SEKEM Insight 03.11 EN

Nr. 103 - March 2011

Insight

SEKEM‘s Journal for Economy, Culture, and Society in Egypt

Editorial Dear Readers,

on 29 March Helmy Abouleish, CEO of the SEKEM Group, has been taken into custody by the Egyptian federal prosecutor.

Basis for his detention is a formal complaint lodged by an unknown party and concerning allegations related to his former role as CEO of the local Industrial Modernisation Center (IMC). After preliminary investigations, an expert commission appointed by the prosecutor could not substantiate the allegations and declared these to be unfounded. Nevertheless 15 days of detention on remand have now been ordered. SEKEM Insight publishes a statement by Helmy Abouleish on page 3 of this issue.

In these turbulent times in which supposedly stable structures seem to break down in many places of the world and many have to start from scratch, it may be encouraging to hear that some seeds, brought out long ago, still bear fruit years later.

SEKEM Insight also reports on the expansion of the successful microfinance project, initially launched 2006-2008. Thanks to a donation by the German Future Development Foundation (Zukunftsstiftung Entwicklungshilfe), the hugely effective project could now be extended.

Your Team of Editors

Microfinance

Textiles

Partners

Successful Project is Extended

New Products for Organic Supermarkets

Economy in Support of Life

Additional Extension for SEKEM‘s Successful Microfinance Project Microcredits have helped small businesses grow in the area around SEKEM since 2004. Now the project will be expanded again.

A recipient of a micro-loan sells and repairs shoes in his shop in a small village near the SEKEM main farm.

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or nearly 30 years SEKEM’s friends and supporters from the German support association “Verein zur Förderung kultureller Entwicklung in Ägypten e.V.” (Association for the Advancement of Cultural Development in Egypt) have been tirelessly striving to advance the social and cultural institutions of the SEKEM initiative.

They have done so both through financial and material means, and by providing contacts to donors, volunteers, and potential later coworkers.

From 2006 to 2008, together with the SEKEM Development Foundation (SDF) and co-financed by the European Commission, a large development project was carried out in 13 villages in the immediate vicinity of the SEKEM main farm. SEKEM Insight repeatedly reported on its various elements.

The holistic approach of the project allowed a large number of very diverse activities to be carried out in these villages. For instance, pregnant women SEKEM Insight | March 2011 | Page 1

Economy

people to realize their own project ideas by making use of a small loan

by SEKEM’s Development Foundation (SDF) who officially runs the project.

Intensive support key to success

Micro-credit recipients often invest their money in the expansion of an existing business.

and young mothers could be cared for by social workers. Before embarking on their mission, these workers were trained to improve the infrastructure in the villages, for instance, by introducing a comprehensive waste collection system. Training opportunities for young people were expanded at the SEKEM Vocational Training Centre (VTC). All these sub-projects put the emphasis on involving the villagers in the development process and thereby create an acute awareness of how to cooperatively develop ones own community. Many of these activities were continued after the project ended.

The microcredit sub-project catering to small businesses owners and those aspiring to found their own businesses proved to be particularly successful.

More than 400 loans awarded The office of the micro-credit project is run by Ashraf Yehia and Sara Ayman, the latter being a former student of the SEKEM School. During the last four years, more than 400 credit applications could be approved with an average loan size of 2.000 - to 5.000 - Egyptian pounds (LE). Some of these credits have already been repaid. Some borrowers even already received follow-up loans to further develop their business ideas.

There have been virtually no defaults on the credits distributed and requests for loans have never ceased to come in. The successful examples of small business owners in the villages speak for themselves and have continuously encouraged more and more

Of crucial importance for the successful realisation of the individual recipients’ projects is the continued personal assistance of the credit officers processing all applications and providing the individual entrepreneurs with the necessary consultancy services during the implementation phase. Courses offered include the building the capacities required in project management, accounting and good business practice. All of the instructional offers are tailored to the individual villager’s context of life and work, and their business ventures.

The male and female entrepreneurs applying for loans commonly focus on the rearing of animals, trade in agricultural or household goods, the production and maintenance of engines used in the countryside, and various craftsmen such as carpenters, painters and electricians also have been able to expand their existing workshops and businesses.

Although the majority of borrowers are men (60%), more and more women begin to be among them. They are being encouraged by the employees of the credit office pointing out the positive examples of other businesswomen. They demonstrate what women can achieve in the Egyptian society if given the necessary financial and practical support.

Earlier this year the stock of capital of the credit programme could again be topped up through a generous donation from the Future Development Foundation. This allowed for the awarding of additional credits and accelerated the support of even more projects. SEKEM Insight presents three exemplary projects in this issue.

to raise a calf on the family‘s land. She also already owned a small shed. In 2006 the 56-year-old used a loan for the purchase of a calf and some concentrated feed. She could care for the animal and collect its green feed easily alongside her usual home and field work. After the slaughtering and sale of the calf she took on another loan and raised two more. With their sale the family made an additional profit and can now easily save the funds needed to purchase the next calf.

Joinery Hussein Darweesh Hussein, a father of now 34 years, already had a small workshop for furniture repairs before taking up his first credit. But for 10 years he had only been able to offer limited services due to his lack in materials and tools. With his first credit he was now able to purchase what he lacked and begin manufacturing his own furniture for kitchens, living rooms, bedrooms, and offices. His business prospered and he had no difficulties paying back the loan within only two years. Meanwhile, Hussein was granted another loan enabling him to build a showroom to better present his products. The room has had a positive impact on his book of orders.

Cattle breeding Hamada El Sayed Mohamed was planning to offer the farmers in his neighbourhood dry food and grain for their livestock. Four years ago he used a loan to purchase feed in large quantities at good prices and sell it to the peasants of the nearby villages.

Hamada was then easily able to repay the loan and has attracted a loyal customer base that allowed him to invest in a new credit in turn enabling him to buy a car and offer delivery services.

That has proven to be his unique competitive advantage and he is now selling to even more customers in many more villages.

Christina Boecker

Livestock breeding Fathia Mustafa Mohamed had long noticed that there was enough forage

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More information: http://www.entwicklungshilfe3.de/

SEKEM Insight | March 2011 | Page 2

Dear Friends, I hope this message finds you well. Unfortunately, I have to inform you about truly dramatic developments concerning myself and the whole SEKEM community.

As you all know, in the past years I was investing much time and energy in working for a more sustainable development of Egypt on the political level, mostly at the expense of my responsibilities at SEKEM. I was serving in a number of public institutions, worked closely with highranking officials, and despite strong resistance to transformation and renewal I had also good success to bring some key priorities for a sustainable future on the political agenda, like ethical business conduct or the green transformation of industry.

However, my strong public visibility and close links to the pre-revolution officials are now backfiring in the context of deep public distrust to everyone connected to the former political establishment.

Our Egyptian media have been hitting hard on prominent businessmen and former officials in general. There have been unfounded allegations raised also against myself directly, and even handed in with the public prosecutor (we do not know by whom). This was related to the work of the Egyptian Industrial Modernization Center, where I served in influential positions in recent years. In the past weeks, thorough initial investigations were conducted by an expert committee appointed by the prosecutor on allegations concerning specific decisions taken during my time as IMC Executive Director, and services funded by IMC for the SEKEM companies in the following years. These investigations concluded with a report clearing all the allegations as unfounded.

But despite the positive final report my case was handed over to the public prosecutor for formal investigations – and I have been held in remand custody since the night of Tuesday, 29.

March!

This development has again been accompanied by false reports and allegations in renowned local newspapers. For now, 15 days of remand have been proclaimed. Under the emergency law still in place in Egypt, this can be extended at will, as has already happened in similar cases.

For SEKEM this implies limited internal short-term restructuring. Dr. Abouleish will take over my executive authorities in the meantime, and I would like to thank my whole dear family and all our colleagues that will take over additional responsibilities and keep everything on track.

We will face this challenge strengthened by the support and solidarity we receive from our friends in Egypt and all over the world.

Thank you all, may God be with you and with all of us.

Helmy Abouleish

SEKEM Insight | March 2011 | Page 3

Impressions

Impressions from SEKEM

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n the months of February and March workers at Naturetex worked very diligently to manufacture the new models for the upcoming Spring 2011 collection. From the end of March on, the new basic line of BioBaby, the finest linen for babies, will be available at Alnatura supermarkets in Europe.

The required models were already designed last year, patterns were designed, and then the fabrics and the yarns dyed and knitted. Over the last months and weeks, then workers have then begun manufacturing the baby bodies and jackets themselves, the hats, and the pants. At present, 11 production lines are at work on the products. An average of 107.000 parts are done each month. The production is partitioned into individual steps that have clear timelines. For instance, one average part of the baby collection is expected to take about 12 minutes to produce. The company produces around 1.5 million of it each month.

SEKEM Insight | March 2011 | Page 4

News in Brief

Petition „VielfaltErleben“ Ready for Signature

Starting immediately the public petition by the Federation of the Organic Food Industry (BÖLW), which is being supported by the initiative “ExperienceDiversity” (SEKEM Insight reported) is ready for signature using the online tools provided by the German Parliament.

The immediate goal of the organisers is to win at least 50,000 signatories within the coming three weeks.

The deadline is the 19 April - every vote counts.

The petition can be signed directly on the website of the German Parliament (see below). It is available under the petition identification number (Pet-ID) 16941 and is titled „ Z u l a s s u n g s b e g r e n z u n g /r e g i o n ales Anbauverbot für gentechnisch veränderte Pflanzen” (German only).

In order to sign the petition a registration of the individual signatory is required. A guide to completing the process can be found on the website of “ExperienceDiversity”.

The petition specifically calls for: „The German Bundestag should instruct the federal administration to advocate that the European Union, halts its approval of genetically modified plants exposed for cultivation (cultivation moratorium). Furthermore, it may create the legal basis for the regional exclusion of genetically modified plants from agriculture in Germany.”

The 6-week subscription period for the petition runs until 10 May. Specifically the first three weeks of the subscription period are important.

Up to 19 April at least 50,000 signatures shall be collected to allow for the discussion of the petition’s claims in the German Bundestag.

Source: BÖLW

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More information: http://epetitionen.bundestag.de

Economy in Support of Life

The GLS Bank and the Protestant Bank for Church and Charitable Work celebrate a successful first year of the FairWorld Fund they have inaugurated in 2010 with major partners. For its investments the fund does not only consider classic, economic and sustainability aspects but also for the first time developmental factors developed by the international non-government organisation „Bread for the World“.

The FairWorld fund was created by Union Investment Private Funds Ltd. After the first year the fund has already reached a volume of more than 60 million Euro. Thomas Jorberg, CEO of the GLS Bank, and Dr. Ekkehard Thiesler, CEO of the Protestant Bank of Church and Charitable Work, summed up the key points of the project: „When they invest in our fund our customers consciously consider their own personal values ​​ and the social impact of their projects they finance.

Many of them actively strive to better understand the developmental contexts of the investments covered by the FairWorld Fund. Demand has exceeded our expectations.”

Fair trade has not only helped thousands of families in Africa, Asia and Latin America to a life in dignity. It has also become an economic success story. However, ethical principles should also be applied to investments in the capital markets mainly because crises hit the poorest of the poor particularly hard.

With the FairWorld Fund investors receive the opportunity to change the world for the better through economically viable and sustainable investments.

Interest in fair investment opportunities is strong: many other banks have begun to offer the FairWorld Fund to their customers. „This reaffirms our belief that it is indeed possible to transfer the winning idea of fair ​​

trade to the capital markets“, Jorberg and Thiesler happily conclude.

If desired, investors may furthermore donate the proceeds of the Fund.

“Bread for the World” has created a dedicated account #500500500/bank identification number 10061006 at the Protestant Bank for Church and Charitable Work specifically for this purpose.

Roughly 70 percent of the fund’s assets are being invested on the basis of the abovementioned criteria in government and corporate bonds and debentures. 20 percent are being invested in shares and up to 10 percent in microfinance funds. The fund manager may, however, depending on the market situation, decide to grant more weight to any of these asset classes.

To reduce the foreign exchange rate risk, foreign currency risk is hedged up to 70 percent.

The fund is managed by the cooperatively run investment firm Union Investment Private Funds Ltd. Source: GLS-Bank

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More information: http://www. fairworldfonds.de

Masthead: The editors of SEKEM Insight wish to thank all contributors to this issue.

Editors: Christina Boecker Bijan Kafi Contact: SEKEM-Insight c/o SEKEM Holding P.O.Box 2834, El Horreya, Heliopolis, Cairo, Egypt insight@SEKEM.com Pictures: Seiten 1, 2: SEKEM; 4: Bijan Kafi No republication without written consent by the publisher.

SEKEM Insight | March 2011 | Page 5