Emerging Egypt 2008

Emerging Egypt 2008

Emerging Egypt 2008Known for its famous landmarks and ancient civilisations, Egypt, with a population of around 80m, stands between the Asian and African continents on the river Nile. The country has a total area of 995,450 sq km and is divided into two distinct landmasses. The desert regions beyond the Nile to the south are exceptionally arid, but the north of the country enjoys a Mediterranean climate. Hydrocarbons are among its most valuable resources, though textiles and tourism play important roles in the country’s economy.

ISBN: 1-90202339-81-9
ISSN (Online): 1744-4446




Reform has been the buzzword for the recent history of the country, with both political and economic moves having serious effects. A change in economic policy has made opening new businesses easier and has won praise both at home and abroad from the International Monetary Fund (IMF), the world bank and the World Economic Forum, which has chosen Sharm El Sheikh as the location for the 2008 Middle East Conference. Political reforms have not been met with enthusiasm across the board however, with some groups claiming the changes represent a reversal of previous gains rather than real progress. The government has defended reforms to the constitution system, saying they are only the first step toward a more democratic country. Other domestic changes include substantial progress in the area of women’s rights, though some say further improvement is still needed. The Egyptian government continues to play a significant role in regional politics, acting as an intermediary between Fatah and Hamas in Palestine and working to create better relations with Iran, although there are still ongoing issues with the Camp David accords.

The chapter includes interviews with Ahmed Nazif, Prime Minister; Francis J Ricciardone, US Ambassador to Egypt; Abdel Monem Said Aly, Director, Al Ahram Centre for Political & Strategic Studies; and Suzanne Mubarak, Egypt’s First Lady. Viewpoints are provided by Benita Ferrero-Waldner, EU Commissioner for External Relations, and Nigel Evans, British MP.


The economy has managed to sustain high growth for the past 10 years. The IMF expects GDP growth to remain at 7% for the year 2007/08, although the ministry of finance is even more optimistic, expecting the figure to be closer to 8% or 9%. The prime drivers of the economy are foreign direct investment (FDI), remittances, Suez Canal fees and tourism. Changes in economic policy have been made to minimise the state’s role. More than 100 traditionally state-owned firms have been earmarked for privatisation, a programme that brought in $3bn for the year 2006/07. A rationalisation of the tax code has worked to encourage more FDI, with 27 tariff categories cut down to six and a reduction of duties of around 75%. Programmes have been put in place to encourage entrepreneurs in various sectors, while stocks have made impressive advances. On the flip side, tax cuts are being offset by the reduction of energy subsidies, a move that has already affected consumers and is soon to hit businesses.

This chapter includes interviews with Rachid Mohamed Rachid, Minister of Trade and Industry; Mahmoud Mohieldin, Minister of Investment; Omar Mohanna, President, American Chamber of Commerce (AmCham) in Egypt; and Emmanuel Mbi, Regional Director for Egypt, Yemen and Djibouti, the World Bank.


The recent trend of privatisation is a having a major effect on the banking sector. The dominance of public banks is starting to subside with four of the country’s major banks being sold, a move which included the eradication of a large percentage of non-performing loans that had been hindering sector growth. A $500m loan from the World Bank will allow the recapitalisation required in order for two of the biggest public banks to comply with Basel II standards. The venture into the private sector is helping banks recruit higher-quality employees and target parts of the market traditionally left untouched, such as the local retail market, ultimately benefiting local consumers. Along with privatisation comes new legislation, bringing the sector in line with international standards and causing a series of mergers and acquisition, allowing some institutions to meet minimum paid-in capital requirements set at LE500m ($89m). Banks are however treading carefully in some areas. Mortgages, for example, are an area that could benefit the entire population, yet firms are waiting to see what happens in courts regarding what some see as inadequately tested laws.

This chapter includes interviews from Mohamed Kafafi, Chairman, iScore, Egyptian Credit Bureau, and Mahmoud Abdel Latif, Chairman, Bank of Alexandria.


The Cairo and Alexandria Stock Exchange may have experienced a rocky year in 2006, but has been key in the country’s economic recovery. With some 550 companies listed on the bourse, it is an attractive destination for investors who can find a plethora of industries among the top 30 companies listed. Recent increases in the amount of actively traded stocks have been encouraging, as has the overall capitalisation of the market, growing to $103.5bn in July 2007. The period from June 2006 to June to 2007 saw a growth of nearly all mutual funds between 20% and 40%, figures just beaten by the HFI large-cap benchmark, which was up 53% in the same period. The future is sure to offer a steady stream of IPOs from the private sector, as well as new licenses for brokers to provide margin trading and short-selling services, eventually leading to more derivatives products. The Capital Markets Authority is also calling for higher standards of corporate governance, which will surely lead to a more stable market.

This chapter includes an interview with Maged Shawky, Chairman, Cairo and Alexandria Stock Exchange, and Yasser El Mallawany, Chairman, EFG-Hermes. EFG-Hermes also provides share analysis and data for Orascom Construction Industries, Alexandria Mineral Oils Company, Commercial International Bank, El Sewedy Cables, Orascom Telecom and Telecom Egypt.


The insurance sector has been viewed as having great potential in the past few years. The country is underserved and thus operators are generally looking for long-term gains. There is around one life insurance policy per 100 people and the total premiums across all segments only just reaches $534m. Long-term lending is rare and medical care is state subsidised, which leaves little incentive for the vast majority of the population to take out insurance. However, there has been some growth and a mortgage boom looks to be right around the corner. The growing middle class is more and more interested in private health care and thus new companies are proving that there is some demand for life insurance. Bancassurance is an important segment, marketing products to both corporations and individuals. A new law is expected to cover growth in the insurance sector, which includes a minimum paid-up capital requirement of $17.8m for all new private companies entering the market.

This chapter includes an interview with Mahmoud Abdallah, Chairman, Insurance Holding Company.


A vast amount of work is needed to bring the country’s transport infrastructure up to pace. Mohammed Lofti Monsour, the minister of transport, has introduced some positive reforms and has brought in the private sector to tackle challenges left by decades of neglect. In August 2006 a $5bn funding package was granted to improve the state of the national railway, and the ministry of transport is looking to public-private partnerships in order to improve the road system. Air travel is also moving in a positive direction with the transformation of airport facilities in Sharm El Sheikh and Luxor among others. Three successive years of profits for the national airline, EgyptAir, indicate that management issues have been solved. One of the key contributors to the country’s economy, the Suez Canal, is seeing more traffic in line with the increase in global trade and work is being done to ensure capacity keeps up with rising demand.

This chapter includes an interview with Mohammed Lotfi Mansour, Minister of Transport.


Egypt’s ancient monuments, year-round sunshine, beautiful beaches and plenty of shopping opportunities are drawing visitors from around the world in ever growing numbers. The international average rise in tourism was around 4.5% for 2005/06, but Egypt managed an impressive 5.5% increase and tourist revenues went up by 11%. Leisure tourism is the largest segment, with business and conference tourism coming in second. Despite increased prices and security threats, the solid value of the dollar and euro against the Egyptian pound is ensuring that the country remains a cheap place to visit for the western world. Hotel capacity has been increasing by 5% per year. More development is on the horizon and the ministry of tourism is working to make licensing and land purchasing easier, focusing on the northern coast for both residential and foreign tourists. Taking note of the effects of tourism on the environment, the the tourism authority and the environmental affairs agency are working in partnership with the US Agency for International Development on a sustainable development project.

This chapter includes an interview with Zoheir Garranah, Minister of Tourism.


A reorganisation of the oil and gas sector in 2000 has led to a greater emphasis on efficiency and attracting international investment. There are concerns that as oil production goes down and energy demand rises, the country could eventually become an importer, but new discoveries and better recovery techniques have breathed new life into the industry. BP is the largest single investor in Egypt, having invested $40bn in the sector over the past 40 years. Away from hydrocarbons, renewable energy looks to have considerable potential and massive wind farms have been built. Nuclear ambitions are also in the cards, with authorities working to convince those at home and abroad that the proposed plants are intended for safe and peaceful use.


The period of 2006/07 was a good one for the construction sector. Net profits were up for nearly all firms in the industry and this trend looks set to continue. Accounting for some 7% of GDP, high-profile real estate projects and improvements in the country’s tourism sector drove the industry. The need for low-cost housing and infrastructure development should help to push the industry onwards. One challenge that still remains for constructors is the problem of red tape – it takes an average of 193 days to complete necessary paperwork. Healthy population growth, 22% over the last 120 years, has created the need for 59 new cities, all of which will need a considerable amount of real estate. The advent of mortgages will give a boost to the real estate sector and as businesses and investors start to look beyond Cairo it seems that the current real estate boom will spread outward from the country’s capital.

This chapter includes interviews with Hussain Sajwani, Chairman, Damac Holding; Nasser Hassan Al Ansari, CEO, Qatari Diar; and Osama Saleh Chairman, Mortgage Finance Authority. Maher Maksoud, CEO and Managing Director, Sodic, provides a viewpoint.


Along with other major infrastructural changes, telecommunications in Egypt have come a long way in the past 10 years. The private sector is just starting to emerge, allowing for more competition in terms of both prices and products available. Call charges for mobile phones have been dropping significantly for the last five years and the entrance of a third mobile operator, Etisalat Misr, is increasing competition even more. The current mobile penetration rate is thought to be in the range of 36% with around 1m new subscribers every month. The company with the largest customer base is Mobinil, which offers the lowest per minute tariffs in the world. The issuance of 3G licenses is also causing waves in the industry and the country is bracing itself for a more open market. IT is also becoming a more important force in the country. Out-sourced call centres are becoming major employers and a new emphasis is being placed on computer literacy both in schools and workplaces. There are currently 2.5m computers in the country, with a penetration rate of 15%. Broadband connectivity has been spreading quickly due to a reduction in rates, and e-content projects aim to expand the amount of information available to Egyptian citizens online. Research and development is also on the rise and the need for more data solutions will continue to increase as a result of more small- and medium-sized enterprises arriving in the economy.

This chapter includes an interview with Tarek Kamel, Minister of Communications and IT, and a round table discussion between Saleh Al Abdooli, CEO and Managing Director, Etisalat; Ian Gray, Chairman, Vodafone; and Alex Shalaby, President and CEO, Mobinil.


Modernisation has brought a great deal of investment from abroad and within the country, with the year 2006/07 seeing $7.48bn worth of funds flowing into the industry sector. Purchases of new cars went up 40% in 2006, indicating greater wealth and confidence amongst consumers. The last quarter of 2006 saw the creation of 300 new industrial sector companies and a number of buyouts look likely in the future. Following global trends, economic zones and industrial parks are offering generous advantages to companies, boosting trade and attracting even more investment. A sudden reduction in import taxes and a growing middle class has also created a healthy environment for the retail sector and the Global Retail Development Index recently ranked Egypt at 14th place in terms of potential, a rise of six places. Retail space has been lacking in the past but this has changed in recent times with shopping complexes and malls as well as the introduction of international brand names.

This chapter includes interviews with Kursad Tuzmen, Turkey’s Minister of State for Foreign Affairs, and Josef El Raghy, Managing Director and CEO, Centamin Egypt.


The Egyptian government has never been known for accommodating journalists comfortably and even with a more liberal environment the press is still wary about what is said. Some contend that as long as criticism is placed in correct terms, there is little chance of rebuttal. Despite the growing popularity of the internet, the press media is growing in popularity, raising the demand for quality writers and editors, although this is no easy job as talent is being drawn to other locations in the region, attracted by higher wages. The advertising industry is enjoying the country’s economic growth and a rising consumer base and players are eager to get their products and services noticed by the Egyptian public.

This chapter includes an interview with Naguib Sawiris, Owner, OTV.


Agricultural production has been boosted in recent times by increased investment and industry reforms. As a result the food gap has narrowed, despite the growing population, and the country is now self sufficient in some staple crops. Water supplies are now a top priority for the country and the Ministry of Water Resources and Irrigation has plans to improve water management and build a drainage system to recycle water in 500,000-ha area north of the Nile Delta. This project, combined with new irrigation techniques, should facilitate the growing of high-cash crops for the European market.

This chapter includes an interview with Helmy Abouleish, Managing Director, Sekem Group.


Egypt has shown progress in recent years in the key indicators of infant mortality, maternal mortality and literacy. Health care has become a top priority for the current government and programmes have been put in place across the country to help citizens keep clean bills of health. However, the quality and amount of care a person receives still varies depending on region with rural areas less well served. The spread of disease is also concentrated with certain areas having higher rates of hepatitis C and bird flu than others. With this in mind the government has set up a special committee to tackle hepatitis C outbreaks with better training for health workers. A lack of public awareness and the challenges faced by a complex organisation system are currently being addressed, as is the issue of funding. Reforms include a national insurance system with a monthly fee of less than $2, waived for the less well-off. New technology is bringing about changes in the sector and training is currently being given to help workers keep up. With an increasing standard of living for many, the private sector is also expanding with a Saudi-German hospital in Cairo and more private institutions to follow. Education is also receiving a helping hand from the private sector with partnerships to enable access to technology.

This chapter includes an interview with John Groarke, Acting Mission Director, US Agency for International Development.


Mansour & Co. PricewaterhouseCoopers guides the reader through the ins and outs of accountancy and tax laws in Egypt while local solicitors Helmy, Hamza & Partners give a full overview of business law.

This chapter includes viewpoints from Tarek Mansour, Country Senior Partner, Mansour & Co. PricewaterhouseCoopers, and Taher Helmy, Partner, Helmy, Hamza & Partners, Baker & McKenzie on legal reforms in Egypt.


The guide includes an in-depth look at Alexandria’s often overlooked treasures, including fabulous underground tombs and sunken ships. Two famous authors, Mark Twain and Gustave Flaubert, found inspiration in Egypt and their travels are recounted here. Also included are hotel listings throughout the country, useful numbers and vital facts for visitors.