsor, Juhayna, celebrated Chatila.s successful ascent of Mount Kilimanjaro in Tanzania. It was his first milestone in a fundraising quest to put roofs on 700 homes in poor areas of Upper Egypt. The adventurer plans to climb the highest mountain peak on each continent to raise money for the project.
TAKATOF ASSOCIATION FOR DEVELOPMENT Takatof Association for Development and the Rotary Club Sunrise sponsored upgrades to Om El Moemenien School in Sayeda Zeinab to accommodate an additional 240 students, bringing the total to 640. The LE 3.5million upgrade was completed in seven months. The association also renovated the Om El Moemenien Clinic for Students, funded by ABB.
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Business Monthly – September 2016
Membership New Replacements at Member Companies: Ahmed Osama Tawfik
Category: Affiliate Sector: Accounting
Rezk Bibawi
Category: General Sector: Agriculture
Tax Partner, PricewaterhouseCoopers Managing Director, Tewfik Bibawi & Co.
Shaden El Rimaly
Category: Affiliate Sector: Consultancy
CI CS Lead, Egypt & Levant, Nielsen Egypt, Ltd.
Ignacio Artaza
Category: Public & Diplomatic Sector: Diplomatic Missions
Country Director UNDP Egypt, United Nations Development Programme UNDP-Egypt Country Office
Laurens Westhoff
Ambassador, Embassy of the Kingdom of the Netherlands
Category: Not-for-Profit Sector: Financial Sector
Senior Investment Officer, IFC International Finance Corporation
Karim Fayek Mohamed
Category: Affiliate Sector: Financial Sector
Division Head- Risk, Union National Bank- Egypt
Nermeen Nasr
Tamer Youssri Ragheb
Category: Affiliate Sector: Financial Sector
Interim Corporate Banking Director, Barclays Bank Egypt, SAE
Gerhard Mitrovits
Category: Affiliate Sector: Power
Mostafa El-Bagoury
Category: Affiliate Sector: Power
Head of Wind Power & Renewables Division Egypt, Siemens SAE (Siemens Technologies, SAE) CFO, Siemens SAE (Siemens Technologies, SAE) CEO, Information Technology Industry Development Agency (ITIDA)
Category: Public & Diplomatic Sector: Public & Governmental Organizations
Mohamed Nabil
Category: Affiliate Sector: Real Estate
Associate Director, Head of Project and Development Services, Jones Lang LaSalle Misr, LLC
Rania Shaker
Senior Manager HR, DHL Express
Category: Affiliate Sector: Transportation
Ahmed Hussam Al-Hazik
Business Development Director, Xceed
Ashraf Mohamed Sayed
Head of Enterprise Business Unit, TE Data, SAE
Changes Change in Member Title: Noha Abdel Hamid
Partnerships & Communications Manager, CARE Egypt
Category: General Sector: Hospitality/ Tourism/Travel
Change in Member Category (Principal Member):
Category: Affiliate Sector: Information Technology
Change in Company Name:
Category: Affiliate Sector: Information Technology
Change in Company Information:
General Manager, Royal Maxim Palace Kempinski Hotel
Ahmed Abul Saoud
Category: Affiliate
Head of Legal Egypt & Levant Sector: Insurance Countries, MetLife Alico (Pharaonic American Life Insurance Company) CEO, AXA Insurance
Ayman Saad
Category: Affiliate
Division Head- Products Development, Sector: Financial Sector Union National Bank- Egypt
Gilbert Chahine
Category: Affiliate Sector: Petroleum
General Manager & Managing Director, Qarun Petroleum Co.
Asmaa Hosny
Category: Public & Diplomatic Sector: Diplomatic Missions
Dalia Wahba
Jeff Wedgwood
Category: Associate Resident Sector: Insurance
Michael Schnedler Jensen
Chairman and Managing Director, AIG Egypt Insurance Company SAE
Category: General Sector: Insurance
Mohamed Tawfik Ezz ElDin
Managing Director – UNBE, Union National Bank- Egypt
Nour & Selim in Association with Al Tamimi & Co. (Formerly – Nour & Partners Law Firm)
Siemens S.A.E. (Siemens Technologies S.A.E.)
Address: Bureau 175, 2nd Business Sector, Al-Horreya axis, 90 south road, 5th Settlement, PO Box: 245/11835 – New Cairo Egypt Call Center: 16610
Tahoun Law Office & Consultations
Address: Building 2401 (B), First Floor, Smart Village, 6 October, Giza Governorate, Egypt; P.O. Box: 12577 Tel: +202 353 717 17 / +202 353 744 43 Fax: +202 353 744 43 Email: info@tahoun.com Website: www.tahoun.com
For any change to contact information, please contact the Membership Services Department at the Chamber’s office Tel: (20-2) 3338-1050, ext. 0016 – Fax: (20-2) 3338-1060 E-mail: membership@amcham.org.eg
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Business Monthly – September 2016
Current Benefits Only With Your AmCham Membership 2016 Card
Academic/ Educational/ (R&D))
The Institute of Management Accountants (IMA) The Institute of Management Accountants (IMA) is pleased to offer a special 30% discount to AmCham Members on IMA Membership. December 31, 2016
Accounting
BDO Khaled & Co. 15% discount for two main outsourcing services: Human Resources Outsourcing, Finance & Accounting Outsourcing December 31, 2016
Automotive
Banks
Courier Services
Abou Ghaly Motors - Accessories Voucher with the amount of 2,000 EGP, for purchasing- Subaru -Jeep- Chrysler- Dodge- Ram- KTM. - 10% discount on “Sixt” rent car. - 20% discount on “London Cab” on the second leg to and from the Airport. - Different financial programs from Abou Ghaly Group for all products with a minimum down payment of 25%. December 31, 2016 Bavarian Auto Group (BAG) 2% discount on BMW line sticker prices. Original car carpet & Key chain as a gift on your car. 3- BMW insurance with different packages, services and special rates: - Rate 4,25% including taxes, stamps and issuing fees - Road assistance 24/7 4- Premium BMW cars to be traded with the best market price. 5- Several bank finance programs on all BMW cars with a downpayment to start from 25% of the car value. December 30, 2016 SMG Engineering Automotive Co. Up to 20% Discount on Spare Parts & Labor for KIA, SEAT, Mercedes and SsangYong Car Owners SMG Engineering Automotive Company is pleased to offer an exclusive benefit to AmCham member companies, on maintenance service rates & Body Shop works/repairs in SMG Service Centre in Ard El Lewa. * HR letter is required from the member company for the employees who do not hold a membership card December 31, 2016 Abu Dhabi Islamic Bank - Egypt Abu Dhabi Islamic Bank - Egypt, is Assigning A@W (ADIB at Work), a dedicated account manager to handle all requests received from members as well as a special web link to share the offer with all members. Members will receive a special rate on admin fees from 1.5% to 1% for all types of loans. Members applying for ADIB cash back cards, will benefit from waiving the annual fees for the first year, in addition to the below privileges: - Members will be offered current accounts - Gold customers (over 500,000 EGP) - Cash Back Cards December 31, 2016 DHL Express 30% discount on DHL published rates for outbound international shipping services. December 31, 2016 FedEx Egypt Save up to 45% discount off the full cash rate on FedEx Inbound & Outbound international shipping, and a 40% discount off the full cash rate on FedEx domestic shipping. December 31, 2016
Health
Dar Al Fouad Hospital Offering EXCLUSIVE prices on Complete Physical Check Up Program using AmCham 2016 membership card. • All discounts apply for the member, spouse and children ONLY December 31, 2016
Information Technology
National Trading Company (Appliance) Up to 10% discount on Laptops, Mobile and their accessories at Appliance retail branches "Mall of Arabia, City Stars, Cairo Festival City Mall, City Center Alexandria, City Light Alexandria and El Gouna branch" - 20% discount on Digital Signage solution. - 10% discount on GPS services. - 10% discount on security systems. December 31, 2016
Insurance
Arab Misr Insurance Group | gig 25% Discount on Travel Care Insurance Rates Arab Misr Insurance Group | gig, has the pleasure to provide AmCham members a 25% discount on Travel Care Insurance Rates. December 31, 2016
Business Monthly – September 2016 I
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Announcements Jobs AMCHAM RECRUITMENT CENTER Code
Vacancies
Company Name
103072 103336 103191 103227 103342 103177
Tax Service Manager Finance Manager FEI CSR Unit Strategic Planning Advisor Treasury Manager Construction Manager Business Development Manager
Amreyah Cement Company Luna Group SEED Project Tanmeyah Micro Enterprise Services Global Consolidated Contractors - GCC Pyramids Cosmetics Company
For more information about these jobs and others, visit: www.amcham.org.eg/recruitment – e-mail: recruitment@amcham.org.eg, Tel: (20-2) 333 88 220 Ext. 1513 - 1514 Fax: (20-2) 333 73 779
Top Tenders
TOP TENDERS
FROM
TAS
Client
Description Supply & erection of the information network to serve the Company's Clinic. Ref. 3/ 2016/ 2017.
Deadline
Suez Co. for Petroleum Refining, the Engineering Office
Raising the capacity of Zagazig East Telephone Exchange network by 10 MSAN Telecom Egypt SAE - Stores & Purchases Div. units of 10,700 lines size & that of Zagazig West Telephone Exchange network New, The Cashier by 26 MSAN units 34,350 lines within East Delta Area including civil works & erection. Ref. 422/ 2016/ 8 Beneficiary Sectors
Bid bond Specs fees
Sectors
September 05, 2016
6,400 LE LE 300
Communications Technology Petroleum
September 06, 2016
1 % LE LE 3,505
Electromechanical Works I.T., Telecommunication and Media
Generating Sectors
www.amcham.org.eg/TAS
For further information, contact the Business Information Center at AmCham Egypt Tel: (20-2) 3338-1050 – Direct: (20-2) 3761-9641 • Fax: (20-2) 3338-9896 • E-mail: info@amcham.org.eg Website: www.amcham.org.eg • US Website: www.amcham-egypt.org
U.S. Exhibitions
Listings are now available on our website:www.amcham.org.eg Exhibitions related to the following sectors are scheduled for the upcoming months. Sector
Show Name
Website
Embassy Contact Person
TEL.
September Energy
Solar Power International
www.solarpowerinternational.com
Mai Abdelhalim
2797-2146
Safety and Security
ASIS
www.asisonline.org/
Cherine Maher
2797-2688
Environment-Water
WEFTEC 2016
www.weftec.org
Hany Wassef
2797-3422
Minning
MINExpo International 2016
www.minexpo.com
Mai Abdelhalim
2797-2146
Food / Agribusiness
Americas Food & Beverage
www.americasfoodandbeverage.com
Ibrahim Al-Habbal
2797-2388
Baking
International Baking Industry Exposition (IBIE)
Rania Mekhail
2797-3487
October www.ibie2016.org
For more information about these exhibitions, please contact: The Commercial Service at the U.S. Embassy Tel: (20-2) 2797-2330/ 40 - E-mail: office.cairo@trade.gov *Please refer to the Commercial Service at the U.S. Embassy for any updates on the exhibitions.
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Business Monthly – September 2016
Classifieds Benefits ARAMEX INTERNATIONAL EGYPT Free Shop & Ship Membership & a 30% Discount on all Personal Domestic Services. “ Shop & Ship “ are an international shipping service that allows you to shop from the US, the UK, China, Turkey, UAE, India, South Africa, Hong Kong, Germany, Italy, Spain, France, Singapore, Canada and Malaysia and then we deliver it to you with the best rates.” Aramex International Egypt is pleased to offer to AmCham members a free Shop & Ship membership, all AmCham members are exempted from the $45 membership fee. In addition to a 30% discount on all Personal Domestic Services. The following is how members can get the free life time membership for their Shop & Ship account they just have to follow the below simple steps: 1.Visit www.shopandship.com 2.Click on “Sign Up Now”. 3.Fill in your profile details (Email, Country of residence, date of birth, etc...) then Click “Sign Up”. 4.You will receive an email to verify your account 5.Fill in your address details. 6.Please use the code SNS100ACE in the promo code field to get the 100% off on the life time membership.
***Discounts will be granted for AmCham members upon presenting their AmCham 2016 membership card*** For more information, please contact: Mohamed Ben Halim • Short No.16996 Email: mohamed.Benhalim@aramex.com Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits This offer is valid until December 31, 2016
SOFITEL LEGEND OLD CATARACT ASWAN - SOFITEL LUXOR WINTER PALACE Special Accommodation Rates and a 20% discount on Food and Beverages from Sofitel Legend Old Cataract Aswan - Sofitel Luxor Winter Palace Sofitel Legend Old Cataract Aswan: • $110 in a single room per night • $130 in a double room per night Complimentary upgrade to next higher category at time of booking. 15% off on any treatment at the SoSpa with 15 minutes free reflexology foot massage. 20% discount on Food and Beverages Sofitel Luxor Winter Palace: • $90 in a single room per night on Royal Gardens view • $110 in a double room per night on Royal Gardens view 20% discount on Food and Beverages
***Discounts will be granted for AmCham members upon presenting their AmCham 2016 membership card*** For more information, please contact: Lydia Rafea • Telephone: (20-2) 2737-3737/ (09-5) 238-0425 Email: H1666-SM@sofitel.com
MARRIOTT HURGHADA Marriott Hurghada is pleased to offer AmCham members a 15% discount on total bill, including alcoholic beverages, in addition to the below privileges. - Welcome Drink upon arrival. - Free entrance to the health club and Gym excluding Massage. - Free wireless internet in all public areas. - Early check-in & late check-out subject to hotel availability. - Upgrade to next room category subject to hotel availability.
***Disc ou nts wi ll be granted for AmCha m members upon presenting th eir AmCh am 2016 membersh ip card*** Reservation Department at Hurghada Marriott Red Sea Resort Phone: (20-65) 3446-950 Fax: (20-65) 344970 E-mail: reservation.hurghada@marriott.com
Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits
Please visit AmCham Cyberlink on http://www.amcham.org.eg/cyberlink for more information for AmCham benefits
This offer is valid until December 30, 2016
This offer is valid until December 30, 2016
The BUSINESS MONTHLY Classifieds section is open exclusively to AmCham member companies. Text ads are £E 150 for up to 30 words, £E 5 per additional word. Abbreviations, phone numbers and e-mail addresses count as one word. Display ads are £E 100 per cm in height, per column (max. 20cm in combined total height). Discounts are offered for regular advertisers and repeat bookings. Insertion orders, payment and ad content must be received by the 15th of the month preceding publication. All classified ads subject to editorial approval. For more information, or to place a classified ad, contact Amany Kassem at (20-2) 3338-9890, fax (20-2) 3338-0850, e-mail: akassem@amcham.org.eg
Business Monthly – September 2016 I
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Advertorial WHITE BAY
ORANGE
This summer, White Bay, located in Sidi Henish along the North Coast, held a live concert featuring renowned musician Omar Khairat and his orchestra, who were all dressed in white. White Bay is built over an area of 328,000 square meters with a 13 percent built up area. It also has a 500 meter-long shoreline.
Orange telecom has announced the launch of the Orange Social Venture Prize 2016, which encourages entrepreneurs to use information and communications technology to develop new products and services that have a social impact. The products and services must be deployed in MENA countries where Orange operates. The winning four entries will receive grants ranging from €5,000 to €25,000. In other news, Orange Egypt has added 19 outlets and 35 new network towers in the North Coast, Alexandria, Marsa Matrouh, Agami and Ras El Bar.
DUSIT THANI LAKEVIEW CAIRO
IKEA
Dusit Thani LakeView Cairo hosted South African football club Mamelodi Sundowns, whose players were in Cairo for a CAF Champions League match against the Zamalek Club. Well appointed, with Thailand-inspired décor and themes, the hotel features some 450 rooms, suites and apartments, and its New Cairo location means it is close to major entertainment attractions in New Cairo, Heliopolis and Maadi as well as downtown Cairo.
The 2017 IKEA catalogue is out, featuring some 1,600 products and furniture options to suit any home from the smallest studio to the largest villa, creating a better living environment. This is the 65th issue of the catalogue, which is launched annually in 48 countries in 33 languages, reaching 255 million people worldwide. This year’s theme is “Goodbye expectations. Hello you!”
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Business Monthly – September 2016
Advertorial CAPITAL GROUP PROPERTIES
SAFIR HOTEL
Capital Group Properties has signed memoranda of understanding with Smart Village, SABIS, Africa Crest Education, El Sawy Culture Wheel, Bustan Aquaponics and Medical Park Redcon to work with CGP on its first housing development in Egypt, AlBurouj. The project is set to feature a school, a medical complex, a cultural center and an organic farm built on 1,212 acres between the Suez and Ismailia desert roads, along with 30,000 housing units. “AlBurouj is more than just a compound,” said Walid El Hindi, CEO of CGP.
The Safir Hotel Cairo won an excellence award from the online hotel website booking.com. The hotel’s high score reflected numerous reviews from guests of the Safir and reflects the excellent and outstanding service the hotel provides.
RIXOS HOTELS
SOMABAY
The Rixos Sharm el-Sheikh is celebrating its fourth year doing business in Egypt by winning an Egypt’s Superbrand award for 2015/16. The Sharm facility is child-friendly, with four separate children’s pools and is one of few hotels that offers Ultra All-Inclusive accommodation, meaning guests on the plan can dine in any or all of the Rixos’ restaurants as well as enjoying some types of alcoholic beverages at no extra charge.
Somabay has made several upgrades to its 10-million-square-meter property in Hurghada, including increasing internet speeds to 210 MB and adding 40,000 square meters to the marina. It’s also adding new projects, including the Somabreeze, the Abu Soma Reef, the Wadi Jebal and the Bay West Villas. Somabay has also contracted Starwood Hotels to manage its La Residence Des Cascades resort, which will change its name to the Westin Hotel. Finally, Somabay has signed a 10-year extension on its agreement with the Robinson Club Hotel, which will renovate some 300 rooms at the property it manages.
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Media Lite
A Glance At The Press Today’s episode: How to make economic reform “Take the middle class, grind it until it becomes powder and put it in a pan on high heat.”
Al Masry Al Youm, Aug. 23
Media Lite is a satirical review of items published in the local and international press. All opinions and allegations made in them belong solely to the original publications and no attempt has been made to ascertain their veracity.
STOP SIGN
The conductor of a passenger train traveling from Damietta to Tanta became infamous overnight after stopping the train mid-journey to pop out and buy sweet potatoes. A video that went viral on social media shows the train standing still on the tracks in the middle of nowhere as the operator waits for a farmhand to bring him his purchase; then he climbs back into the front car as frustrated passengers lean out their windows and gesture in outrage. After the video went up, someone posted another—this time a conductor on the Damanhour-Cairo route making an unscheduled stop to buy cigarettes from a kiosk. While many saw the unauthorized pit stops as more evidence of the sorry state of Egypt’s railway system, some of the passengers on the latter video could be heard asking the conductor to buy them snacks. Youm7, Aug. 16
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RUNNING LATE Some people really need a vacation. Passengers were buckled in and ready to take off on an Emirates flight from Cairo to Abu Dhabi when a man was spotted running frantically after the moving aircraft. The tardy traveler had somehow made it past airport security and onto the tarmac. A few weeks earlier, in Spain, a Ryanair ticket holder, desperate to make his flight from Madrid to the sunny island of Gran Canaria, jumped off the jet bridge carrying two bags and sprinted to the edge of the runway, where, incredibly, the captain allowed him to board. Still, officials said he would face a hefty fine, adding that the man was lucky he wasn’t taken for a terrorist “and all that comes with that.” Various media, Aug. 9 and Aug. 22
A MONUMENTAL MISTAKE Egyptians took to the internet last
Business Monthly – September 2016
month to protest recent renovations to the famous statue of Om Kalthoum in Zamalek. Online commentators were disgusted that the formerly bronze-colored statue of the iconic Egyptian singer had ended up making Kalthoum look “like Shrek’s wife.” “All they did was spray paint it,” complained an article on the website Scoop Empire, which noted the unflattering new color scheme, which turned Kalthoum’s dress military green and her face chocolate brown. Even the statue’s sculptor, Tarek ElKomy, complained that the changes amounted to “vandalism.” Another poster noted a trend of “ugly statues popping up across the country,” citing a misshapen mermaid in Safaga and a botched likeness of Nefertiti in Minya that caused such an outcry it was quickly taken down. He asked: “When will we ever learn that we can’t build things as good as the ancient Egyptians did?”
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