Minister of Trade and Industry Rachid Mohamed Rachid announced a significant reduction in import duties on a wide range of manufactured goods and raw materials during the first week of February under Presidential Decree 39 of 2007.
The decree encompasses white goods and home appliances including refrigerators, televisions and air conditioners; medication and medical equipment; garments; food products; raw plastics; and livestock feed, among other items.
Overall, the average import tariff dropped by around 25% to 6.5%, with almost 90% of the customs tariffs charged on the 1,114 products mentioned in the decree now in the 10%-or-less import duty bracket.
The move is part of an effort to curb rising consumer prices, according to Minister of Finance and Insurance Youssef Boutros-Ghali, who noted that inflation was stable in January 2007 at an annualized 12.4%.
Custom tariffs for the food industry have been reduced on some finished products and eliminated altogether for certain inputs. Tariffs on fabrics dropped to 10% from 22%, on threads to 5% from 12% and on garments to 30% from 40%. Tariffs on agricultural products of animal origin and on medications dropped to 30% from 50%.
While the tariff reduction includes consumer goods, officials said that one of the objectives of reducing tariffs is to spur industrial growth by making intermediary products and raw materials cheaper, thereby improving local producers’ global competitiveness.
The move is estimated to cost the government LE 1.4 billion ($246.8 million), which Boutros-Ghali expects to recoup from taxes on new economic growth.
While the tariff reduction should help eliminate smuggling by making it a less attractive and less profitable venture and help provide consumers with higher quality goods, it will also expose local products to more competition. Rachid added that the government has earmarked LE 150 million to help the local clothing industry deal with competition from abroad.
The decision has met with mixed responses: Food producers welcomed the reduction of tariffs on their inputs, while fabric and thread manufacturers were disgruntled with a 55% cut in tariffs that they say expose them to higher competition compared to garment manufacturers, for whom tariffs were reduced by only 25%.
Meanwhile, as part of the Ministry of Finance’s efforts to further restructure its operations, the Customs Authority signed a memorandum of understanding with Information Technology and Services Company (ITSC) to provide electronic manifest exchange services for both inbound and outbound marine and air freight, using EDI and XML technologies.
The move will bring Egypt into compliance with UN and World Customs Organization standards, which demand that manifests be submitted and updated electronically, saving both time and money.
ITSC is part of the First Arabian Development & Investment Company (FADICO), whose diverse investments in Egypt cover sectors including banking and finance, hotels and tourism, manufacturing, energy development, information technology and aviation.
The group has successfully provided data services for the Sokhna and Damietta ports and also provides money transfer, bill collection and corporate collection services.
The Customs Authority aims to implement paperless customs shipping document management procedures within three months. Analysts expect the move to sharply cut customs clearance times for inbound and outbound shipments, but the authority declined to provide estimates on how much the average time should drop.
The Nation in Brief
MasterIndex: Consumer Confidence Strong, but Sliding
Consumer confidence in Egypt dipped in the second half of 2006 compared with the first half of the year, but the Egyptian consumer is still the fifth-most optimistic of all emerging markets surveyed, according to the MasterIndex of Consumer Confidence.
The index in Egypt dropped to 78.2 out of 100 compared to 83 recorded in 1H06. Egypt’s fourth-place ranking among Middle East and the Levant markets was unchanged from the first half of the year.
Focusing on five key economic barometers — employment, the economy, regular income, the stock market and quality of life — the consumer confidence survey is carried out in select South Asian, Middle Eastern and African (SAMEA) markets twice a year to gauge consumer perceptions of economic conditions for the six months ahead.
Egyptian consumers in Cairo and Alexandria, the only two cities in Egypt where the survey was taken, are a little less optimistic about the next six months than they were in the preceding survey, with pessimism on all economic fronts.
Despite the dip in 2H06, last year’s score was still higher than its 62.3 in 2H05 and higher than the historical average of 57.2 points. Survey scores for 2H06 showed the economy index dipping to 73 from 79.3 the year before; quality of life fell to 77.7 from 86.5; employment rose to 81.2 from 80.5; regular income decreased to 83 from 89.9; and stock market slipped to 75.9 from 78.6.
Comparing individual markets, Saudi Arabia topped the surveyed countries at 97.3, followed by Kuwait at 94.5, South Africa at 86.5 and the United Arab Emirates at 80. Lebanon trailed Egypt at 67.6. This is the sixth MasterIndex conducted for the SAMEA region, which has declined overall to 80.3 in 2H06 from 82.2 in 1H06. For the Middle East and the Levant, the index has improved to 83.9 in 2H06 up from 82.1 in 1H06.
The survey group is asked about their outlook for the following six months. As the region’s real GDP grew by an average 6.5–7% in 2006, consumers reflected their confidence in the economy’s performance in the upcoming year.
New Government Budget
Early in February, Prime Minister Ahmed Nazif discussed the broad lines of the new state budget for FY07/08. Cabinet Spokesman Magdy Rady said that LE 2 billion would be dedicated to developing the railways, which is the remainder of an initial budget of LE 5 billion that had been originally earmarked for the project.
Budget housing efforts would be bolstered with an additional LE 1 billion in funding, the industrial modernization budget would be doubled to LE 500 million from LE 250 million and the training budget would also be boosted to LE 500 million from LE 250 million.
Mohamed Ibrahim Recognized
Mohamed Ibrahim, the billionaire Sudanese telecommunications entrepreneur behind the African mobile giant CelTel International, was honored at a telecoms industry gathering on February 13.
The GSM Association, the global trade association representing more than 700 GSM mobile phone operators, recognized Ibrahim, who has deep roots in Egypt, with its prestigious Chairman’s Award at the annual 3GSM conference, held this year in Barcelona.
Presenting the award, GSM chairman Craig Ehrlich described Ibrahim as “a visionary wireless technician and mobile businessman, whose commitment to both the industry and the continent has helped the world to hear Africa’s voice.”
Ibrahim, whose charity work has previously been profiled by award-winning columnist Gwynne Dyer in these pages (see “An Honest Payoff,” December 2006, p. 98) rose to prominence as founder of CelTel, an African mobile phone operator that was present in 15 African countries when it was purchased by Kuwait-based MTC for $3.4 billion (LE 19.3 billion) in 2005.
He has since focused his efforts on philanthropy — most recently on the Mo Ibrahim Prize for Achievement in African Leadership, which will give over $5 million (LE 28.4 million) each year to an African head of state who transfers power peacefully and democratically.
Newport Media Expands to Cairo
Newport Media, a US-based producer of semiconductors for use in the digital audio and mobile television industries, announced last month the establishment of a media design center to be located in Cairo.
Mohy Abdelgany, CEO and founder of Newport and a graduate of Ain Shams University, was clearly happy to be bringing business back to his home country, saying, “This is an exciting time in the mobile TV industry, and the new Egypt design center enables us to quickly maximize our efforts to develop and support multiple, major programs in parallel.”
Newport’s specialty is the production of computer chips designed with the delivery of digital television to mobile phones in mind, with a focus on attributes such as reduced size, weight, cost and power consumption.
UN General Assembly Gets Egyptian Under-Secretary
Egyptian Ambassador Mohamed Shaaban got a promotion from new UN Secretary General Ban Ki-moon on February 9. The former assistant to Foreign Affairs Minister Ahmed Abul Gheit was named to the post of undersecretary general for General Assembly and Conference Management.
The new posting should allow Shaaban to use the ties he’s made over more than two decades of work with the UN and other diplomatic agencies. His most recent posting was as the Abul Gheit’s personal assistant with responsibility for Egypt’s Middle East Reform initiatives.
Shaaban previously served as assistant foreign minister for European affairs from 2001-2004 and assistant foreign minister for African affairs from 1997-98. The veteran diplomat was also Egypt’s lead negotiator during talks on Egypt’s accession to COMESA.
Shaaban’s promotion comes as part of an administrative sweep that saw many top officials replaced, including the appointment of the former American ambassador to Indonesia as new undersecretary general for political affairs — one of the UN’s top postings.
Ki-moon has been shuffling the cards he’s been dealt since taking over the UN’s top job at the beginning of the year. The Secretary General has accepted at least 17 resignations from senior UN officials, out of more than 50 reported submissions, according to a statement by Chef de Cabinet Vijay Nambiar.
Visa Cracks Down on Identity Theft, Fraud
On January 22, 2007, Egyptian Fraud Forum members and Visa International inked a charter that makes Egypt the only African state to allow fraud-related information sharing among EFF members.
The EFF — a platform for industry experts to exchange knowledge and information on commercial crimes and the means to fight it — is hosted by Visa International. Dina Yassa, deputy general manager of retail banking at the Arab African International Bank, was elected Forum chairperson, while other prominent members were drawn from Commercial International Bank (COMI, bt100 number 13), Banque Misr and the National Bank of Egypt.
Egypt’s payment-card fraud rate remains lower than both the global and regional averages, and Visa has said it plans to use the Egyptian model in other regions.
Savola Plans Egypt Sugar Refinery
Savola Group, Saudi Arabia’s leading food products company, has revealed plans to establish a sugar refinery in Egypt next August.
The 750,000-ton-per-year plant — a joint venture with Tate and Lyle, among other companies — will be established on the Gulf of Suez coast and will focus on sales to the Egyptian, Jordanian, Lebanese and Syrian markets.
Savola hopes to fill a gap created by the absence of European Union sugar from the regional market as Arab demand for sugar is estimated to be growing at about 2.5% per year, spurred by population and economic growth. Egypt’s market alone consumes 2.5 million tons of sugar per year, 1.5 million of which is produced locally.
The Egyptian plant will cost Savola an estimated $90 million, with almost half of its output for the local market and the remainder for export. It will be Savola’s second refinery, following its Jeddah plant, which has a 1 million-ton-per-year capacity.
Meanwhile, the group recently broke off negotiations to acquire an additional stake in the Egyptian Fertilizers Company, in which it already holds a 30% stake.
IMC and Siemens Sign Three Agreements
The Ministry of Trade and Industry’s in-dustrial Modernization Center (IMC) and Siemens signed three cooperation agreements at the Egyptian-German Business Forum held in Cairo last month.
The agreements are all aimed at upgrading factories and machinery as well as cooperation on training and technical programs.
The first agreement is to modernize automation and machines used in industrial development centers and schools backed by the IMC. Siemens will provide equipment for 50 training centers nationwide in a multi-stage program; each stage will last six months and include up to 12 centers. Siemens Group will cover 50% of the cost while Siemens Egypt will cover 30%.
The second agreement is to upgrade machine and equipment factories in Egypt, including 30 factories, to increase their exports. The IMC will test all local equipment and help manufacturers to analyze the gap and provide advice on how to improve. The modernization will touch on management skills, electrical solutions and technical know-how transfer. Siemens will provide 400 experts for free.
The third agreement is to improve the use of digital technology in 50 factories, through cooperation between Siemens Energy & Automation and the IMC by upgrading electric connections in the production lines using remote control in the furniture, engineering, textile, chemical and pharmaceutical sectors.
Prime Minister Ahmed Nazif and German Chancellor Angela Merkel inaugurated the February forum with Nazif quoting a 25% increase in bilateral trade in addition to an increase in the number of German tourists coming to Egypt. Germany continues to explore investment opportunities in the Egyptian housing, industry, tourism, railway and highway sectors.
Air Traffic Control Satellite in Works
Minister of Civil Aviation Ahmad Shafiq announced last month that the construction of an Egyptian satellite for air traffic control is underway, adding that it will be put into operation in 2010.
The initiative aims to serve the growing number of flights to Egyptian airports, where passenger volume is growing an average of 6% annually, which according to the minister is higher than the current global rates.
In other news, construction of Cairo International Airport’s Terminal 3 is almost complete, and the terminal should be operational in 2008. The ministry is already planning for a fourth terminal.
IFC to Fund Local Hospital Expansion
The International Finance Corporation, the private-sector arm of the World Bank, will step in to support the Middle East and North Africa’s healthcare industry by financing the expansion of the Saudi German Hospitals Group.
The IFC will provide $37 million to support a new hospital in Sanaa, Yemen, and the construction of a hospital in Cairo. The SGH Group has been a major participant in Saudi Arabia’s health sector since 1988, and the group owns and operates five hospitals.
The planned Cairo hospital will be a multi-specialty facility with a 300-bed capacity.
Gamesa to Provide Wind Turbines
Spain’s Gamesa Corporacion Tecnologica has been awarded two contracts worth a total of $367.7 million (LE 2.08 billion) to supply Egypt with 284 wind turbines with a total power capacity of 241 megawatts.
A company statement indicated that the turbines would be used in the construction of two wind farms in Zafarana on the Red Sea coast. Work on the wind-power installation will begin in the second half of 2008. These two new turnkey contracts make Gamesa the main supplier of wind turbines in Egypt with 405 megawatts.
TIHC Settles Debts
The extraordinary general meeting (EGM) the Trade Industries Holding Company (TIHC) held at the end of January approved the return of 80,000 acres of TIHC land in Toshka to the Ministry of Agriculture. The holding company will retain 40,000 acres.
The EGM was attended by Minister of Investment Mahmoud Mohieldin and Minister of Manpower Aisha Abdel Hadi. Mohieldin said that six TIHC subsidiaries had settled debts worth a total LE 1.16 billion with the National Bank of Egypt, Banque Misr and Banque du Caire. The companies include El-Nasr Import and Export, which settled LE 646 million in debts; Sidnawy, LE 100 million; and Banzion, LE 180 million. The debt settlement will save TIHC LE 151 million in annual interest expenses, which will reflect in its 2006/2007 budget.
For FY05/06, TIHC recorded profits worth LE 39 million and total revenues worth LE 2.035 billion compared to LE 1.885 billion recorded the year before, indicating an 8% increase. Exports more than tripled from LE 111 million to LE 409 million during the same period.
Private Sector to Manage West Delta Project
The World Bank has agreed to extend a $175 million (LE 992.5 million) loan to the Egyptian government to be paid off in 20 years to develop the West Delta Water Conservation and Irrigation Rehabilitation Project.
The project is part of the government’s effort to foster continued agricultural growth and investment by developing irrigation over a 500,000-acre area.
The private sector will pay off the loan in return for services including digging a new canal to extend Nile water into the area; well water, on which the project is currently dependent, is running out.
Minister of Public Works and Water Resources Mahmoud Abu Zeid said that it had been a Cabinet decision to let the private sector manage and operate the project.
Oshkosh to Supply Army Trucks
Oshkosh Truck Corporation, a US manufacturer of heavy-duty trucks for both civilian and military purposes, inked a deal last month with the Ministry of Defense and Military Production to supply 30 medium tactical trucks worth a total of $4.9 million (LE 27.8 million).
Oshkosh, the largest supplier of heavy-duty military trucks to the US Army, also exports trucks for civilian uses such as firefighting and transportation of construction equipment.
Oshkosh trucks and equipment have been used in the Egyptian Army since 1990. According to Oshkosh, the first four trucks of the deal will be shipped fully manufactured from the United States, with the remaining vehicles to be assembled at the Egyptian Tank Plant in Cairo.
Best Affirms, Withdraws Ratings on Mohandes
A.M. Best affirmed last month its financial strength rating of B++ and issued a credit rating of bbb for Mohandes Insurance (bt100 number 93) with a stable outlook. Barely a week later, the company issued a follow-up stating that it had “withdrawn the rating in response to the company’s request and has assigned it an NR-4 (Company Request).”
“The rating reflects the company’s strong risk-adjusted capitalization and good operating performance,” Best said. The agency also indicated that it “anticipates Mohandes to continue its good performance through targeting small entities, enabling the company to maintain its market position despite increased competition from domestic and foreign firms in Egypt.”
Mohandes faces pressure from new entrants to the Egyptian market for non-life underwriting, which should prompt it to focus on niche areas such as new takaful (Islamic insurance) products to counter the growing threat to its market position.
EFG-Hermes Announces Net Profit Growth
EFG-Hermes (bt100 number 26), the investment-banking firm with market capitalization of over LE 15.96 billion, announced strong financial results for 2006 in a February 22 statement.
Revenues grew by over 48%, with net profit climbing 42.4% to LE 498.6 million. EFG has rapidly become one of the largest investment banks in the Arab world, and analysts expect another strong year from the firm in 2007 as it expands its operations to the lucrative market of Saudi Arabia.
Meanwhile, EFG also announced that it would appoint a non-executive chairman to the board of the company, bringing the firm in line with international best practices. The Capital Market Authority is expected to mandate non-executive chairmen for all publicly traded companies in the coming year.
AGF Allianz Discusses Investment Opportunities in Egypt
Hugues de Roquette-Buisson, AGF Allianz Group’s general manager for the Middle East and a member of the French Business Investors Association (MEDEF), met with Prime Minister Ahmed Nazif and the ministers of finance, investment, and trade and industry, as well as members of the Egyptian Businessmen’s Association and the General Authority for Free Zones and Investment, to discuss ways to boost French investment in Egypt.
MEDEF arranged the bilateral meetings as part of the Egyptian-French presidential business council established by President Hosni Mubarak and French President Jacques Chirac.
During his visit, de Roquette-Buisson announced that after offering takaful products in Saudi Arabia, Allianz is in the process of opening a new takaful insurance company in the Gulf, emphasizing the company’s aim to secure a strong presence in this region as a full-service provider offering asset management, reinsurance, banking and management of special risks.
Allianz Egypt is a leading provider of life insurance, long-term care insurance products and health excess of loss insurance products. The company comprises two subsidiaries: Allianz Insurance Company and Allianz Life Assurance of Egypt.
Egypt Signs Trade Agreement with EFTA
The European Free Trade Association’s (EFTA) four members signed a free-trade agreement with Egypt on the sidelines of January’s World Economic Forum in Davos.
The accord will liberalize trade in industrial products and processed agricultural products and contains provisions for protecting intellectual property rights, competition and technical cooperation. Provisions for services, investments and public procurement will be negotiated at a later date.
The agreement on agricultural trade was left to be decided on a bilateral basis.
Minister of Trade and Industry Rachid Mohamed Rachid said he hoped the deal would open up business opportunities and cement relations between the EFTA and Egypt.
Tajikistan Revives Egypt Relations
Tajik President Emomali Rakhmonov visited Egypt and Syria in February with hopes of restoring ties that lapsed during Tajikistan’s five-year civil war from 1992 to 1997.
During his weeklong visit, the Tajik president held top-level talks in Cairo and Damascus and met with Egyptian and Syrian business leaders.
The Tajiks hope to lure both Egyptian and Syrian investment. Today, economic relations between the two sides are virtually non-existent: Tajikistan’s total bilateral trade with Egypt rang in at exactly $3,100 last year, while it exchanged goods worth $126,400 with Syria.
Rakhmonov was also expected to address security and policing questions during his visit.
Publicly Traded Petroleum Company?
Minister of Petroleum Sameh Fahmy has delegated a team to look into a proposal made by MP Mohamed Abul Einein to establish new exploration companies to be traded on the stock market.
The plan is for the small investor to benefit from the strides made in the petroleum sector. The move would also make Egypt the top beneficiary of its petroleum wealth, Abul Einein said.
The ministry has said it would consider creating an exploration firm with 70–80% of its equity on the Cairo and Alexandria Stock Exchange and the rest in the government’s hands.
Turkey Warns on Drilling Rights
Turkey has warned Lebanon and Egypt not carry out their oil and gas exploration deals signed with Cyprus. A statement from the Turkish foreign ministry said that Turkey was “determined to protect its rights and interests in the eastern Mediterranean and will not allow attempts to erode them.”
Lebanon and Cyprus had signed an agreement on January 17 for the demarcation of a border across the 200 kilometer-wide oil- and natural gas-rich seabed between the two countries to facilitate future oil and gas exploration.
A similar agreement was signed between Egypt and Cyprus, allowing for joint exploration of potential undersea oil and gas fields.
Turkey’s determination to terminate the agreements comes in light of the Turkish-Greek divide that exists in Cyprus. The Greek-Cypriot government based in the south of the island, which is the internationally recognized government, said it would launch an international tender in February for offshore oil and gas exploration.
Dana Gas Sixth Largest in Egypt
Dana Gas, the Sharjah-based natural gas company owned by a consortium of 300 founding investors from the Gulf Cooperation Council countries, has announced significant developments regarding its Egyptian operations.
Dana Gas entered the Egyptian market by acquiring Canada’s Centurion Energy in a $950 million (LE 5.39 billion) deal in January.
Dana Gas is now the sixth-largest natural gas producer in Egypt and well positioned to ride an expected boom in the local natural gas sector over the coming years. Since 2002, Egypt’s proven natural gas reserves have doubled to over 70 trillion cubic feet, with expected natural gas exports to reach $10 billion (LE 57 billion) by 2010.
Dana’s acquisition of Centurion also gave it ownership of lucrative fields in gas-rich regions such as Tunisia and offshore West Africa.
Shell Egypt Announces Discoveries
Shell Egypt announced last month a series of new oil and gas discoveries in the Western Desert, which will increase the company’s daily production capacity by an additional 42 million cubic feet per day of natural gas and 4,000 barrels per day of oil.
At current market prices, the new discoveries would increase yearly production revenues by $211 million (LE 1.2 billion). In 2006, Royal Dutch Shell, Shell Egypt’s Anglo-Dutch parent company, became the second-largest corporation in the world by earnings, with total revenues surging to $318.8 billion and yearly profit up by 25% to $26 billion.
BP Egypt Announces Offshore Gas Discovery in West Nile Delta
BP Egypt announced the successful drilling of the Giza North-1 well in the North Alexandria concession jointly held by BP, RWE Dea and EGPC/EGAS. The well struck a significant gas accumulation and is estimated to hold reserves equivalent to nine months of local gas consumption.
The Giza complex is estimated to contain more than one trillion cubic feet of gas. The drilling of another well is planned for April 2007 to further appraise the complex. The rig will shortly move onto the next appraisal well in the Taurus field as part of a four-well appraisal program in the North Alexandria concession.
Currently, 65 multinational companies are conducting exploration activities across the country, with a rate of success that is three times more than the global rate, especially in the Mediterranean concessions.
The country’s proven gas reserves have doubled over the last seven years from 36 trillion cubic feet in 1998-99 to 67 tcf in 2004-05. Potential reserves are estimated at 100-120 tcf with 70 tcf estimated to lie in deep waters, making Egypt second in the world in terms of potential deep-water reserves
Vodafone to Launch Voice Messaging
Vodafone Egypt has signed a deal with US-based Bubble Motion, developers of voice applications for mobile phone users and networks.
Bubble Motion’s most successful product to date is BubbleTALK, a voice SMS system that allows mobile phone users to send voice messages to contacts in much the same way that text messages are sent today.
BubbleTALK is seen by telecommunications industry analysts as one of a number of ways in which mobile network operators will look to increase revenue in coming years. As market penetration increases and the cost of gaining new customers becomes higher, revenue growth will become increasingly reliant on growing average revenue per user (ARPU) rather than simply growing the number of subscribers.
Mobinil’s launch of EDGE high-speed data services (over which it has entered into a dispute with government regulators), and Vodafone Egypt and Etisalat’s expected entry into the market with third generation (3G) data services are also signs of a major focus on ARPU growth in coming years.
AMD and Centra Sign Deal
Advanced Micro Devices, the world’s second-largest chipmaker, announced a partnership with Egypt’s Centra Technologies, a PC-assembling company that supplies both the local and international markets.
The agreement will give Centra access to AMD’s full range of computer processors. Market analysts attribute the move as a response to Intel’s activity in Egypt.
Intel, which controls a 78% share of the PC chip market globally, launched a series of initiatives in Egypt last year, including the establishment of a high-tech “digital village” in the rural town of Oseem, supporting the development of an electronic Qur’an and launching a low-cost PC for the local market.
Tejari Launches in Egypt
Tejari, a Middle East business-to-business marketplace, launched its Egyptian operation, Tejari Egypt, at Cairo’s Information and Community Technologies (ICT) exhibition held February 4-7, 2007.
The gateway into the North Africa market has been established in partnership with Al-Ahly Development and Investment (bt100 number 94) and will introduce e-procurement and e-commerce services to both government departments and private enterprises, providing an expected 15–20% procurement savings.
At a press conference held at ICT, Tejari CEO Omar Hijazi said, “Over the next five years, we plan to cater [to] more than 20,000 Egyptian organizations who will adopt e-procurement through Tejari Egypt, resulting in more than $1 billion worth of trade being transacted through our marketplace. We see enormous potential for e-commerce and e-procurement in Egypt, and with ADI, Tejari has the ideal partner to offer the measurable procurement efficiencies and other benefits that our online marketplace can bring to organizations in Egypt.”
Tejari has a presence in eleven countries, including UAE, Jordan, Oman, Lebanon and Pakistan.
MCIT Assigns Commercial WiMAX Licenses
The Ministry of Communication and Information Technology is working on a project to transform Luxor and Sharm El-Sheikh into wireless cities through the use of WiMAX high-speed wireless internet services.
MCIT is using the two tourist hubs as pilot projects pending a nationwide rollout of WiMAX licenses, says Khaled Ismail, senior technology development advisor to Minister of CIT Tarek Kamel.
The project follows one of the three top recommendations from a digital transformation study completed by global management consulting firm A.T. Kearney. The study also recommended that Egypt open itself to the Indian economy and that the government help the CIT industry focus on areas of inherent strength.
Ismail says focusing on Luxor and Sharm will have the additional benefit of improving Egypt’s image in the eyes of tourists. He expects the WiMAX project to create approximately 1,000 jobs in the sector.
TE Data and EgyNet will build and operate the first two WiMAX networks.
Opening up to the Indian economy is expected to create 35,000 employment opportunities as Egypt cooperates, and not competes, with the Indian CIT sector. “We have a competitive advantage in the technical support sector and we should make use of it,” Ismail says.
Sawiris Moves on to Greece
Orascom Telecom Chairman Naguib Sawiris announced Weather Investment’s acquisition of Greece’s third-largest mobile operator, TIM Hellas, for $4.4 billion in early February.
Weather Investments — 97% owned by the Sawiris family — is poised to become a leading operator in Europe after its 2005 acquisition of Italian mobile operator Wind Telecomunicazioni for $6.22 billion from power company Enel.
The sale was funded by Deutsche Bank, Citibank and Banca IMI, which to date have provided a total equity worth $647.75 million. Speaking to the press, Sawiris denied any extra funding was made to refinance Weather Investment’s debts.
TIM Hellas is Greece’s third-largest mobile telephone operator by market share after the Hellenic Telecommunications Organization and Vodafone Group’s local operation. (See story on page 40.)
Acer and Mantrac Support ‘PC in Every Home’ initiative
Acer Computer Middle East and Mansour Group’s Mantrac have announced that they will supply a large share of PCs earmarked for millions of homes across Egypt as part of the government’s home-computing initiative.
Acer had received the highest rating from the Egyptian government of all platforms tested in both the notebook and desktop categories
The plan will see desktop requirements met by 10 government-approved partners (seven Egyptian and three international vendors) while five will serve the laptop segment (three international and two Egyptian).
Mantrac is the authorized Caterpillar and Michelin dealer in Egypt; the company established an IT distribution division in 1998, which is today a multi-brand, multi-product distributor for names including Acer, Dell, HP, 3COM and Fujitsu-Siemens.
DAMAC Properties Opens Office in Egypt
DAMAC Properties, Dubai’s leading private-sector luxury property developer, cemented its presence in the Egyptian market with the opening of its first office in the country last month.
The developer’s first project in Egypt, Gamsha Bay, was announced last December. The area’s largest township, Gamsha Bay is located 60 kilometers north of Hurghada and will offer an array of housing options as well as entertainment and recreational amenities including a theme park.
The 320 million-square-foot project, to be completed in five phases over the next decade, will be divided into nine zones: Gamsha Marina, Marina Park, Coral Golf Course, Sea View Crescent, Creek Retreat, Gamsha Bay, Peninsula Luxury Villas, Downtown Gamsha and Extreme Sports World Theme Park.
Total investments are expected to reach $16 billion.
In a statement, DAMAC Chairman and founder Hussain Sajwani said, “We are delighted to open our first office in Egypt, as it is a key regional market with significant growth potential. This is only the first step along the way to establishing a strong presence for DAMAC Properties in Egypt.
“Egypt is blessed with a number of factors such as the natural beauty of its coastlines and easy access to international markets that will help position it as one of the top countries to attract overseas home owners,” he added.
DAMAC Properties is a division of Dubai-based DAMAC Holding, a global conglomerate with operations in 18 countries. DAMAC Properties’ portfolio currently includes 52 towers worth $4 billion. The group recently won three awards at the CNBC Arabian Property Awards 2006: best development award for Oceanscape, best architecture award for Ocean Heights 2, and best website award for the company’s website.
Talaat Mostafa Taps Saudi Market
Talaat Mostafa Group is dipping its toes into the Saudi market: TMG has established Aknan Urban Development with capital worth $319 million. Partners in the new venture include businessman Essam Moheeb; Saudi development company Al-Oula, headed by Abdallah Fawzan; and Saudi Arabia’s Al Ibrahimiya for Real Estate Development headed by Qays Goleedan. Aknan’s investments worth $2.6 billion are underway in Jeddah and Riyad to build integrated communities.
New Unified Building Law Due in Months
During a conference on real estate finance and investment organized by the Egyptian Junior Business Association held at the end of January, Minister of Housing Ahmed El-Maghrabi revealed plans for a unified building law, which he expects will help solve “85% of Egypt’s real estate problems.”
On a separate note, El-Maghrabi blamed the rent law for the deterioration of investments in real estate over the past decades. He re-emphasized the need for an in-depth analysis of laws to determine the scope of their effect on economic activity and the society before passing them.
He added that his ministry has launched a tender for international planning companies to present plans for the development of Egypt’s suburbs, indicating that LE 19 billion has been spent on extending utility services to these areas over the last three years. He also pointed out that the Housing Ministry is fighting the trend of “land cooling,” where landowners hold onto land without developing it, only to sell it when its price appreciates.
With regards to the new building law, Maghrabi said that maximum heights will be clearly indicated, along with requirements for a minimum 10% green space in the form of public gardens.
Minister of Investment Mahmoud Mohieldin pointed out that loans given to finance real estate have exceeded LE 1 billion. He also noted that improvements in the land registration process have reduced fees to a maximum of LE 2,500.
The Ministry of Investment is in the process of establishing three mortgage companies that will begin operations in 2008; each company will have its own financing unit so clients will not be forced to deal with only banks when trying to finance their new homes.
Tourist Arrivals on the Rise
CAPMAS statistics for November 2006 show that the number of tourists coming to Egypt increased 8.8% compared to the same month the year before, reaching 802,952. The number of tourist nights also increased 9.4% for the same comparative periods.
European tourists were the largest group, making up 74.4% of the total, followed by tourists from Middle East countries at 13.4%, North America 3.3% and Africa 3%.
The total number of Arab tourists dropped 2.8% between November 2005 and November 2006, nevertheless the number of tourist nights spent by Arab tourists increased 16%, with Lebanese in the lead, followed by Saudi and Sudanese tourists, respectively.
Statistics showed that tourists from Qatar increased 26.4% in 2006 compared to 2005, the highest jump in the region. Of the GCC countries, Saudi Arabia continues to be the strongest source of outbound tourists with more than 388,000 visitors to Egypt, a 7.5% increase over 2005. UAE visitors increased 21.8%, Libya 17.8%, Jordan 16.9%, Kuwait 16.7%, Tunisia 14.7% and Bahrain 13.4%.
InterContinental Hotels Group announced the termination of its management contract with InterContinental Garden Reef Resort Sharm El-Sheikh as of January 29, 2007, according to a company statement.
IHG continues to operate eight hotels and resorts across three brands in Egypt, including the recent addition of InterContinental Taba Heights Resort, which opened mid-2006.
UK-based IHG is the world’s largest hotel group by number of rooms: It owns, manages, leases or franchises through various subsidiaries more than 3,650 hotels and 540,000 guest rooms in nearly 100 countries and territories around the world. The group aims to increase its portfolio by 50,000–60,000 rooms by 2008 and as such is exploring new opportunities in the Egyptian market.
IHG owns a portfolio of well-recognized and respected hotel brands including InterContinental, Crowne Plaza, Holiday Inn, Staybridge Suites, Candlewood Suites and Hotel Indigo. It also manages the world’s largest hotel loyalty program, Priority Club Rewards, with over 28 million members worldwide.
Sukari Gold Mine Approved
Australian gold mining company Centa- min Egypt, which has been eyeing vast gold reserves in the Eastern Desert since 1995, has announced that it will proceed with the $216 million (LE 1.23 billion) Sukari gold mine project there.
Centamin, whose operations have previously been profiled by bt (“Fools Rush In?” September 2006, page 89), plan to have the mine fully operational by 2008.
The Sukari mine has confirmed reserves of 8.26 million ounces of gold, worth approximately $5.42 billion (LE 30.74 billion). It is planned that the gold will be extracted at a rate of approximately 200,000 ounces per year for 15 years. As Sukari is only one of many such untapped
ancient gold mines, the first Egyptian gold rush since the time of Pharaohs could well be upon us. bt
The Nation in Brief was written by Fatima El-Saadani, Tom Gara, Shane McNeil and Nadine El Sayed
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I wonder if this will actually lower prices or not?
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