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The keystone of the Middle East and a ma-jor player in regional and

world politics, Egypt is emerg-ing from one of the most tu-multuous periods of its recent history, with President Abdel Fattah El-Sisi looking to contin-ue down the road to recovery since celebrating his first year in office in May.

Much like his predecessors, Hosni Mubarak, who reigned for 30 years before being de-posed in the wake of the Egyp-tian Arab Spring in 2011, and Mohamed Morsi, the leader of the now banned Muslim Brotherhood, President from June 2012 to July 2013, Presi-dent El-Sisi’s core challenge can be summarized in two figures. Two thirds of 90 million Egyp-tians are under 35 years old, and a quarter of the population lives under the poverty line, accord-ing to the International Mon-etary Fund (IMF).

It’s the frustration and aspi-rations of a vast and predomi-nantly young population that fuelled the revolution of 2011, threw it into the arms of a cun-ningly populist “brotherhood”, and now spurs President El-Sisi’s government’s drive for economic reforms that are just as essential to domestic peace as they are to regional stability.

Speaking at the World Eco-nomic Forum in Davos, Swit-zerland, earlier this year the Egyptian President said, “there is no doubt that sustainable development is an issue of paramount importance” and that “Egypt is fully aware that it needs to open up to the world to realize its ambitions.”

With strong financial back-ing from the Gulf countries, which have pledged or given a combined total of $35 billion in the past year with the aim of strengthening an ally they consider crucial to counter the Islamist threat, the government of President El-Sisi has already accomplished a lot to recover from the economic wreckage of the past four years.

While it has been experi-encing recent difficulties, the Cairo Stock Exchange beat all of its competitors around the world in 2014, with an index that grew by nearly 30% in dol-lar terms, and offering the best returns for investors.

But the key word in Cairo is not so much economic growth but rather inclusive develop-ment. Indeed, President El-Sisi

is acutely aware that the eco-nomic well-being of millions of impoverished families is the safest way to ensure political stability and prevent radical-ism. One of his key reforms was to gradually suppress sub-sidies on food and energy that weighed heavily on the State’s budget – Egypt spent $3 billion a year on wheat imports, mak-ing it the largest importer in the world – and were a source of corruption.

An innovative initiative in this sense was the introduction earlier this year of a smart card system for subsidized flour and bread. Reuters news agen-cy reports “under the new sys-tem, families are issued plastic cards allowing them to buy five loaves of bread per fam-ily member per day. Buyers no longer have to queue. Baker-ies are paid for the subsidized loaves they sell, rather than be-ing given a fixed allotment of cheap flour, making it harder to siphon off subsidies.”

This measure “has freed up billions of dollars in the govern-ment’s budget so that we can

now invest more in education and health care programs for those who really need it,” says the Prime Minister, Ibrahim Mahlab. “Working on creating a social safety network is per-haps the most important thing we are doing right now.”

The government’s 2015/2016 draft budget envi-sions a 12% increase in spend-ing on social programs at 431 billion Egyptian pounds ($55 billion), or nearly half of total public expenditure, and a defi-cit of 9.9%, lower than the cur-rent 11%. The budget is based on encouraging indicators: growth rose to an annualized 5.3% in the first half of this fis-cal year, compared with 1.2% in the same period the year before. Unemployment, a particularly pressing issue, is still achingly high at 12.8%, with 55% of all those unemployed aged 15 to 24, according to national statis-tics (2013), but it is falling from its January 2014 peak of 13.4%.

The IMF has lauded the reforms implemented so far: “Egypt has chosen a path of ad-justment and reform which, if followed resolutely, will lead to economic stability and growth,” it stated in February. “For a num-ber of years, Egypt has suffered from large fiscal deficits, rising public debt, fragility in the bal-ance of payments and, hence, losses of foreign exchange re-serves. But the authorities have embarked on an economic re-form program to raise growth, create jobs, and contain fiscal and external deficits and the loss of foreign exchange reserves,” added Christopher Jarvis, IMF Mission Chief for Egypt.

On the expenditure side of the budget, the government started to reform the system of energy subsidies. It also started to get a grip on the public sector wage bill. On the revenue side it introduced measures such as higher tax rates for high earners. “Those measures have already made a big difference in curbing the unsustainably high fiscal defi-cit,” said Mr. Jarvis.

The fiscal program also in-cludes enacting a long-await-ed value-added tax which, if implemented successfully, “can greatly boost govern-ment revenues and, hence, improve the country’s fiscal position at large.” Last but not least, “the authorities are pursuing structural reforms and developing measures to protect the poor, increasing cash transfers and spending on health, education, and in-frastructure,” the IMF sum-marized in its report.

In parallel to reforming a notoriously bureaucratic and cumbersome economic sys-tem, the El-Sisi government is wooing foreign investors, well aware that it needs foreign money to compensate its defi-cit and its debt, which stands at 95% of the GDP. The new in-vestment law presented a few months ago goes a long way towards achieving this.

“When we began reform in June 2014, we had a very clear vision based on three pillars: structural adjustment and fiscal consolidation; an investment stimulus plan with the launch of mega-projects and incen-tives to the private sector; and

improving the investment cli-mate,” emphasizes the Minister of Investment, Ashraf Salman.

The objective of the new in-vestment law is to streamline regulations and facilitate in-vestment and job creation. Up until now, an entrepreneur had to obtain 85 different permits in order to set up a company, a process that could last up to five years. Now, they will be able to manage all the paper-work through a one-stop agen-cy. “This is a major change and it will take some time to imple-ment it,” adds Mr. Salman.

Although it will certainly take time, investors have al-ready voted with their purse and their feet. No less than 2,800 international political and business leaders flocked to the Egypt Economic Devel-opment Conference (EEDC) held in March in Sharm El Sheikh. The event had been carefully designed by the Egyptian authorities to send

a message to the world: we are open for business. “Egypt is going towards the future. Egypt is welcoming inves-tors who are seeking to use the chances given to them by Egypt and giving a better life for Egypt,” said President El-Sisi in his opening address.

The conference was a re-sounding success from both a political and a business per-spective. Aside from the U.S. Secretary of State, John Kerry, and Managing Director of the IMF, Christine Lagarde, the conference gathered the Italian Prime Minister, Mat-teo Renzi, the Crown Prince of Saudi Arabia, Muqrin bin Abdulaziz – whose country offered $4 billion in funds to Egypt – and the United Kingdom’s Foreign Secretary, Phillip Hammond, who came leading a strong British del-egation of businesses, includ-ing British Petroleum (BP), which signed a $12 billion investment deal in the West Nile Delta, the single largest investment deal in Egypt’s his-tory. In total, the conference garnered more than $130 bil-lion in direct investment and signed commitments.

Concerning mega-projects, and apart from the opening today of the New Suez Canal, which was financed by a public bond transaction that “raised $8.5 billion in eight working days”, as the Minister of In-vestment proudly notes, the government unveiled at the conference plans for a sprawl-ing new capital city to be built 28 miles (45 km) east of Cairo. The government hopes this new $45 billion development will create 1.5 million jobs.

However, in his closing ad-dress, President El-Sisi called for more foreign investment and said that his country needs “no less than $200 to $300 billion to have real hope for the 90 million Egyptians to really live, really work, and really be happy.” If Egypt de-livers on the promises made at the conference for re-forms and stability, President El-Sisi’s objective seems defi-nitely attainable given that be-fore 2011, Egypt was emerging as one of the world’s top desti-nations for foreign capital.

EGYPTThursday, August 6 , 2015

#EgyptTheWorldfolio #TheWorldfolio

Our World Insert is produced by United World. USA Today did not participate in its preparation and is not responsible for its content

“The authorities have embarked on an economic reform program to raise growth, create jobs, and contain fiscal and external deficits and the loss of foreign exchange reserves”

ChrisTophEr JArvis , iMF Mission Chief for Egypt

“There is no doubt that sustainable development is an issue of paramount importance…Egypt is fully aware that it needs to open up to the world to realize its ambitions”

AbdEl FATTAh El-sisi , president of the Arab republic of Egypt

With the overwhelming success of the Egypt Economic Development Conference, the opening of the New Suez Canal and a reform-minded president one year at the helm, Egypt is living a true watershed moment – a moment defined by the creation of new opportunities

This supplement to UsA TodAY was produced by United World ltd., suite 179, 34 buckingham palace road, london sW1W 0rh – Tel: +44 (0)20 7305 5678 – [email protected] – www.unitedworld-usa.com

Nation engineers new channels of growth

official media partner in Egypt

A UNITED WORLD SUPPLEMENT PRODUCED BY: John Kirlin, Editorial Director Julia Maeda, Project Director James Kinnersly, Project Coordinator

president Abdel Fattah El-sisi gives a speech at the Egypt Economic development Conference in March


Stable partnership to build a stable region

For the most part of the second half of the 20th cen-tury, Egypt, the most populous

Arab nation, was a bedrock of stability and a diplomatic heavyweight in a volatile region. But that was be-fore 9/11, a time when the situation in the Middle East was – seen from hindsight – much more straightfor-ward than it is now, with most of the Arab world un-der the control of strong, albeit autocratic rulers.

Now, a look at a map of North Africa and the Mid-dle East shows better than any foreign policy paper how deeply the situation has changed. Egypt is sur-rounded by three war-torn, ungoverned countries: Lib-ya, its neighbor to the west, and further afar to the east, Syria and Iraq, with Israel in between. And of course, a new enemy has emerged, overshadowing Al Qaeda in brutality and terror: the so-called Islamic State, whose stronghold is in Iraq.

Egypt itself has under-gone radical transforma-tion and turmoil in the past four years. Since the Egyp-tian Arab Spring toppled President Hosni Mubarak in 2011, after 30 years of iron-fist reign, the Islamist Muslim Brotherhood came to power in 2012 through democratic elections, only to be removed by the army after huge demonstrations of dissent in 2013. The cur-rent President, Abdel Fat-tah El-Sisi, formerly head of the Egyptian armed forces, was elected in May 2014. Parliamentary elections are scheduled to take place be-fore the end of this year.

The world in which Presi-dent Jimmy Carter brokered the historic Camp David peace accords between Egyptian President Anwar El-Sadat and Israeli Presi-dent Menahem Begin, in 1978, is long gone. But this era has left a lasting legacy: the peace between Israel and Egypt still holds and the two countries now have quite good working relations.

The Egyptian Arab Spring and the events that followed have left the United States without a clear policy towards their important Arab ally. Ac-

cording to a background paper produced in March 2015 by the Congressional Research Service, which provides policy and legal analysis to the House and Senate, “Egypt’s role in the so-called Arab Spring of 2011 briefly elevated the country toward the top of the U.S. foreign policy agenda, as officials tried to delicately navigate a tran-sitional period that wit-nessed an existential power struggle between Islamists and the military. After a two-and-a-half year period of U.S. efforts to promote a democratic transition in Egypt, the return of author-itarian rule that began with the military’s July 2013 takeover has left U.S. poli-cymakers in a quandary.”

In short, the Obama ad-ministration’s view is that full democracy is the sur-est way to prevent and fight Islamist radicalism and terrorism, while the El-Sisi administration stresses the urgency of the situation and views political Islam as an existential threat. But over the past few months, a third way has been emerg-ing: the idea that the best response to both radicalism and the Egyptian people’s aspirations is to strengthen Egypt’s economy not for the profit of the well-to-do, but for the whole popula-tion in an inclusive manner.

The fact that the U.S. Sec-retary of State, John Kerry, attended the Egypt Eco-nomic Development Con-ference in March, was in itself a powerful message. In his address, Mr. Kerry said, “the United States is committed to strengthen-ing the partnership with Egypt. How Egypt develops in the coming years, how it succeeds, and how it re-charges its economy will not only affect near 90 mil-lion Egyptians, but it will also have a profound im-pact on the entire region. It is strategically important to make certain that Egypt can move along the road to development and to the full achievement of its demo-cratic aspirations. I reiter-ate the support of [...] the United States for Egypt as it undertakes significant reforms and works toward the economic transforma-tion that all the people of Egypt are hoping for.”

Mr. Kerry also expressed unequivocal support for Egypt’s efforts against ter-rorism, stressing, “the im-portant role that Egypt is playing in the coalition against ISIL and the chal-lenges of violent religious extremism that is mani-fested in many ways in the region,” and that “we have

all been deeply shocked and saddened by the recent terrorist attacks, including those in Egypt and the gro-tesque murder of 21 Egyp-tian Copts in Libya.” Mr. Kerry was referring to the murder by ISIL of a group of Egyptian Christians in Libya, in February.

As the situation in Iraq, Syria and Libya worsens and the scale and scope of jihadist attacks increase – as shown in late June with the simultaneous at-tacks in the Sinai Penin-sula (17 Egyptian soldiers killed), Tunisia (38 tour-ists murdered on a beach in Sousse), and Kuwait (27 worshippers killed in a Shia mosque) – Washington has also taken the decisive step to resume military aid, which had been suspended by the Obama adminis-tration two years ago. On March 30, the White House announced that President Obama had directed the re-lease of 12 Lockheed Mar-

tin F-16 aircraft, 20 Boe-ing Harpoon missiles, and up to 125 M1A1 Abrams tanks. This was “in the in-terest of U.S. national se-curity,” said a spokesperson from the National Security Council. The decision was announced after a tele-phone call between Mr. Obama and President El-Sisi in which they also dis-cussed the turmoil that is gripping the region.

Later, in June, Washing-ton announced it had de-livered two navy vessels to Egypt, doubling its total fleet of Fast Missile Craft to four, according to the U.S. embassy in Cairo.

On the domestic front, the most pressing security issue for the Egyptian ad-ministration is the ongo-ing insurgency in the Sinai Peninsula, where terrorist groups seem to be gaining strength, as attested by the June attacks. The Sinai in-surgency comprises a series of actions by Islamist mili-tants in the Peninsula, initi-ated in early 2011 as a fallout of the Egyptian Revolution. The waves of military and security campaigns have had little success in end-ing the crisis though. Be-tween 2004 and 2015, the Sinai insurgency has grown from mainly an urban ter-rorism campaign of bomb-ing soft targets (such as the Taba Hilton in 2004) to a structured, low-to-mid level insurgency aiming primar-ily at hard targets (such as Battalion 101 Camp in Al-Arish, the headquarters of the military campaign). In February, when he received in Washington the Egyptian Foreign Minister, Sameh Shoukry, Mr. Kerry said that Egypt is an “increasingly critical partner” in counter-terrorism efforts and that it “is working with us in the Si-nai against terrorism.”

The same month, Presi-dent El-Sisi called on the United Nations to approve a new coalition for airstrikes in Libya, where the jihadists have set up their first major affiliate outside of Iraq and Syria. He argued that the Is-lamic State group in Libya is not just a threat to Egypt but to Europe as well. “I want to say humanity will judge us if we do not fight against ter-rorism and protect human-ity,” he told France’s Europe 1 radio. French President Fran-cois Hollande’s office said he and Mr. El-Sisi both “stressed the importance of the Securi-

ty Council meetings and that the international community take new measures to con-front this danger.”

The fight against ter-rorism in the Sinai Penin-sula and against ISIS-ISIL (Islamic State of Iraq and Syria and Islamic State of Iraq and the Levant: the two acronyms are used for the same organization) are not the only priorities in Egypt’s counterterrorism efforts. During his visit in Sharm El Sheikh, Mr. Kerry also recognized that Egypt is not only “working with us in the Sinai against terror-ism” but also “with respect to Gaza and [that it] helped enormously in the effort to try to bring the war of last summer to a ceasefire.” Fur-thermore, Egypt is “work-ing with us on the issue of the Palestinian-Israel peace process, as well as on Libya, Syria and Iran,” he added.

Another front on which Egypt is active is Yemen, where it is taking part in the Saudi-led interven-

tion against Shia rebels, launched in March. In June, Foreign Minister Sameh Shoukry reiterated his country’s support for achieving stability in the crisis-torn Arab country. “Security in the Gulf is an integral part of Egypt’s se-curity,” he told Al-Ahram newspaper, adding that Egypt and Saudi Arabia share a “common vision” and “identical stances” on the war in Yemen. More than 2,600 people have been killed, half of them civilians, and hundreds of thousands displaced in the turmoil, according to the United Nations.

Mr. Shoukry said Cairo is closely working with Ri-yadh to provide humanitar-ian aid to Yemenis and pro-tect Egyptians residing in

Saudi regions bordering Ye-men. He added that Egypt continues to work together with its Arab allies to bring into effect a military force aimed at combating jihad-ists, including the Islamic State group. “We are work-ing with our [Arab] broth-ers to bring this idea into force,” he said. Arab League military chiefs decided in March to set up a region-wide force, with members given four months to agree on its composition and mode of intervention.

As danger looms in in-creasingly vast swathes of the Middle East, Cairo is keen to reaffirm its role as a leading Arab nation. Perhaps most importantly to this, given the current global debate about the role of Islam in politics, is how Egypt – home to the world-renowned Al Azhar University, one of the old-est in the world and an au-thoritative center of knowl-edge and research on Islam – continues to assert its ideological role in the re-gion. As the Congressional Research Service’s paper points out, “although it may not play the same type of leading political or military role in the Arab world as it has in the past, Egypt still has significant ‘soft power’”.

“We have the manpower, technical ability and dedi-cation to recognize the harmful policies being ad-vocated by these terrorist organizations,” says Mr. Shoukry. “Their objectives are political and circum-vent the will of the people of the region. This frag-ment of society is not co-hesive with our history or culture. In fact, Egypt has been a cultural leader in the region for the past two hundred years contribut-ing to regional diversity, artistic milestones and re-ligious tolerance.”

Egypt’s Prime Minis-ter, Ibrahim Mahlab, em-phasizes for his part that “Egypt is a very strategic partner to the USA. When you have had a long-stand-ing strategic relationship as we have, you can withstand any challenges.”

Indeed, the events of re-cent months have shown that in spite of their recent hesitations, Washington and Cairo are back on the path of friendship and mu-tual cooperation. It’s good news for the Middle East, and indeed for all of us.

A diplomatic heavy-weight in a volatile region, Egypt is an important ally and strategic partner of the U.S. in the fight against terrorism across several fronts in the Middle East and North Africa

2 Thursday, August 6, 2015 distributed by UsA TodAYEGYPT

“The United States is committed to strengthening the partnership with Egypt.The important role that Egypt is playing in the coalition against ISIL and the challenges of violent religious extremism that is manifested in many ways in the region”

John KErrY, U.s. secretary of state

“We have the manpower, technical ability and dedication to recognize the harmful policies being advocated by these terrorist organizations... This fragment of society is not cohesive with our history or culture”

sAMEh shoUKrY, Minister of Foreign Affairs of Egypt

Egypt’s foreign minister Sameh Shoukry being welcomed by U.S. Secretary of State John Kerry during a visit to Washington

The media and the new consensusby Mohamed Abdel-Hady Allam, Editor-in-Chief of Egypt’s Al-Ahram newspaper

Egyptian society is passing through a critical phase of its current history. In the aftermath of the popu-lar uprising against the former president and the outlawed Muslim Broth-erhood, the Egyptian po-litical and economic elites have focused their efforts on building a new consen-sus around the principles of both the January 25 and June 30 revolutions.

At the heart of current developments, the Egyptian media plays a major role in cementing the advance-ment towards a real civic state that should be based on full citizenship and equality of all citizens as a

premise of a new paradigm before the whole world. The Egyptian media has en-joyed a margin of freedom that allows different voices to express their opinions. At the same time, profes-sional journalism came to the conclusion not to give a space to frantic or violent voices that caused a nation-al rift in the recent past.

Part of pushing the country along a path of prosperity is building a consensus around the new national economic plans that aim at enhanc-ing the living conditions and quality of life for all Egyptians. Media could be a central component of such an endeavor.

The Egypt Economic Development Conference (EEDC) offered Egypt a real chance to explain the challenges that businesses face. It was a great venue to get the international media to understand the

deep changes that the ma-jority revolting against the former rulers have made. The EEDC has also pre-pared the global stage for a new Egypt that will rise from the ashes of the Mid-dle East to build a new re-gional consensus towards freedom and develop-ment for everyone. Indeed, it is time to communicate with the right audiences with a sound message and the perfect tone.

“The EEDC has also prepared the global stage for a new Egypt that will rise from the ashes of the Middle East to build a new regional consensus towards freedom and development for everyone”

AbdEl-hAdY AllAM, Editor-in-Chief, Al-Ahram newspaper

Mohamed Abdel-hady Allam, Editor-in-Chief of Al-Ahram

The Egypt Eco-nomic Develop-ment Conference (EEDC) that took place in Sharm El-

Sheikh on March 13-15 was a watershed moment for Egypt in several ways.

Firstly, it was held in the “cap-ital city” of the Sinai Peninsula, a region where Egyptian authori-ties have been battling Islamist militiamen for several months. Being able to gather hundreds of heads of state, representa-tives of major international in-stitutions and top international CEOs for three days without the slightest security glitch was in itself a strong message from Egypt to the world: we can guarantee public order.

Secondly, the conference was undeniably a political success given the number of high-rank-ing officials in attendance: the U.S. Secretary of State, John Ker-ry; the Italian Prime Minister, Matteo Renzi; the Crown Prince of Saudi Arabia, Muqrin bin Abdulaziz; former British Prime Minister, Tony Blair; and the British Foreign Secretary, Philip Hammond, to name a few.

Thirdly, the event allowed Egypt to scoop an impressive $130 billion worth of direct investment agreements and signed commitments from some of the world’s leading companies. And even though President Abdel Fattah El-Sisi said in his closing remarks that his country needs more to “re-ally be happy”, this is an achieve-ment that serves as a clear

testament to the international investment community’s con-fidence in a rejuvenated Egypt.

Titled “Egypt the Future” and very sleekly crafted by in-ternational PR firm Richard Attias & Associates, the event was attended by 2800 Arab and foreign investors from 88 countries and 23 international organizations, who listened to speeches by some of the world’s leading politicians and businessmen and schmoozed informally on the new business opportunities in the nation of 90 million as it recovers from four years of turmoil.

President El-Sisi and mem-bers of his government, in par-ticular the Prime Minister, Ibra-him Mahlab, and the Minister of Investment, Ashraf Salman, presented a comprehensive development program aimed at boosting the economy and, more importantly, pulling mil-lions of Egyptians out of poverty. This will be achieved by opening up the country to foreign capital and offering a business-friendly environment backed by a tight grip on internal security.

In its opening message to conference-goers, included in the official brochure, the gov-ernment said it is: “committed to pursuing policies aimed at achieving inclusive and sustain-ably high rates of growth, creat-ing an attractive, predictable, fair and internationally com-petitive business environment, and addressing the needs of Egyptian citizens. [...] The aim is to reengineer the economy

through a coherent set of poli-cies, programs and projects to ensure that future growth is high, sustainable and inclusive.”

Commenting on the progress already made, the Managing Director of the International Monetary Fund, Christine Lagarde, said, “Over the past few months, there have been promising strides on the reform front. [The government] did a lot to prepare the country and beginning this process was a major achievement. Continu-ing it will be equally important, and completing it for good, the ultimate goal.” For his part, Mr. Kerry said “how Egypt develops in the coming years ... is strate-gically important to this region and to all of us who are looking for stability, for a better standard of living and greater inclusivity.”

On the business side, the EEDC proved that interna-tional investors are very keen to go back to the giant Middle Eastern nation. Some of the most notable investments made as a result of the con-ference include a BP energy deal worth $12 billion to fund the West Nile Delta gas proj-ect, the largest single foreign investment in Egypt’s his-tory; $10 billion from Siemens for the construction of two power stations; a concession agreement with Italian energy firm Eni worth $5 billion; and $6 billion from the Suidan Group, which will be used to establish logistical centers for seed storage in Damietta and along the Suez Canal.

In total the Ministry of Elec-tricity signed 15 agreements totaling some $35.7 billion, claiming the lion’s share of total agreements signed at the EEDC and reflecting the priority of the government to meet growing power demand. Besides Sie-mens, other companies that committed to building new power plants were Orascom, which will build a 3,000 MW coal-fired plant, Saudi Arabia’s ACWA Power, which commit-ted $3 billion for power plant developments, and $5 billion from Canada’s SkyPower Glob-al for the development of 3GW of solar power.

Deals in construction and real estate included: a pledge by mall developer Majid Al Fut-taim to invest $700 million in the development of eight malls in the next five years; $3 billion by Emirati Mohamed Alabbar to construct residential housing on the North Coast, a project that will create 14,000 jobs; and $30 billion for the New Cairo and 6 October City projects.

In the food and bever-ages sector, both PepsiCo and Coca Cola have pledged to invest $500 million each to expand their Egyptian op-erations in the coming years, while Beyti, the milk and juice company PepsiCo owns with Al-Marai, will invest $525 million to build a new factory.

One of the most notable deals was the Aviation Indus-try of China’s commitment to invest $700 million in a brand new electric train from Alex-andria to Abu Qir. Meanwhile the Gulf States, which had al-ready donated billions of dol-lars in aid, pledged to invest a further $12.5 billion in several new projects as well as depos-its in Egypt’s Central Bank.

The improved business en-vironment and political stabil-ity also prompted Moody’s to upgrade Egypt’s credit rating, raising the country’s issuer and unsecured bond ratings one level from Caa1 to B3, six levels below investment grade. “This expected level is based on an assumption that domestic po-litical stability will continue, as will improvements in the business environment, which in Moody’s view will be con-ducive to higher investment levels,” it said in a statement.

Following the success of the EEDC this year, the Egyptian government plans to make the conference an annual event, with President El-Sisi stating that the country would need an extra $200 to $300 billion in order to see real change.

3Thursday, August 6, 2015distributed by UsA TodAY EGYPTDeals worth $130bn secured at landmark conferenceThe $130 billion of investment agreements signed at the Egypt Economic Development Conference, which is set to become an annual event, serves as a clear testament to the international investment community’s confidence in the new Egypt


The government presented a comprehensive development program aimed at boosting the economy and, more importantly, pulling millions of Egyptians out of poverty. This will be achieved by opening up the country to foreign capital

“Egypt represents an extraordinary area of opportunities…We trust in Egypt and we trust in your leadership Mr. President ... Egypt’s challenge is our challenge, Egypt’s journey is our journey, and Egypt’s stability is our stability”

MATTEo rEnzi, italian prime Minister

“Over the past few months, there have been promising strides on the reform front. [The government] did a lot to prepare the country and beginning this process was a major achievement”

ChrisTinE lAgArdE, iMF Managing director

“A strong Egyptian economy, which delivers growth and jobs for all Egyptians, is firmly in the UK’s interest as the foundation for security and democracy”

phillip hAMMond, UK Foreign secretary

2800 foreign investors from 88 countries attended the EEdC ibrahim Mahlab, prime Minister of Egypt, speaks to the media at the EEdC

lArgE AgrEEMEnTs signEd AT ThE EEdCEnErgY• Siemens: $7bn - Power stations to produce 6.6 GW • Aquapower: $7bn - 2GW clean coal-powered electricity station • SkyPower / Gulf Development Company: $5bn - Solar panel- based power plant to produce 3 gW• Altharwa: $9.6bn - 6GW Clean coal-powered electricity station

oil And gAs• Eni: $5bn - to produce 900 million cubic feet of natural gas• British Gas: $4bn - to develop and enhance natural gas fields• BP: $12bn - development new find west of the Nile

TrAnsporT & logisTiCs • Chinese Aviation Industry : $700mn - Electrical train between Alexandria and Abu Qeir• Chinese Aviation Industry: $1bn - Train carts and electricity for train tracks• Red Sea Port Company/Dubai Port Company: $4bn - Liquid pouring station in sokhna• Suidan Group: $6bn - Logistical Centers in Damietta and the Suez Canal

rEAl EsTATE• ABAR: $20bn - MOU for October Oasis project• Capital City Company: $45bn - MOU for new capital city project

EConoMiC indiCATors• $945bn - GDP (PPP) 2014• 3.5% - Projected GDP Growth 2015• 11.5% - inflation (June 2015)• 12.8% - Unemployment rate (Q1 2015)• -0.44% - Current account balance (as % of gdp)• $5bn - Required investment in electricity per year through 2020

OvERALL INvESTMENTS $130 BILLION AT ThE EEDC

$60 Billion: projects and agreements$12.5 Billion: investments from 4 Gulf countries$36.2 Billion: foreign direct investments$2 Billion: financing from international institutions$18.6 Billion: private sector deals



When one thinks of E g y p t ’s g reatest e n g i -

neering feats, perhaps the Great Pyramids first spring to mind. However, equally impressive is the Suez Ca-nal, a man-made waterway connecting the Mediter-ranean Sea and Red Sea. Opened in November 1869 after 10 years of construc-tion, the canal revolution-ized world trade – dra-matically cutting transit times from Europe to Asia by eliminating the need to sail around Africa’s Cape of Good Hope. It has served as the lifeblood of Egypt’s economy for almost 150 years, now generating bil-lions of dollars in annual revenues, and a profound source of national pride.

Officially inaugurated on August 6, the New Suez Canal, the first major ex-pansion of the waterway in its 146-year history, has been hailed as the “mega-project of the century” and a symbol of the new Egypt. Construction time for this monumental proj-ect was initially estimated at three years. But last year President Abdel Fattah El-Sisi promised in a tele-vised speech that it would be completed in just one year. He has managed to keep this promise thanks to a hugely successful and well thought-out financ-ing strategy, as well as the hard work and diligence of the 41,000 workers in-volved in its construction, who labored around the clock to move half a trillion cubic meters of earth – the equivalent to moving 200 Great Pyramids.

“We will lift our country on our shoulders,” Presi-dent El-Sisi told the nation in his televised address, promising that “Egyptians will experience a new eco-nomic era that will depend on the strength of people and the project will be owned by Egyptians.” The president invited the public

to have a direct stake in the New Suez Canal. As a result the Egyptian people com-pletely funded the proj-ect, investing $8.5 billion dollars in just eight days through the purchase of tax-free investment certifi-cates offered by state banks for as little as 10 Egyptian pounds (around $1.30).

The new 45-mile lane that opens today will al-low ships – including the world’s largest container ship, the colossal Maersk Triple-E Class – to travel simultaneously in both di-rections for the first time. This will double the daily vessel capacity from 49 to 97 and reduce total naviga-tion time from 22 hours to 11 hours. At the same time, six new road and rail tun-nels linking the Sinai Penin-sula with Ismailia and Port Said have been dug under-neath the canal, which will significantly boost connec-tivity between both sides of the waterway.

Mohab Mameesh, Chair-man and Managing Direc-tor of the Suez Canal Au-thority, has said the new canal will more than dou-ble annual revenues from $5.4 billion to $13.5 billion by 2023, further strength-ening its vital role as one of the country’s principal sources of foreign currency along with tourism.

But the canal expan-sion is just the beginning of a much more ambitious scheme. The master plan for the Suez Canal Zone (SCZone) project is a com-prehensive long-term de-velopment strategy that

aims to turn the waterway’s environs into a world-class transport, logistics, com-mercial and industrial hub – providing strategic ac-cess to a market of 1.8 bil-lion consumers, including Egypt’s large and growing domestic market of around 90 million people enjoying rising standards of living and purchasing power.

The government believes that over the next fifteen years, the SCZone will have the potential to create one million jobs and gener-ate $100 billion in annual revenue. “This project will represent 30-35% of Egypt’s new economy,” says Min-ister of Investment Ashraf Salman, who is confident that it will attract $220 bil-lion in investments over the same time period.

“The Zone should create an industrial awakening. In different locations, we have a total area of 460 square kilometers that we’re de-veloping,” says Yehia Zaki, Director of Operations at Dar Al Handasah, the Lebanese-based engineer-ing and consulting firm that developed the master plan, which was presented to investors and dignitar-ies from around the world at the Egyptian Economic Development Conference in March. “There are cer-tain areas of committed projects and developments. Part of our strategy is to honor whatever is already operating and integrate it into the master plan. We have very strong reasons to believe that industry can act as a hub in the area.”

In order to turn the area along the Suez Canal into a logistics and industrial hub, the master plan focuses on three main development sites: Port Said at the north-ern mouth of the canal open-ing onto the Mediterranean; the city of Ismailia and its surroundings, which will be the administrative center for the SCZone; and Ain Sokh-na, situated on the southern end of the canal along the Gulf of Suez (see map).

“The master plan covers the areas around the new canal, including six ports and Ismailia’s ‘Technology Valley’, and the integration of the ports’ operations and infrastructure so all the ser-vices function in a comple-mentary and fully integrat-ed manner,” adds Mr. Zaki.

According to the Gen-eral Authority of SCZone, East Port Said will be transformed into a major transshipment hub and a thriving gateway port with a dedicated multi-modal logistics facility generating over 105,000 jobs. Already one of the world’s busi-est ports, development of 2,600 hectares for storage and logistics services will further increase its inter-national standing.

This development will include: fully integrated container terminals which will increase container ca-pacity by 20 million TEUs (standard 20-foot con-tainer) by 2050; a large-scale multipurpose general and dry bulk terminal; a dedicated area for automo-tive products; and a liquid

bulks terminal, which will accommodate five mega-tons of different liquid bulk commodities, such as liq-uefied natural gas (LNG).

Close to 4,000 hectares around Port Said have

been earmarked for light and medium manufac-turing activities, includ-ing: agribusiness and food processing; automobile parts assembly; construc-tion and building mate-rials; pharmaceuticals; electronics; and textiles. Space will also be allocat-ed for business, commer-cial, and R&D activities. Authorities say this will create more than 80,000 jobs. Residential areas will be developed to host the influx of new workers around Port Said, as well as supporting social and community infrastructure.

Already known as “The City of Beauty and En-chantment”, Ismailia will also become “Egypt’s Sili-con Valley”, where the focus will be on hi-tech activities such as R&D, ICT and renewable energy development. Agri-pro-cessing, logistics centers, a dry port and other light manufacturing facilities will also be developed just north of Ismailia in Qan-tara, while construction of urban areas in Qantara and New Ismailia City will have the capacity to host over 350,000 residents.

The third development node, Ain Sokhna Port, will become home to one of the largest industrial and port complexes globally and a strategically located gate-way to some of the fast-est growing regions in the world: East Africa, the Gulf and Asia.

Like Port Said, 4,000 hectares will be available for light and medium manu-facturing activities such as automobile parts assembly, construction and building materials, electronics, food processing and textiles.

A further 2,260 hectares will be allotted for heavy industries including oil re-fining, petrochemicals and energy component manu-facturing. The highlight de-velopment in this industrial zone will be local company Carbon Holding’s $7bn petrochemical complex, which is expected to cre-ate approximately 100,000 direct and indirect jobs and generate annual revenue of $6bn (see page 12).

“By moving into the in-dustrial zone south of the Suez Canal, you are look-ing at many logistics op-erations being based there. The fact that there is lo-gistics means there will be warehousing – meaning that eventually, there will be manufacturing. For a company like ours that produces a variety of pet-rochemical products, these manufacturers are going to require the products that we produce,” says Carbon Holdings Chairman and CEO Basil El-Baz, who be-lieves that the SCZone “is not just a very good proj-ect, but a necessary proj-ect in this specific time in Egypt’s history”.

Around Ain Sokhna Port’s environs, a central business district for com-mercial and retail activi-ties will be developed, as well as a business and R&D park. Mixed-use residential developments will occupy more than 1,500 hectares, while around 110 hectares have been earmarked for social and community fa-cilities, such as schools and health centers.

Indeed achieving the vision for this landmark project will require signifi-cant investments in infra-structure that will connect each development node to the wider region. Mr. Zaki says that $15 billion will be invested through 2030

While the New Suez Canal will double the capacity of the 146-year-old waterway, the canal expansion is just the beginning of a much more ambitious scheme that aims to turn the environs into a world-class transport, logistics and industrial hub

“The Zone should create an industrial awakening. In different locations, we have a total area of 460 square kilometers that we’re developing”

YEhiA zAKi, director of operations, dar Al handasah

“We have a number of projects that are surrounding the new Suez Canal expansion project. We expect the impact of the project to be very large for both the country and our company”

MAgdi MohEb KAssAbgUi, Chairman of the board, reliance investments

“We took advantage of the dormant period in activity here in Egypt to equip ourselves for better days. Those days are coming”

oMAr MohAnnA, Chairman of Suez Cement

Officially inaugurated today, the New Suez Canal, the first major expansion of the waterway in its 146-year history, has been hailed as the “mega project of the century” and a symbol of the new Egypt

New Suez Canal project to generate $100bn a year and 1 million jobs

“Egyptians will experience a new economic era that will depend on the strength of people and the (Suez Canal) project will be owned by Egyptians”

AbdEl FATTAh El-sisi,president of the republic of Egypt

5Thursday, August 6, 2015distributed by UsA TodAY EGYPT


in power, water, desalina-tion, and sewage to meet rising demand. For power production, emphasis will be given to the harnessing of clean and renewable re-sources such as wind, solar and biofuels.

The master plan also contains proposals for a road and rail express ways linking East Port Said to Ismailia and onto a new inland dry port situated at 10th Ramadan City. The transport arteries running through the development nodes of the SCZone will also connect to Cairo and the New Capital City (see page 8), with international air links provided by Cairo airport and potentially by Port Said Airport.

There is no doubt that the SCZone project is Egypt’s most ambitious de-velopment project to date – a project that is going to require substantial in-vestment from the private sector. But with so many free trade zones, shipping hubs and special economic zones in the region and around the world available to investors, what makes the Suez Canal Expansion Project and Suez Canal Zone stand out amongst the competition?

“Firstly, among our stud-ies that examined other ar-eas around the world with similar projects, a certain study in particular gives assurance about the viabil-ity and attractiveness of the Suez Canal Expansion and Zone Project.” replies Mr. Zaki. “Secondly, inves-tors have been knocking on our doors and asking about it from an early on-set. Everyone is quite in-terested and eager. There are a number of industrial developers that are hold-ing their decision to build a new factory as they are waiting for the Zone to be integrated. Interested par-ties have done their home-work, which makes us feel more confident.”

Local firms set to cement the SCZone’s successPerfectly positioned to prosper from the billions of dollars being pumped into the construction of the SCZone and its related infrastructure work is Suez Cement, the country’s leading cement manufac-turer. With an industrial

network of five produc-tion facilities in Suez, Kat-tameya, Tourah, Helwan and El Minya, the compa-ny produces approximate-ly 12 million metric tons of clinker, or lump cement, per year.

“Cement is the backbone of any production and for a country like Egypt that is on

the verge of taking off, you will find that the construc-tion business is the first that shows a result,” says Suez Cement Chairman Omar Mohanna. “We took advan-tage of the dormant period in activity here in Egypt to equip ourselves for better days. Those days are com-ing and our responsibility

is to meet the market de-mands and expand.”

Among the steps taken were upgrading manufac-turing processes to meet international environmen-tal standards and expand-ing the company’s produc-tion of the right kind of cement required for the more modern building

techniques expected for the Suez Canal projects.

As the SCZone becomes one of the world’s premier transport and logistics hubs, local companies of-fering freight services also stand to benefit greatly from the project’s develop-ment. One such company is Reliance Logistics – a sub-sidiary of Reliance Invest-ments – which will be in a prime position to offer logistics, maritime freight and trucking services to the influx of potential new clients operating along the Suez Canal corridor.

“Logistics is an impor-tant sector that needs to be developed in Egypt and as a group we have a mis-sion to try and develop new concepts of logistics in a number of sectors and industries,” explains Magdi Moheb Kassabgui, Chair-man of the Board of Reli-ance Investments. “As far as the Suez Canal is con-cerned, we believe that we need to look at it with a dif-ferent concept. Warehous-ing is going to be extremely important there. We need to create a logistics hub in the Suez Canal region where we can serve several industries.

“We have a number of projects that are surround-ing the new Suez Canal ex-pansion project. We expect the impact of the project to be very large for both the country and our company.”

Like Suez Cement, Reli-ance Investments is also set to take advantage of the de-mand for locally produced cement as construction of the SCZone project goes into full swing – through its subsidiaries Reliance Ready Mix and Reliance Cement Trading.

“There is optimism and appetite to focus on the opportunities in Egypt,” adds Mr. Kassabgui, “whether they are related to infrastructure, logistics, or the Suez Canal. The lat-ter is opening doors for many projects.”

EGYPT

SUEZ CANAL

NEW SUEZ CITY

WEST PORT SAID

EAST PORT SAID

ISMAILIA

AIN SOKHNA

GULF OF

SUEZ

MEDITERRANEAN SEA

49MAX. DAILY SHIP

CAPACITY OF OLD CANAL

18,000 TEUSCAPACITY OF LARGEST SHIPS

PASSING THROUGH THE CANAL

8%PORTION OF GLOBAL SEABORNE

TRADE HANDLED BY CANAL

$5.4BNYEARLY REVENUES

OF OLD CANAL

22 HOURSTIME TO NAVIGATE

THROUGH OLD CANAL

45MILESLENGTH OF NEW CANAL

11HOURSTIME TO NAVIGATE

THROUGH NEW CANAL

97MAX. DAILY SHIP

CAPACITY OF NEW CANAL

$220BNFORECASTED INVESTMENTS IN

SCZone PROJECT OVER NEXT 15 YEARS

$13.5BNPROJECTED YEARLY REVENUES

OF NEW CANAL BY 2023



P erhaps not for thousands of years has Egypt e x p e r i e n c e d such a boom in

construction like that which is taking place today due to plans for unprecedented public and private invest-ment encouraged by the government of President Abdel Fattah El-Sisi.

As in ancient times, new structures are popping up all over the country. Not to erect towering pyramids, columned temples and luxurious palaces for rulers and priests, but rather me-ga-construction projects – civil, residential, indus-trial and leisure – aimed at helping to usher tens of millions of Egyptians into the 21st century.

According to industry an-alysts, spending on Egypt’s construction sector should top $7.3 billion by the end of this year, with much of that – $6.7 billion – earmarked for non-residential projects like the expansion of the Suez Canal and developing 75,000 square kilometers (30,000 square miles) of land along the strategic wa-terway’s route for industry and infrastructure.

And this global figure was calculated even before the Egypt Economic Develop-ment Conference was held in March, where additional me-ga-projects were announced, such as plans for a new Egyp-tian capital city projected to cost up to $70 billion.

At the conference, also attended by U.S. Secretary of State John Kerry, Min-ister of Housing Mostafa

Madbouly said the new capital project was nec-essary as Cairo’s current population of 18 million was expected to double be-tween now and 2055.

While these government-sponsored projects are un-derway, at the same time, private sector investment is pouring into factories, of-fice blocks and major shop-ping centers that are spring-ing up across the country, all of which will create jobs for Egypt’s burgeoning youth demographic now and for many decades to come.

In one project alone, re-tail developer Majid Al Futtiam of Dubai has an-nounced plans for a $2.3 billion investment over the next five years for four me-ga-malls and almost three dozen hypermarkets which will account for a total of 40,000 new jobs.

Housing is also a top pri-ority for the Egyptian gov-ernment as demand for home ownership increases among the growing middle class. In 2015, an estimated $600 million will be spent on residential construction spurred by new government initiatives to ease housing fi-nance and the development of new residential areas.

Construction firm Arabtec of the United Arab Emirates, for instance, last year said it would erect one million affordable homes costing $40 billion with the backing of the Egyptian and Abu Dhabi governments.

Meanwhile, one of the Middle East’s leading con-struction and engineering firms, Orascom Construction

Limited, is expected to play a major role in many of the new projects being promoted by the government which should mean fresh opportunities for local operators, argues CEO Osama Bishai.

“Personally, I’m very opti-mistic from a business and construction perspective as there is a strong focus on stimulating the econo-my through infrastructure projects and developing a better platform for foreign investment.

“The current administra-tion has a tendency to en-courage local contractors which will create more ex-perience within Egypt rath-er than forcing the sector to become dependent on for-eign contractors regarding technical skills,” he says.

Mr. Bishai states that the challenge lies in sustainabil-

ity with the country need-ing a long-term plan utiliz-ing a model for at least four to five years. As a contrac-tor, Orascom can only plan ahead for a period of 18 to 24 months, the usual life-time of a project.

“We hope that within the next few months there will be a master plan for the next five to seven years out-lining where to invest and how much money should be earmarked for various proj-ects,” he explains.

Orascom is well posi-tioned for the future, thanks to its vast experience in the market as well as its global connections.

Founded in 1950 as a small construction firm in Upper Egypt, it grew swift-ly and made its first foray overseas in 1985 when it set up the Contrack company

in McLean, Virginia to pur-sue U.S. AID and U.S. gov-ernment-financed projects in Egypt.

A series of successes fol-lowed, including an initial public offering on the Egyp-tian Stock Exchange to be-come the largest company on the bourse, an ambitious overseas expansion cam-

paign and the winning of a range of contracts on some of the most prestigious proj-ects in the Middle East.

Now, thanks to the ambi-tious initiatives proposed by the El-Sisi government, the group is eagerly looking for-ward to the opportunities at home and the chief execu-tive is confident Orascom will benefit.

“We are not an outsider who has been invited to look into Egypt,” Mr. Bishai says. “We know Egypt, we are committed to Egypt and we are bullish about Egypt and for us the expectation is to attract more foreign di-rect investors.

“As a contractor, when these investors come in, we realize that these firms will need to build something at some point so even if I am not a direct beneficiary of this construction, it in-creases the overall market share which allows me to gain more work whether through this opportunity or another.”

Along with sustaining Egypt’s growth, the CEO says the second most seri-ous challenge will be main-taining the fiscal discipline to manage FDI, spending, foreign currency and re-ducing subsidies, among other issues.

“But from a business standpoint, I think our big-gest challenge is the avail-ability of talent and human capital within the next five years as there has been a talent drain flowing out of Egypt to the rest of the Mid-dle East, Canada and the United States.”

Spending on construction and infrastructure to reach $7.3bn in 2015The Suez Canal Zone development, the New Capital City and a string of other large-scale construction projects will form the foundation of the new Egypt and ensure that the country’s building boom will last for years to come

“We are not an outsider who has been invited to look into Egypt... We know Egypt, we are committed to Egypt and we are bullish about Egypt and for us the expectation is to attract more foreign direct investors.”

osAMA bishAi, CEo of orascom Construction

The moment was not lack-ing in drama at last March’s g roundbreak-

ing Egypt Economic Devel-opment Conference, when the host country’s Housing Minister, Mostafa Madbouly, unveiled a to-scale mock-up of what is someday going to be the country’s brand new capital. Planned to be built up from scratch in the desert east of Cairo, about halfway between the current sprawl-ing capital and the Suez Ca-nal Development Corridor, the new city is meant to ab-sorb the population overflow and bulky administrative ap-paratus of government and finance that the swollen, pol-lution-wracked Cairo can no longer accommodate.

“We are committed to the first phase,” Mr. Madbouly said in an recent interview. “We al-ready have a very clear plan.”

One may be forgiven for wondering if the government of President Abdel Fatah El-Sisi is out to make a big po-litical splash by pledging to achieve the impossible. On the other hand, it could be rather a serious attempt to come to terms with the re-lentlessly inevitable, since de-mographers and planners all agree that Greater Cairo is on course to double its current population to top the 40 mil-lion mark by mid-century.

What its promoters de-scribe as “a momentous en-deavor to build the national spirit, foster consensus and provide for the country’s sus-tainable long-term growth” is a full-function, futuristically post-modern city covering 700 square kilometers, rough-ly the size of Singapore, that is to be grown from and remain attached organically to the mixed-use megacity develop-

ment of New Cairo, which has been in operation for more than a decade.

Residents will be free to make use of amenities that in-clude a theme park “four times the size of Disneyland” an in-ternational airport larger than Heathrow, over 1250 mosques and places of worship, 663 hospitals, 10,000 km of boule-vards, avenues and streets and 1.1 million housing units.

Commentators, mean-while, have remarked that the capital’s proposed skyline looks a lot like Dubai. In fact, the master planning and ex-ecution is to be carried out by Capital City Partners, a private investment fund led by Mohamed Alabbar, the Dubai financier at the head of the consortium that financed and built the emblematic Burj Khalifa tower in Dubai. No-body can say how much the Egyptian project will end up costing, but sums between $45 and $300 billion have been mentioned. Who’s going to pay for it? Authorities insist that private investment capital from the Gulf region and else-where will cover everything.

Regardless of who picks up the tab, public opinion has not settled on whether this is a case of unjustifiable ex-travagance for a country with Egypt’s current problems or an essential and overdue reform. Supporters point out there’s nothing inherently wrong with changing capitals; Paki-stan, Nigeria, Brazil and oth-ers have done it without going bust or disrupting the delivery of government services. And whatever may or may not hap-pen out there in the desert, the original, inimitable Cairo will still be where it always has been for the past 1,000 years, a 20 minute ride by car or elec-tric train from the new capital of a very old country.

New $45bn capital city to rise out of the desertGovernment unveils an ambitious plan to build a smart-city the size of Singapore that aims to solve Cairo’s overcrowding issues. Officials boast it will include an airport bigger than London’s Heathrow, 1.1 million housing units, and 10,000 km of boule-vards, avenues and streets

“Modern, moderate and a beacon for freedom in the Arab world,” is the future that Nobel Peace laureate Mohamed El

Baredi envisages for Egypt one day. Meanwhile, Egypt remains a “developing country” in terms of its efforts to meet the urgent needs of its 90 million inhabit-ants. Roughly half are young and either at or approach-ing an age in which the usual thing is to get married and set up a household. The result is a yearly shortfall of 500,000 to 800,000 residential housing units in the major urban areas, affecting all price categories and giving rise to a situation that makes Egypt’s real estate and construction sector an ex-tremely promising target for in-ternal and foreign investment.

Residential property is the primary focus of Egyptians’ re-lentless hunger for real estate, with prices increasing across the board for apartments and villas at a rate of 20% per year. How could prices not be shoot-ing up in a country where 96% of the people live on roughly 4% of the land? But on a per capita basis, Cairo remains one of the most underserved capi-tals in the world, says Alsherif Wahdan, a Harvard trained civil engineer who manages the Egyptian portfolios at Capstone Advisory Services.

That fact duly noted, other types of property have posted extremely positive results for the first quarter of 2015. In the commercial category, turnover in new office space has been particularly brisk in the satellite towns on the outer periphery of the capital where digital con-nectivity, parking, housing and services are easy to come by. Developers have promised to deliver another 37,000 square meters of offices at the New Cairo City complex, to cite just one example. In the center of the capital, government depen-dencies occupy virtually all the existing office space, making it not uncommon to see older apartments reconverted for use as office complexes. Mean-while, the scramble for retail space has been eased some-what by a number of newly-built in-town and out-of-town shopping malls.

14% sector growth in 2015In uncertain times, owning property is seen as the fail-safe fallback option. It will still be there when things return to normal and very likely to have increased in value. “Real estate gets sick, but it never dies,” the saying goes. Timing matters greatly, though. That’s why it should be emphasized that all evidence suggests that the cur-rent government has succeed-ed in winning the confidence of Egyptians and foreigners alike, as is evident from the upgrade it received at the beginning of the year from all the international ratings agencies. That is the confidence that explains why it took all of eight working days to finance the $8.5 billon Suez Canal Expansion Project, with many small-time investors and everyday Egyptians purchasing low denomination bonds is-sued by the government.

Housing and construction is expected to attract some $7.3 billion in direct investment over 2015 and continues to generate a 20-30% Internal Rate of Return (IRR). Demographic indicators suggest that up to eight million more units still need to be built just to catch up with the demand curve. In short, the climate could hardly be more favorable than it is now in a sector poised to maintain growth of 14% a year, while at the same time pro-viding employment (through related sectors like cement, utili-ties, infrastructure, furniture and household goods) to an estimat-ed 8% of the workforce.

Beating bureaucracy Given those numbers, an op-timistic view of the market seems neither perfunctory nor undue. However, that is not to suggest that the path ahead is smooth and uniform. One ma-

jor obstacle to doing business is a bloated bureaucracy that feeds on a plethora of outdated laws and niggling regulations. It is a situation that Hassan Dorra, Chairman of the Dorra Group, says that the government is now acknowledging needs change.

“At the top levels of the cur-rent government, officials are doing all they can within the available resources and time frame. The improvement has to be at lower levels where civil servants should move projects forward rather than wrapping them with red tape,” says Mr. Dorra, whose company also has a strong presence in the United Arab Emirates.

“The government now re-alizes it has to make many legislative and administrative upgrades and modifications. Some have already been com-pleted, like the latest invest-ment law, and other reforms are in the pipeline,” adds the chairman of the 70-year-old firm that has signed on to build elements for the Suez Canal Expansion project and prepar-ing for the second phase of the Capital Business Park in the Cairo suburb of Sheikh Zayed City, where the outer walls are sheathed in shimmering panels of Belgian glass.

Mr. Dorra does not regret the fact that the playing field, as it was known to his father, the group’s founder, has changed its contours. He sees it not as change for its own sake but change for the better. “We have hope,” he says. “The gov-ernment is open to ideas. In the past, we could not suggest anything. Now they will listen. This is one of the most impor-tant things that must be kept in mind. They are very receptive to ideas and suggestions.”

Social Housing ProjectArchitectural showpieces like the Capital Business Park are not the solution to Egypt’s hous-ing crunch. It is unfortunate that in a country where half the population meets the UNESCO criteria for “poor,” most new construction is designed and priced for upper middle to up-per income buyers. The middle class is poorly served, and low income families all but shut out of the market. This is where the Egyptian government has stepped in with a series of initia-tives mostly aimed at encourag-ing developers to take a more active role at the lower end so as to attract families that would otherwise remain outside it.

“We have launched the Social Housing Project and established a national fund with the goal of creating one million housing units over the next five years,” says Egypt’s housing minister, Mostafa Madbouly. “Right now we have 240,000 units under

construction and expect to final-ize 170,000 of them by the end of this year. I used to work for the UN Habitat program so I know this is one of the world’s largest projects of its kind.”

As one would expect, an ini-tiative on this scale has an imme-diate impact on the larger econ-omy, since the authorities have made a point of contracting out the work to local, mainly small businesses. At least 250,000 di-rect jobs have been created un-der the project, according to Mr. Madbouly who notes “When you are in a recession, the best thing you can do is invest heav-ily in infrastructure and big proj-ects like this one.”

At the same time, the gov-ernment is reaching out to low-income families by drawing on a special fund in which 10 billion Egyptian pounds ($1.3 billion) provided by the country’s Cen-tral Bank has been earmarked for mortgage financing and guarantees. That may sound fairly routine, but the fact is mortgages are not at all com-mon as a means of home financ-ing in Egypt, where transactions involving property are almost always off the books and in cash.

Mr. Madbouly believes this is going to change, and the up-tick in mortgage lending will be apparent when the numbers are in for this year. “Prior to the action of the Central Bank, no one benefitted from mort-gages except the very affluent who could prove their income and pay very high interest rates of 14%. Under this initiative, though, low income families will be eligible for 40-50% of the mortgages written.”

Housing & Development One bank that supports the government’s interest in ex-panding the market and thinks that good social policy can also be good business is the state-owned Housing and Develop-ment Bank. Managing Director for Engineering and Investment at the bank, Mohamed El Alfy, was very much encouraged by the attitudes he observed at the Egypt Economic Development Conference (EEDC) held in March at the Red Sea resort of Sharm el Sheikh.

“The EEDC restored confi-dence and pushed a reset button that lined up the entire interna-tional community alongside Egypt to support reforms in the investment, business, economic and political spheres,” says Mr. El Alfy, whose bank posted ex-

ceptional results that last year earned it a place on the coun-try’s top ten banking list.

“The private sector, whether locally, regionally or interna-tionally anchored, will take the lead in driving the economy for-ward,” underscores Mr El Alfy. “The government, being the reg-ulator, will maintain an environ-ment that makes doing business easier, rather than overcrowding the market or competing in it.”

The Housing and Develop-ment Bank itself plays an im-portant role in driving socio-economic development. Many people who apply through the bank for social housing ben-efits become first-time bank customers – no small matter in a country with only 10 million bank accounts for a population of 90 million.

“We welcome our social housing clients, and we are probably the first bank they will have had any dealings with. We encourage them to open accounts, even if just for a small sum, inform them about the products we offer and show them how the sys-tem works,” he adds.

Under legislation that took ef-fect at the beginning of the year, property developers can take advantage of a new mechanism that allows the government to swap land it owns for a stake in the equity or in the revenues generated by whatever is con-structed on it.

Granted, disputes will inevi-tably rise over the assessed value of the land in question, but both sides have too much at stake to let that become a deal breaker. Land in Egypt is almost as hard to obtain as is the permission to build on it. Cairo visitors have commented on the unseemly vacant lots and weed-tangled parcels of neglected land at in-tervals along the banks of the Nile. That is just land being held as part of the family patrimony, often untouched from one gen-eration to the next.

The Government-owned Housing and Development Bank is a special case in that projects in need of financing come to them from developers and the bank itself directly inter-venes in the market to see them carried out through a number of affiliated, subsidiary or sister companies that are active play-ers in the sector.

“The only way to go is up,” Mr. EL Alfy assures us. “The support we received showed unanimous international support for Egypt which was translated into the mega-projects that were recent-ly announced.”

Indeed fueling the surge in new housing developments are the mega-projects unveiled at the EEDC in March, where public officials, foreign inves-tors and local private sector decision-makers conferred over how to get the best return on their money, exchange know-how and sign memorandums of understanding. The govern-ment made the scope of its am-bitions clear when it unveiled its Suez Canal enlargement and development plan. It is to be structured around a special economic zone 100 kilometers wide that will include custom

built logistics and handling fa-cilities buffered by a 400 square kilometer industrial zone.

MegacitiesHowever, arguably the true show stopper at the EEDC conference was when Housing Minister Mostafa Madbouly unveiled a mock-up new city that will be spawned out of the existing Egyptian capital known as “New Cairo”. The city will increase hugely in size as it develops in a rational, eco-logically sound and sustainable manner until it becomes a fully mixed community of 70 million inhabitants, eventually replac-ing Cairo as Egypt’s capital.

But why should Cairo have to be replaced, you may pon-der. It’s crowded, chaotic and beloved by the many who live there, and that means one in every four Egyptians. So what’s not to love about noisy, lively, and colorful Cairo? For its 18 million inhabitants (who make it Africa’s largest unitary urban space) life is still articulated around the local mosque, yet living space is pricey, pollu-tion out of control, workplace access complicated, and traffic beyond congested.

These drawbacks were seri-ous enough for the authorities to start building “satellite cities” out in the desert as long ago as the early 1980s. But comple-tion of the prototype high rises brought no big rush to relocate. Only a few people were ini-tially willing to trade up to run-ning water, sewage treatment, schools, hospitals and a reliable supply of electricity, plus access to global consumer brands that never would have made it to the family-run shops and suqs in the heart of the old city.

Little by little, that has been changing over the years. By now some one million Cairo residents are said to have moved out of town to resettle in 6th of October City, located about 45 km west of Cairo. By now there are over 20 hybrid developments not yet over-taken by Cairo’s metastasiz-ing sprawl. Shopping malls? Of course they have shopping malls. 6th of October City also has several universities, a cou-ple of tech start-ups and (you guessed right) Starbucks.

The question is whether these multiple-use residential-com-mercial-leisure complexes are no more than a haven for the se-riously well-to-do. Actually, the government has been at pains to include a substantial percent-age of low-income units in new developments such as Al Obour

and Al Shorouk, scheduled for completion in 2017.

Regulating real estate Mamdouh Badr El Dine is chair-man of the Badreldine for Real Estate company, which came to occupy a secure share of the market in the post-1995 bonan-za years when it won fame for ensuring that the mostly high-end buildings reflected and en-hanced the cultural specifics of the community they were built for. This includes pioneering developments in Sheikh Zayed in the suburbs of Cairo, as well as the 6th of October City.

His idea now – indeed, his priority – is to help organize an independent Federation of Realtors that would act as an intermediary mechanism for resolving disputes should they arise between developer and buyer. Since almost all trans-actions in Egypt are in cash, unregistered and unreported, today’s homebuyer has little re-course if delivery dates are not met or the faucets fall off the bathtub, other than taking his complaint to Egypt’s jammed-to-the rafters and borderline dysfunctional court system.

Similarly, proponents of the Federation would like to see it create an administrative body to assume some basic regula-tory functions such as assessing and approving plans and speci-fications for new construction, issuing habitability certificates, appraising pre-owned proper-ties and verifying land title. Mr. Badr El Dine, who is supported by other important industry executives in this venture, says “Establishing the federation will improve the performance and benefits for all the players.”

Financing for Egypt’s extreme makeover as well as the know-how required to make it hap-pen has been directed at Egypt from many countries in the region, particularly members of the Gulf Cooperation Council. The same consortium of UAE investors that helped put up the emblematic Burj Khalifa tower, are involved in the planning for substantial parts of Egypt’s new capital city. SECON, a Saudi-Egyptian joint stock company has been active in Egypt since 1975. The CEO, Darwish Has-sanein, is pleased to think he will still be at the helm when the firm enters its newly-acquired niche in the hotel and hospitality sec-tor. “Two out of three current projects are in hotels and tour-ism area, including a hotel with 256 rooms and suites in Maadi, an affluent Cairo suburb with privileged views of the Nile, and also at New Damietta, on the Mediterranean, where we are building a 90-room hotel.”

Asked if he could disclose the secret that has kept a busi-ness with two equal partners representing different cultures and national interests thriving for four decades, Mr. Hassanein said, “the company is focused on the details that matter to its customers by choosing sites very carefully and taking into account the technical and envi-ronmental aspects of the place. You could probably say that it all comes down to location, lo-cation and location.”



“The private sector, whether locally, regionally or internationally anchored, will take the lead in driving the economy forward. The government, being the regulator, will maintain an environment that makes doing business easier”

MohAMEd El AlFY, Managing director of Engineering and investment, housing and development bank

High-rise demand for Egypt’s property developersWith 8 million housing units needed to meet demand, the real estate sector is forecasted to grow 14% annually, while the government’s Social Housing Project aims to extend the property ladder to include lower-income families

“At the top levels of the current government, officials are doing all they can within the available resources and time frame. The improvement has to be at lower levels where civil servants should move projects forward rather than wrapping them with red tape”

hAssAn dorrAChairman, dorra group



Palm Hills Developments builds on success in real estate sector

R apidly cement-ing its position as Egypt’s lead-ing real estate developer; Palm

Hills Developments now re-tains one of the largest land banks in the country. The company’s vision of cre-ating integrated and self-sufficient communities has yielded remarkable results. Palm Hills not only pos-sesses an impressive collec-tion of eighteen nationwide residential, commercial and tourist projects but has also achieved spectacular sales and profits growth. In the first quarter of 2015, year- on-year net profits rose by almost 260% reaching EGP 218million ($28.6m). In ad-dition, year-on-year sales figures for the same period also doubled achieving EGP 1.35 billion.

Building upon this suc-cess, Palm Hills recently signed two Memorandums of Understanding (MOUs) at the Egypt Economic De-velopment Conference (EEDC) in March, for two major projects in partner-ship with the Egyptian Min-istry of Housing (MNHD). The first project is for a 500 feddan gated community de-velopment in New Cairo.

This is an area in which Palm Hills has a lot of past experience and expertise, as Tarek Abdel-Rahman, the co-chief executive officer of Palm Hills Developments explains: “It will be similar to our usual compounds servicing the upper-middle class and above. This is our bread and butter, and we do know how to do it.”

The second project is an altogether more ambitious and historic undertaking. A 10,000 feddan develop-

ment in West Cairo, it brings together Palm Hills Devel-opments and UAE’s Aabar Investments. It will consti-tute the largest ever private joint venture in Egyptian-Emirati history.

“The 10,000 feddan proj-ect is completely different because it is the develop-ment of a town. It will have to include low-medium and high density housing with a strong theme underlying the whole town.” Mr. Abdel-Rahman explains. “We are thinking that our 10,000 feddan project will be based on wellness and education, but we are not quite set on a theme yet. However, it will have a very strong theme that will drive the economy and the town so that people can live and work there, and we have currently initiated the conceptual master-plan-ning phase,” he adds.

Situated in the 6th of Oc-tober area of Cairo, the proj-ect will complement rather than compete with the gov-ernment’s The Capital Cairo project. “They are both on dif-ferent sides of the city, so they won’t necessarily compete,” says Mr Abdel-Rahman. “Our understanding is that the gov-ernment wants the whole 6th of October area to be the resi-dential, entertainment, and tourism hub.”

Both projects were signed at the global three day Egyp-tian Economic Develop-ment Conference in March. Aimed at re-affirming inter-national investor confidence in Egypt, it was according to Mr. Abdel-Rahman, an important success. “The conference was extremely important because it sig-naled that Egypt is open for business. The quality of the speakers was unbelievable. In which conference do you see the CEOs of GE and Siemens along with senior people from Pepsi and Co-ca-Cola, Christine Lagarde, Tony Blair, Albert Speer and delegations from the Gulf countries together? This sig-nals again that foreign inves-tors are interested in Egypt and that Egypt is courting foreign investors.”

The need for housing projects in Egypt is appar-ent. The present cumulative housing gap in the country stands at 8 million units and is growing by 3,000-4,000 units per year. Whether or not the gap can be closed is uncertain, but it certainly demonstrates the contin-ued real demand for real es-tate development in Egypt, supported by the country’s compelling demographics. “I’m not so sure that we will catch up,” says Mr. Abdel-

Rahman. “Where do you get the infrastructure to build 8 million units? How long will it take you to build 8 million units, and what is the gap go-ing to be then? Last year, we delivered 980 units. The oth-er competitive developers probably delivered roughly 4,000 units. Let’s assume that all the other developers developed 10,000 units. It’s still insignificant compared to the demand driven by real need for personal usage.”

International invest-ment is a key priority for the company. Listed in both the Cairo-Alexandria Stock Exchange and the London Stock Exchange, Palm Hills has already proven its ability to attract foreign capital. In November last year for ex-ample, UAE based Aabar In-vestments PJS bought a 5.1% stake in the company.

Palm Hills hopes to attract more international investors this year, as it undertakes a

capital increase with a new share issue worth EGP 1.65 billion. Mr. Abdel-Rahman explains: “It’s being offered to existing shareholders at two Egyptian pounds per share, but in Egypt, the right to subscribe trades is sepa-rate from the share itself. If you are a shareholder that doesn’t want to subscribe, you can actually sell that right to someone else who can buy it and subscribe in your place.”

In support of the share issue, the company has recently completed a suc-cessful road show tour tar-geting international insti-tutional investors. “We did the road show in London, New York, Washington, Dubai, Abu Dhabi, Johan-nesburg and Cape Town,” says Mr. Abdel-Rahman. “It was a very positive road show and we met some of the top-tier investors in the world who were willing to listen to our story and were very excited about Egypt.”

The real estate developer signed two Memorandums of Understanding with the Egyptian Ministry of Housing at the Egypt Economic Development Conference in March

“Our 10,000 feddan project will be based on wellness and education. It will have a very strong theme that will drive the economy and the town.”

TArEK AbdEl-rAhMAn, Co-CEo of palm hills developments


EGYPT

$5 billion landmark deal puts renewable

Culturally and h i s t o r i c a l l y , Egyptians have long had a close affinity with

the power of the elements, particularly the sun. An-cient Egyptians worshipped their sun god Ra to such an extent that some historians theorize they revered him above all others, and that the pyramids may have been built to represent rays of sunlight to further connect the pharaohs with the deity, who was also closely linked with the wind gods Shu and Amun. Modern-day Egyp-tians are also showing in-creasing reverence for the elements, although not on such a spiritual level, but a more practical one: har-nessing the power of the sun and wind to generate much-needed electricity is undergoing unprecedented levels of interest as local and foreign investors flock to gain a foothold in the re-public’s burgeoning renew-able energy sector.

Clean energy is set to add a silver lining to the dark cloud hanging over Egypt’s power generation challeng-es. Its oil and gas reserves – which currently generate 95% of the country’s electric-ity needs – are set for sharp depletion over the next few decades. At the same time, higher economic growth, improved living standards and a rapidly urbanizing population mean that the demand for power is esti-mated to escalate by up to 6.2% a year until 2035.

With the Arab nation historically suffering from frequent electric blackouts that negatively impact do-mestic life and massive in-dustrial development, the need to develop alternative energy sources is becoming ever more urgent. Fortu-nately, the republic’s pre-dicament of growing energy needs and fossil fuels peter-ing out fits hand in glove with its abundant potential for renewable sources and the current global trend to-ward greener options, solar energy in particular.

Therefore, owing to plen-tiful year-round sunshine and high wind speeds – par-ticularly on the Gulf of Suez – Egypt has clearly recog-nized and begun to promote the substantial opportuni-ties renewable energy can have on this rapidly devel-oping country. Exhibiting the key drivers of a rapidly growing power demand, exceptional availability of

wind and solar resources and the necessity to reduce fossil fuel consumption, Egypt has all the hallmarks of becoming a considerable renewable energy market in the short term.

“Our main problem was our dependence on natural gas,” explains Dr. Mohamed Shaker, the Minister of Elec-tricity and Renewable Ener-gy, “but we have decided to adjust the energy mix to in-clude renewables, whether it be wind or solar.” Indeed, green energy has become an increasing priority for the Egyptian government. Previous administrations had pursued a number of energy diversification re-forms, with limited success as a result of political and economic events that came to a head in 2014.

Over the last 12 months the country has begun to make clear headway in pur-suing renewable energy un-der the government of Pres-ident Abdel Fattah El-Sisi. When addressing the World Future Energy Summit in Abu Dhabi in January, the President highlighted and declared: “The availability of energy and managing the demand for it is one of the main priorities on the Egyp-tian development agenda.”

EEDCInvestors’ responses to the three-day Egypt Economic Development Conference (EEDC) held in March bear testament to the energy industry’s potential. The hugely successful event saw more than 2,000 delegates from 120 countries descend on Sharm El Sheikh and enter into various forms of agreements worth around $22 billion in the electricity and power sector. President Abdel Fattah El-Sisi devoted much of his speech to dis-cussing new deals for power generation, with some of the biggest investments an-nounced at the conference being poured into the re-newable sector.

Industry frontrunners expressed their optimism for the outlook of clean en-

ergy generation in Egypt, applauding the country’s dynamism and investment environment. The President and Chief Executive Offi-cer of leading solar multi-national SkyPower Global, Kerry Adler, commended Egypt’s leaders for “swiftly executing its well designed strategic blueprint to ensure a bright and prosperous fu-ture for all Egyptians, for generations to come.”

Such sentiments were echoed by other high-rank-ing attendees. Jeffrey Immelt, Chairman and CEO of GE, remarked: “Today, countries that succeed are those that can get in front of the trends, innovate, work together and deliver results. Egypt is mov-ing with speed and scale, and reimagining a future cen-tered on its people.”

During his keynote speech at the EEDC, President and CEO of Germany’s Siemens, Joe Kaeser, commented: “Egypt needs a powerful and reliable energy system to support its long-term, sustainable economic de-velopment, and experienced partners who understand the specific challenges fac-ing the country. Siemens’ technology and expertise has been supporting Egypt’s growth for more than 150 years. We are part of Egypt’s society and proud to shape Egypt’s future together.”

Attracted to the coun-try’s wind potential, Sie-mens reached agreements with the Egyptian govern-ment to build a 4.4 gigawatt combined-cycle power plant and install wind power ca-pacity of 2 gigawatts. Under the deals, the company will propose to build additional combined cycle power plants with a capacity of up to 6.6 gigawatts and 10 substations for reliable power supply.

In addition to wind, the EEDC was particularly auspi-cious for the solar industry, with a number of agreements signed with Egypt’s New and Renewable Energy Author-ity (NREA) for solar projects by the likes of Saudi Arabia’s FAS Energy, among others. However, there was one an-nouncement in particular that grabbed the spotlight and both the industry’s and media’s attentions.

A landmark agreementSkyPower Global made headlines at the EEDC when it set an unprecedented mile-stone in Egypt’s renewable energy ambitions. In part-nership with Middle Eastern infrastructure specialists

International Gulf Develop-ment (IGD), SkyPower-IGD signed a historic agreement with the Egyptian govern-ment to develop 3 gigawatts of utility-scale photovol-taic (PV) projects that will be built over the next four years. The joint venture be-tween SkyPower Global and IGD will enable the produc-tion of clean, sustainable and cost-effective energy that will help fuel the nation’s so-cioeconomic ambitions.

The project represents a massive $5 billion investment and will create employment for thousands of people, to-taling an estimated 74,500 job years. It also includes 600 megawatts of solar panel fab-rication and assembly facili-ties to be built in Egypt.

Working closely with the Ministry of Electric-ity and Renewable Energy, SkyPower-IGD plans to start the construction of solar power projects by late 2015.

The government is also looking to install 2.3 gigawatts of solar by 2017 through its feed-in tariff program.

“Egypt has the right vi-sion,” says Mr. Adler at SkyPower Global. “The country needs power. Oil or gas is the current source for Egypt’s primary energy demands. If solar and wind power can be harnessed dur-ing the day, oil and gas can be saved for evening hours. This can be controlled, which is the rationale for Egypt moving toward solar power as a significant part of its future energy-supply mix. Egypt’s targets for growth, such as the New Capital City, require a tre-mendous source of energy, which is all the more reason why they need to continue on their path toward rapidly streamlining their process to move from contract to com-mercial operation.”

Also present at the sign-ing of the agreement was Canada’s Ambassador to Egypt, Troy Lulashnyk, who commented that the agree-ment “marks a significant milestone” for international businesses looking at the region, sending a “clear sig-nal…that they can work in Egypt with confidence, and to Egyptians that their coun-try is open for business.”

Electricity and Renewable Energy Minister Dr. Shaker expressed the government’s enthusiasm for the solar projects announced at the EEDC and the massive in-vestment they attract. “For-eign investment in Egypt helps build the economy and strengthen internation-al ties with well-respected

and viable partners, such as SkyPower Global and IGD,” he remarked.

Partnerships with credentials SkyPower Global is one of the largest and most suc-cessful developers and own-ers of solar energy projects in the world. Over the past few years, SkyPower Global has secured more than two dozen utility-scale solar PV power purchase agreements and contracts with leading utilities and governments around the world, estimated to be worth in excess of $80 billion in long-term renew-able energy sales. Its roots stretch back over a decade and it now has more than 30 international offices. The company develops, fi-nances, owns and operates solar energy projects from the initial stages through commercial operation in more than 60 countries. In fact, it currently has some 25 gigawatts of projects at various stages of develop-ment worldwide.

Fellow partner IGD brings its expertise in re-gionally based power, re-newable energy, infrastruc-ture, construction, and oil and gas projects through-out the MENA region to the landmark project. The company is a founding part-nership between Al Hamed Enterprises and Gulf Data International (GDI), and its joint venture track record demonstrates its ability to commit, mobilize and suc-cessfully deliver turnkey projects. Over the past 25 years, IGD’s partner com-panies have successfully executed various projects both locally and interna-tionally, and the company invests in state-of-the-art technology and solutions to ensure it is ready for proj-

ects such as its venture with SkyPower Global and the Egyptian government.

Solar on the global riseOn an international scale, the solar industry is going through rapid expansion and its potential outlook is noth-ing short of remarkable. “We are in a new era of renewable energy,” asserts Mr. Adler. “Solar energy is the new way and people need to get used to it – and fast.”

In 2014 a record amount of solar-sourced power – at least 40 gigawatts, up from 37 gigawatts in 2013 – was added to the planet’s energy grids, taking the world’s total cumulative solar capacity to 178 gigawatts, or 100 times higher than in 2000.

For the first time ever, more energy was produced from renewable sources than nuclear in Europe last year, with solar playing a major part. The U.K. and Germany led the charge adding around 7 gigawatts to Europe’s solar capacity, by installing 2.4 gigawatts and 1.9 gigawatts respectively, followed by France with an increase of about 0.9 giga-watts. An uptick in PV in-stallations is happening all around the world, not just in Europe. The geographi-cal spread of solar projects is expanding and installations are no longer regarded as a Europe-centric fad. Inter-nationally, China, Japan and the U.S. are leading the cur-rent growth in the industry, adding 10.6 gigawatts, 9.7 gigawatts, and 6.5 gigawatts, respectively, of installed ca-pacity in 2014. Korea’s mar-ket doubled to more than 0.9 gigawatts, South Africa installed 0.8 gigawatts, and Canada, Taiwan, Thailand, The Netherlands and Chile each raised their capacities by around 0.5 gigawatts.

The trend looks set to continue, with regular an-nouncements of major solar projects emerging around the globe. Pakistan’s government recently confirmed plans for one of the world’s largest so-lar power projects – a 900 megawatt, $1.5 billion con-tract in Quaid-e-Azam Solar Power Park in Bahawalpur. Coincidentally, SkyPower Global has also been in Paki-stan for more than a year.

Such significant advances have renewable energy asso-ciations and analysts stating the solar power industry has reached a tipping point that will open the way to a new wave of investment. Solar-Power Europe, formerly the European Photovoltaic In-dustry Association (EPIA),

Foreign investors signed an unprecedented level of agreements at the Egypt Economic Development Conference, particularly in the burgeoning renewable energy sector. Solar’s potential shone through with a multibillion-dollar pact between SkyPower-IGD and the Egyptian government to add 3 gigawatts over the next four years

“Our main problem was our dependence on natural gas, but we’ve decided to adjust the energy mix to rely on renewables, whether it be wind or solar”

dr. MohAMEd shAKEr,Minister of Electricity and renewable Energy

10 Thursday, August 6, 2015

“We look at Egypt as being a pivotal leader in the Middle East. The criteria for SkyPower Global to select a country where we want to invest and build power are: a growing economy, the need for new power versus the need for replacement power, a highly educated and talented workforce, and most importantly a government that is fully committed to delivering renewable solar power”

KErrY AdlEr,president and Chief Executive officer of skypower global

Egyptian president Abdel Fattah El-sisi and president and CEo of skypower Kerry Adler share a congratulatory moment on SkyPower-IGD’s $5 billion commitment to build 3,000MW of solar energy projects in Egypt over the next four years

distributed by UsA TodAY


EGYPT

estimates global cumulative solar capacity will continue its rapid growth and could reach between 396 gigawatts and 540 gigawatts by 2020. In SolarPower Europe’s re-cent Global Market Outlook for Solar Power 2015-2019 report, its President Oliver Schafer and CEO James Wat-son express their belief that last year’s expansion “demon-strates the fact that the power of solar is unstoppable; the developments in the sector that have supported solar to become a more predictable and cost competitive energy source in recent years under-pin our growth.”

Furthermore, two reports issued by the International Energy Agency (IEA) in 2014 suggest that by 2050 the sun could be the planet’s largest source of electricity, ahead of fossil fuels, wind, hydro and nuclear sources.

Discussing more imminent options during his keynote speech at the EEDC, Sie-mens’ Mr. Kaeser comment-ed: “I wish we had as many opportunities in Europe as we have in Egypt. I am im-pressed with the leadership I see in this country.”

Why Egypt? SkyPower Global was the first international company to approach the Egyptian government with a solar project of such magnitude. “The signing of this monu-mental agreement demon-strates the shared passionate aspirations of global partner-ships that will substantially impact the country’s GDP,

contributing approximately $16.1 billion and resulting in increased opportunities for employment, skills training, youth and education,” says Mr. Adler.

With fervor for solar ener-gy on the rise worldwide, and SkyPower Global’s already established international presence, what in particu-lar about Egypt spurred the company to invest so heavily in such a benchmark project in the republic?

“We look at Egypt as being a pivotal leader in the Middle East,” explains Mr. Adler. “The criteria for SkyPower Global to select a country where we want to invest and build pow-er are: a growing economy, the need for new power ver-sus the need for replacement power, a highly educated and talented workforce, and most importantly a govern-ment that is fully committed to delivering renewable solar power and jobs, coupled with education for its youth. Egypt met every single criterion.

“We are buoyed by the commitment from the coun-tries in the Middle East and Europe. SkyPower-IGD is

also pleased by the commit-ment of the government of Egypt to make investors feel welcome and provide ade-quate protections to them in the form of modifications to the investment laws, in addi-tion to other steps they have taken to open the doors to foreign investment.”

The effect of such a posi-tive approach to internation-al involvement is reflected in the swarms of foreign inves-tors entering the sector, as SkyPower-IGD is joined by numerous international play-ers coming to Egypt, strik-ing partnerships with local enterprises. The Egypt Solar Industry Association (Egypt-SIA) has listed various large-scale projects in progress in its recently published re-port, Egypt’s Solar Energy Market: FiT Program and Beyond 2015. In addition to the SkyPower-IGD venture, it includes projects by ma-jor groups from Jordan, the UAE, and Saudi Arabia.

Feed-in tariff (FiT) programWorldwide, the rising inter-est in solar power has been encouraged by countries es-tablishing feed-in tariffs, self-consumption measures, tax breaks, and beneficial net-metering policies. Fine-tuned technology and decreasing costs of PV cells have also made the prospect of solar electricity becoming a com-petitive mainstream alterna-tive more viable.

In Egypt, a milestone feed-in tariff (FiT) program announced by Egypt’s gov-

ernment in September 2014 to encourage private invest-ment in renewables has be-come the cornerstone of the clean energy push. Under the FiT, private companies will receive a fixed tariff for the power they produce from renewable resources. The size of the payment depends on factors such as the type of technology used and the size of the project.

The first FiT tender – in which the NREA earmarked opportunities for 4.3 giga-watts worth of wind and solar projects – attracted massive interest from both interna-tional and local players.

“We received 178 proj-ect proposals for the FiT scheme,” comments the re-newable energy minister, Dr. Shaker. “We were asking for only 2.3 gigawatts for solar and we saw 10 gigawatts of proposals. We also asked for 2 gigawatts for wind power and we received double that amount in applications.”

Of the 178 proposals, the NREA has given 69 proj-ects the go ahead, which will contribute greatly to the government’s goal of produc-ing a total of 13 gigawatts of generation capacity to meet the soaring power demands over the next five years. All this extra electricity coming online will no doubt pose a challenge for the existing transmission network, but as the renewable energy minis-ter points out, “The govern-ment is financing EGP 2 bil-lion ($260 million) in order to enhance the network to accommodate all of the ad-ditional power.”

New electricity lawSuch agreements at the EECD were largely made possible by a raft of reforms passed in the run-up to the conference, key among them a draft law passed by the Cab-inet in February that paves the way for privatization of the energy sector.

The new law aims to move the state toward a regulatory role, and away from directly managing the electricity sec-tor. According to a cabinet statement, it calls for the cre-ation of an independent enti-ty to “ensure the preservation of the interests of consumers and providers of the service and a balanced relationship between them.” The law will also introduce rules to permit “free competition” in the pro-duction, transfer, distribution and sale of electricity, and

will separate the transport, production and distribution of electricity.

In short, the changes to the law will allow private compa-nies to transmit and sell elec-tricity directly to consum-ers, leaving the state owned Egyptian Electric Holding Company out of the process. This new model will offer the private sector a greater scope of activity in the ener-gy generating sector, as well as open up new platforms for funding and growth. And if the deals announced at the EEDC are anything to go by, liberalization of the power sector shows great promise as a way to get more electric-ity online in Egypt.

More than just energyThe EEDC attracted billions of dollars in investment, not only in PV power plants, but also in manufacturing facili-ties, research and develop-ment, and training. A focus on social development as well as clean energy genera-tion has made some projects stand out. For example, SkyPower Global has pledged to roll out programs for professional development, skills training and academic/vocational certification for young people. Its EduGreen Program will provide certifi-cation, education, and schol-arships for Egypt’s youth cen-tered on renewable energy. The plan is for EduGreen to be delivered in tandem with a globally recognized univer-sity as a sister institution to an Egyptian university, and encourage international col-laboration. The company will be subsidizing the project.

“We have also commit-ted to building a solar lab in Egypt for the research and development of advanced solar technologies to im-prove the efficiency of solar and try to find innovative new technologies that would advance renewable energy,” adds Mr. Adler. “This is what sets SkyPower apart glob-ally. We are not only about building and selling power. Indeed this is the core of our business, but we are also firm believers in ensuring that we are strong participants and contributors in the commu-nity. We are focused on creat-ing jobs in addition to helping build economies and deliver-ing clean solar energy.”

Fast action With Egypt taking “fast ac-tion for the first time in the

history of Egypt’s electric-ity sector,” according to Dr. Shaker, the Minister of Elec-tricity and Renewable Ener-gy, the nation clearly means business. It has already intro-duced at least 3.6 gigawatts of power in 2015 so far – a pro-cess that would normally take three to four years.

If power continues to be added to the grid at such a rate, with renewable energy at the core of this process, Egypt can wave goodbye to the energy shortages that have plagued the country’s progress and finally welcome true socio-economic devel-opment, the likes of which it has never seen before.

“I have a lot of respect for, and am truly impressed by, the country’s vision and lead-ership,” says Mr. Adler. “I have every confidence Egypt will become a solar energy giant in the region.”

With a stabilizing politi-cal and economic landscape, coupled with international investment, Egypt is sure to become one of the world’s top renewable players in the near future.

“Today, countries that succeed are those that can get in front of the trends, innovate, work together and deliver results. Egypt is moving with speed and scale, and reimagining a future centered on its people”

JEFFrEY iMMElT, Chairman and CEo of gE

“The availability of energy and managing the demand for it is one of the main priorities on the Egyptian development agenda”

AbdEl FATTAh El-sisi,president of Egypt

“The signing of our monumental agreement demonstrates the shared passionate aspirations of global partnerships that will substantially impact the country’s GDP, contributing approximately $16.1 billion, resulting in increased opportunities for employment, skills training, youth and education”

KErrY AdlEr,president and Chief Executive officer of skypower global

“Egypt needs a powerful and reliable energy system to support its long-term, sustainable economic development, and experienced partners who understand the specific challenges facing the country”

JoE KAEsEr, president and CEo of siemens

Memorandums of understanding for electricity and power projects worth around $22 billion were signed at the EEDC

energy potential in the spotlight

distributed by UsA TodAY 11Thursday, August 6, 2015



Egypt is relying on its oil and gas sec-tor to drive its am-bitious economic plan and help the

country achieve its overall economic targets, a goal it will need to accomplish while the industry continues to over-come some acute challenges.

“[Achieving] sustainable economic growth is at the top of Egyptians’ expectations of the current government,” says Sherif Ismail, Minister of Petroleum, who oversees the agency responsible for the coordination and devel-opment of Egypt’s oil and gas industry. “This means there will be more responsibility on the petroleum sector to secure the energy supplies needed to achieve targeted economic growth, which in turn means higher energy demands.”

It’s a tall order for an indus-try that has been beset with the worst energy crisis in de-cades. Rising energy demands, lower output from maturing oil fields, terrorist attacks on its infrastructure, and slumping oil prices have all contributed to a challenging environment, yet there’s still reason to be optimis-tic, says Mr. Ismail.

President El-Sisi’s election last year came with bold reforms aimed at the oil and gas industry. The announcement to phase out fuel subsidies, which gob-bled up a quarter of the nation’s budget, has helped to stimulate the economy and give the gov-ernment greater flexibility in meeting its debt obligation. Fall-ing behind on payments to for-eign operators stalled oil and gas exploration for years as develop-ment plans were put on hold till arrears were paid.

The government took con-crete steps to resolve the issue; in December 2013 it made a payment of $1.5 billion, whit-tled the debt down by another $3.5 billion last year and is on track to minimize its debt in 2015. The pay-off has led to swift and renewed interest in oil exploration and develop-ment. Since November 2013, 56 new exploration and supply agreements have been reached with international oil compa-nies, ringing in investments worth more than $12 billion and setting Egypt on course to once again thrive as an oil pro-ducer in the region.

In fact it was energy deals that dominated Egypt’s Eco-nomic Development Confer-ence earlier this year, attracting some of the most influential power brokers in the world. British Petroleum, for instance, signed a $12 billion deal for exploration and resource ap-praisal activities, while Inter-national power company Eni inked a development deal with the Ministry of Petroleum worth an estimated $5 billion.

“This is of great significance since it is expected to contrib-ute to securing supplies of gas to meet increasing local demand,” says Mr. Ismail. “The total value of investments used to imple-ment projects in the next four years will result in the produc-tion of 200 million barrels of oil and 1.3 trillion cubic feet of gas.”

Oil production peaked at 922,000 barrels per day in 1996, but the country’s oil fields have matured considerably and crude output has fallen to about 600,000 barrels per day, making it all the more critical for Egypt to pursue exploration initiatives to meet the needs of its growing population.

The current drop in oil pric-es, meanwhile, has not slowed the country’s drive for greater energy independence. “Many firms may decide to reduce their total global investments as a result of falling oil prices, yet some major companies see it as an opportunity to invest in drill-ing operations and services,” the Minister comments.

In a move to enhance the investment environment the government has shown a willingness to renegotiate en-ergy prices to reflect the cost of exploration.

“In light of the high cost and risk of recent discoveries in

Mediterranean deep water, new models for production-sharing agreements were created to achieve appropriate revenues and encourage petroleum com-panies to accelerate the process of putting the discoveries on the production map,” continues Mr. Ismail. “This will be a win-win situation for the exploration companies and local markets.”

Mr. Ismail also points out that, to help accelerate bringing petroleum products to market, Egypt is expanding its refining capacity and embarking on a series of ambitious projects to develop petroleum infrastruc-ture. “We are updating exist-ing refineries, improving their safety, and raising capacity lev-els. We are also setting up new units for the production of pet-rol, gas oil, liquefied petroleum gas, and asphalt to meet the needs of the domestic market.”

The government has sunk nearly $6 billion in upgrad-ing facilities in Alexandria, Suez, Assiut, and Mostorod. The Middle East Oil Refinery Company (MIDOR) refinery in Alexandria is being expand-ed to increase capacity by 60%, with an infusion of $1.3 billion in funds; additional output is expected to come online by the end of 2017. More projects are in the works to increase output at other refineries. Construction is underway for a $220 million plant in Alexan-dria which is expected to pro-duce 500,000 tons of gasoline a year, while a new unit in Assiut will produce 400,000 tons of gasoline a year to help supply the Upper Egypt region.

If the Minister is eager to fast track his exploration and development plans, there is good reason. Egypt’s energy demands have been briskly out-pacing its capacity. Over the last five years, energy production grew at an average rate of 1% a year while the country’s con-sumption rate grew more than 5% annually. To help bridge the gap, the Ministry is employing a multi-pronged strategy, which includes expanding domestic natural gas production.

The North Alexandria and West Mediterranean Deep-

water project, a strategic gas resource in the West Nile Delta area, is being developed in partnership with British Pe-troleum and German oil com-pany, R.W.E. Dea. The project will help supply the country’s natural gas requirements to the tune of 1 to 2 billion cubic feet per day, equivalent to 25% of Egypt’s current natural gas pro-duction. The Ministry is also expanding operations at other offshore facilities, including The West Delta Deep Marine Project and Project Decca in the Mediterranean Sea. On-shore projects in the Western Desert are also being revital-ized to improve efficiency.

Imports of liquid natural gas are also being beefed up to close the gap between pro-duction and consumption. The Ministry inked a deal with the Norwegian gas com-pany, Hoegh, to begin provid-ing shipments of natural gas and is negotiating a similar ar-rangement with Russia’s Gaz-prom. These new contracts are being added to Egypt’s growing list of international suppliers to maintain a steady stream of natural gas to the country particularly during the summer months when de-mand is at its highest.

Another critical part of the government’s strategy is to raise public awareness of energy conservation. The elimination of fuel subsidies has driven prices higher for many, but the Minister suggests there is a pos-itive side for consumers and the environment.

“National awareness of en-ergy conservation will help citi-zens accept a system that allows for the rational and efficient use of energy,” he says. “Egypt will secure a new energy mix by di-versifying its resources and us-ing new and renewable energy.”

TransformingPetrochemicalsEgypt’s energy crunch has the government focused on a master plan to improve energy self-sufficiency. With one eye on exploration and the other on developing the downstream sector, Egypt is one of the fast-est growing petrochemical markets in the Middle East and North Africa region.

In an industry driven by private investment – as well as state initiatives – perhaps the most important recent de-velopment in the downstream sector has been the launch of the Tahrir Petrochemicals Complex by Carbon Hold-ings. The largest venture of its kind in the country, the $7 billion mega-project will dra-matically expand Egypt’s pet-rochemical potential.

Located at the southern end of the Suez Canal, the sprawling complex will feature a naphtha

cracker plant, the first of its kind in Egypt and the largest in the world. The complex will include a dedicated 300 mega-watt combined cycle power plant, a wastewater treatment plant, and a full-fledged water desalination facility that will be operated by General Electric’s proprietary ultra-filtration and reverse osmosis technology.

“We are going to be the first liquid cracker,” says Basil El-Baz, Chairman and CEO of Carbon Holdings. “It will produce eight or nine different products. It’s a massive com-plex, sitting on a site of nearly 5 million square meters.”

The project will take five to six years to complete and once operational is expected to gen-erate annual revenue ranging from $6 to $9 billion and in-crease the country’s overall an-nual exports by more than 25%.

Cracking in the petro-chemical industry refers to the method used to break down complex hydrocarbons into the chemical raw materials that are used to manufacture products consumers use every day. In-stead of relying on natural gas, Tahrir’s cracker will use 350,000 tons of naphtha, a liquid hydro-carbon mixture. It is expected to produce 1.5 million tons of polyethylene, 880,000 tons of polypropylene, 215,000 tons of butadiene and 100,000 tons of

Hexene-1, in addition to annual outputs of gas and petrol. Car-bon Holdings’ new technology is expected to give the company a competitive edge producing at a lower cost while selling at global prices.

Big ideas are not unusual for Mr. El-Baz, who as an under-graduate at Harvard University developed the concept for build-ing an ammonia plant in Egypt. His feasibility study earned him a grant from the United States Trade Development agency and eventually financing from the Import-Export bank. What started out as a dorm room proj-ect became known as the Egyp-tian Basic Industries Company or EBIC. It went on to become the 6th largest global exporter of ammonia and in 2005, OCI, the Netherlands based fertilizer manufacturer, acquired a major-ity stake in the company.

The Carbon Holdings CEO now suggests that the Tahrir project will kick start an indus-trial revolution that will help Egypt’s struggling economy get back on its feet. The con-struction phase of the project will create 20,000 jobs, employ more than 3,000 technicians and engineers and produce an-other 25,000 to 50,000 indirect jobs. Between purchasing the raw materials and selling the final product, the economic cy-cle will have a projected benefit of $15 billion per year.

“This will have a tremendous impact on the banking sector,” says Mr. El-Baz. “Each one of these financial institutions that we are dealing with will have to employ people to handle the flow of what is taking place.”

Carbon Holdings’ strategic goal is to attract more domestic customers, which would create a domino effect. More domes-tic manufacturers would mean more Egyptian made end prod-ucts that are less expensive than imports, leading to increased purchasing power and eco-nomic growth.

The spirited entrepreneur also believes an industrial revo-

lution would be the ultimate solution to a threat that has dogged the region and kept foreign investors cautious – terrorism. “Among the region’s youth, it is a common belief they are being forgotten and their governments do not care about their future, the so called Islamic State exploits this disen-chantment,” Mr. El-Baz wrote in a recent Op-Ed in the Global Post. He went on to argue that a military effort must be part of a broader strategy to bring fundamental change to the economy and bring hope to the country’s youth.

Mr. El-Baz expects his Tahrir mega project and the ongo-ing facelift and expansion of the Suez Canal to help create that opportunity. “We want to set up the manufacturing right next to where the product is, ideally, adjacent to the ware-house of the storage tank. In an ideal world, there is a consumer market right next to that pro-duction facility.”

Expansion of the Suez Canal is expected to draw more traf-fic, resulting in more logistics and warehousing operations, which in turn is expected to attract more manufacturers. “For a company like ours that produces a variety of pet-

rochemical products, these manufacturers are going to require the products that we produce,” continues Mr. El-Baz, who says there have already been serious inqui-ries from manufacturers who want to set up shop in Egypt.

Egypt’s state initiatives in petrochemicals are also being ramped up. The government is looking to leverage its natu-ral gas reserves with plans to spend more than $14 billion in developing its refining and pet-rochemicals sectors over the next five years.

The Egyptian Ethylene and Derivatives Company (ETHY-DCO) is a joint venture formed by three state-run petrochemi-cal companies and will save the country more than $500 million in annual imports and boost its exports of ethylene to Western Europe and Africa.

Egypt consumes about 500,000 tons of ethylene a year. The new factory which is ex-pected to begin production by the end of the year will manu-facture 460,000 tons of ethyl-ene, and 400,000 tons of high and low density polyethylene annually, enough to cover 45% of local demand for ethylene. Ethylene and polyethylene are used in the production of plas-tics and chemicals. The plant will also be capable of produc-ing 20,000 tons of butadiene, a first in Egypt. Butadiene deriva-tives are used in the manufac-turing of products ranging from tires to golf balls.

“It is heavy industry that un-derpins any economy, and our government understands that and supports the industrial-ization of Egypt in an unparal-leled way,” explains Mr. El-Baz. “The level of optimism I have now is very different than any level of optimism I’ve had pre-viously. Unlike previous gov-ernments, this government is very receptive to creative ideas and non-governmental par-ties raising concerns or giving suggestions. That in itself is ex-tremely encouraging.”

Oil and gas reforms create fresh investor interest

Having suffered its worst energy crisis in decades, the oil and gas industry is now bouncing back. Following bold reforms to minimize debt, a host of new agree-ments have been reached with international oil companies, ringing in billions in investment and setting Egypt on course to once again thrive as an oil producer

“[Achieving] sustainable economic growth is at the top of Egyptians’ expectations. This means there will be more responsibility on the petroleum sector to secure the energy supplies needed to achieve targeted economic growth, which in turn means higher energy demands”

shEriF isMAil, Minister of petroleum

“It is heavy industry that underpins any economy, and our government understands that and supports the industrialization of Egypt in an unparalleled way. The level of optimism I have now is very different than any level of optimism I’ve had previously”

bAsil El-bAz, Chairman and CEo of Carbon holdings

T he label “Egyp-tian cotton” on a set of bed sheets evokes sweet dreams

of luxurious softness. Indeed, Egyptian cotton was once the bar against which all other linens and clothing were mea-sured. So sought-after was it that some said Egyptian cot-ton was as much a symbol of Egypt as the Pyramids of Giza.

“Egypt has had a long his-tory of textile manufacturing and we have one of the best cottons in the world,” says Mohamed Kassem, Chairman of the Ready Made Garment Export Council, a public-pri-vate partnership between the Ministry of Trade and Indus-try and some of Egypt’s most prominent clothing exporters.

But since the 2011 revolu-tion, Egyptian cotton’s star has faded as cash subsidies from the government and output of premium cotton have shrunk.

Yet as production of Egyp-tian long-fiber cotton has fallen – from a high of nearly 2.5 billion bales in 1970 to just 340,000 today, according to the U.S. Department of Agricul-ture – the textiles market has been blossoming. Exports of textiles and ready-made gar-ments (RMG) have reached $2.5 billion, and the sector gen-erates around one in three jobs in more than 4,400 companies around Egypt.

Mr. Kassem says the sector has its sights set on even more growth, driven by exports to Egypt’s two biggest markets for textiles and RMG; the United States and the European Union.

“Our goal is to increase from the $2.5 billion in ex-ports that we are currently

producing to $10 billion by 2025,” he asserts.

With the international mar-ket projected to double in the next 10 years from $350 bil-lion to $700 billion, Mr. Kas-sem adds, “It will not be diffi-cult to reach our goal if we do our job right.”

Part of doing the job right involves changing with the times and producing garments and textiles with other materi-als besides Egyptian cotton, explains Mr. Kassem, who spent years in the foreign ser-vice – including a stint at the Egyptian embassy in Washing-ton, D.C., as the commercial attaché in charge of promoting Egyptian exports.

“Our Egyptian cotton is what they call the ‘extra-long staple.’ The demand for this type of cotton does not exceed 3-4% of the total demand of all fibers. To be a major player, other fibers including short staple cotton must be used.”

Egypt will not completely abandon the luxury cotton that bears the nation’s name, but the industry has realized

that “you cannot use an ex-pensive Egyptian cotton to produce cheap yarn,” affirms the Ready Made Garment Ex-port Council chairman. And that’s the way the market is go-ing, according to Mr. Kassem. “To be a player in this market, you need to play the game that everyone is playing.”

Last year, around one third of Egyptian textile exports and more than half of Egyp-tian ready-made garments went to the United States. Textile exports to the United States represent a quarter of non-oil exports and 20% of total manufacturing in Egypt.

Playing a large part in Egypt’s success in the U.S. market are the 15 Qualifying Industrial Zones (QIZ) in the country. Companies in QIZ can export goods to the Unit-

ed States duty-free, provided at least 35% of the product they sell is manufactured in a qualifying zone and 10.5% of the product or its component parts are made in Israel.

Waleed El Zorba, the Chair-man of the Nile Clothing Com-pany, says QIZ was “a life-saver for my company.”

“Asia was so cheap, and they had so much capacity that if I didn’t have that com-petitive edge, I wouldn’t have been on the map.”

But because of the advan-tages that come with operat-ing in a QIZ, “We really stood out and we offered a lot of val-ue to the importers and retail-ers,” continues Mr. El Zorba.

According to the Egyptian Trade Ministry’s QIZ web-site, exports from Egypt have risen sharply since QIZ began,

“with the bulk of these exports going to US markets.”

Mr. El Zorba says there’s an attraction to doing business with American companies that is hard to find elsewhere.

“Europe is very segmented. England is buying for England; France is buying for France, so the order quantities shrink ac-cordingly,” he explains.

“When you sell to Walmart, you are selling to 3-4,000 of the biggest stores in America. Or if you sell to Levi’s, they are selling to all of the department stores across America.”

Mr. Kassem agrees that Egypt’s QIZ has had a huge, positive impact on business. But, he adds, it has also en-hanced Egypt’s relations with one of its neighbors.

“Through QIZ, we are now duty-free exporters, but

there is also a political ini-tiative, which brings Israelis and Egyptians together in business. In my opinion, this is one of if not the only po-litical initiative that has paid back,” he says.

Mr. Kassem adds, however, that it has been a struggle to maintain double-digit growth that the textile and RMG sector was enjoying be-fore the 2011 revolution. Not only have government sub-sidies for luxury, long-fiber cotton dried up, but so did some customers’ confidence.

“We are holding our ground at a very high cost with a lot of hard work to keep our customers from leaving. In the first days of the revolution, we were send-ing out situation updates so that they didn’t rely on Fox News to hear what was hap-pening,” Mr. Kassem says.

Mr. El Zorba admits “I was actually spending almost every other month traveling to New York to let people know that our ports are open, business is running, there would be no stop in flow, and don’t pay at-tention to everything you are seeing on the news.”

His company never missed a delivery to clients, even at the height of the revolution. “But that took about a year for them to realize,” he says.

Today, Egyptian textile and RMG companies are begin-ning to turn the corner, and Mr. Kassem is urging Ameri-cans to continue buying made-in-Egypt clothing and textiles.

“Garments out of Egypt are seeking customers in the U.S. Every garment you buy from Egypt is a vote for democracy.”

Textile companies aim to quadruple exports by 2025

While the much celebrated Egyptian cotton has fallen from grace in recent years, elsewhere the textiles industry has been truly blossoming. Now representing 20% of manufacturing exports, the sector is buoyed by an initiative that has both helped increase trade with the U.S. and improve relations with Israel

“Egypt has had a long history of textile manufacturing. [Now] our goal is to increase from the $2.5 billion in exports that we are currently producing to $10 billion by 2025. It will not be difficult to reach our goal if we do our job right”

MohAMEd KAssEM, Chairman of the ready Made garment Export Council




Azazy looks to build a better future for Egypt

A new day in edu-cation is dawn-ing in Egypt where a long-time private pur-

veyor of high-quality, West-ern-style instruction is taking further steps to bring interna-tional teaching and learning standards to the country, while at the same time the govern-ment is promising wide-rang-ing reforms aimed at hauling the Egyptian educational sys-tem into the 21st century.

“Egypt is again connecting with the rest of the interna-tional community and this new era is represented by our slogan: ‘A Place for Everyone in the World’. Our intent is to use our proven experience for a better future for our country,” says Khaled Hassan Azazy, the chairman of the Azazy Group.

Founded by the chairman’s father almost 60 years ago with the establishment of a small private school, the Group now operates 14 primary schools, a secondary school and a uni-versity educating more than 20,000 students, with almost 20% from other countries in-cluding the United States and United Kingdom.

In its latest effort to bring quality education to Egypt, the Azazy Group late last year signed an agreement with the United Kingdom franchise school, Malvern College to open the British educational institution’s first location in the Middle East which will serve students aged 3 to 18.

Built on the same principles as its parent organization back home, Malvern College Egypt will be a co-educational day school. Parents will be able to enroll their children starting September 2015. The school is ideally situated be-tween two well-known and affluent parts of Cairo, Maadi and New Cairo.

“We’ve had very positive feedback from parents of po-tential students as they have been waiting for quite some time to be able to gain access to the type of high-quality ed-ucation that we will be offer-ing at Malvern College from September 2016.

“It is one of the leading independent schools in the United Kingdom and our aim is to emulate its success by hiring the very best educa-tors thus creating a vibrant atmosphere within our school where inquisitive young stu-dents have the opportunity to reach their full potential,” the chairman says.

Founded in 1865, Malvern College is one of Britain’s top independent schools, with a 150-year track record for as-sisting students in reaching their full potential through a broad curriculum that focuses on academic work as well as sports, music, art and drama.

Some of Malvern Col-lege’s most well-known Brit-ish alumni include the author C.S. Lewis, creator of the much-loved children’s classic The Chronicles of Narnia, and Maurice Wilks, who conceived and developed the Land Rover automobile manufacturer.

Malvern has already estab-lished one foreign academic outpost in China and Mr. Azazy says that the Group hopes to grow the franchise even further within Egypt and beyond. It is already in talks on expanding into other Mid-dle Eastern countries where international education has become a huge growth indus-try, and even into Europe.

The celebration launching Malvern College in Egypt rep-resented a major milestone for the country’s primary educa-tion system and was attended by Prince Michael of Kent, cousin of Her Majesty Queen Elizabeth II, British Ambas-

sador to Egypt John Casson, as well as Baroness Gloria Hooper, actress Liz Hurley and Omar Sharif.

Other attendees included Chairman of Malvern Col-lege Lord MacLaurin, former First Lady of Egypt Jehan Sa-dat, Malvern College Head-master Antony Clark, and former British Prime Minis-ter Tony Blair who promised that Malvern College Egypt will provide “education for an open mind.”

“It makes perfect sense to combine the long-standing expertise of foreign educa-tional institutions with part-ners who are aware of the lo-cal culture,” Mr. Azazy argues. “It creates a dynamic mix where the strengths of both partners can be brought to the forefront for the benefit of students and parents alike.”

The Azazy Group applied that same philosophy when it took its first step into higher education by establishing Future University, one of the

newest and most promising universities in Egypt and locat-ed in the heart of New Cairo.

“We founded our university in 2006 and it has experienced unprecedented growth, even through the revolution,” Mr. Azazy explains. “The country keeps growing and the educa-tion sector is one of the most resilient in Egypt.”

Through excellence in teaching, research and ser-vice, Future University strives to provide a comprehensive, high-quality education that prepares graduates to be fu-ture leaders.

The campus provides a creative, nurturing environ-ment where students can realize their potential while learning from a talented, well-qualified faculty.

The university’s fully-ac-credited faculties focus on small-group teaching sessions or lectures, labs and tutorials.

It currently hosts six facul-ties: oral and dental medicine, pharmaceutical sciences and

industries, engineering and technology, economics and political science, commerce and business administration and computer science and in-formation technology.

Key to Future University is its much-admired range of partnerships with such pres-tigious U.S. institutions as the University of Cincinnati, Louisiana State University, the University of Maryland, Temple University, the Uni-versity of New Mexico, as well as others in Ireland, Lat-via, Italy and Hungary.

Depending on the school, partnerships include faculty, staff and student exchanges, joint research projects and knowledge transfer, and shared seminars and courses, among other activities.

“We have great respect for the U.S. education sys-tem and we recognize U.S. schools are always at the top of the rankings,” the chair-man says. “So the United States means a lot to us. It is

the leader in specialized edu-cation such as medicine and we want to follow its lead.”

With that in mind, the Group is now planning an even more ambitious project: Knowledge City, a vast edu-cational and cultural complex gathering together branches of universities from the United States and the United King-dom, research centers and other facilities.

“We want to partner with these universities to build a world-class medical school with its own university hospi-tal based on American stan-dards,” the chairman explains.

“We are also aiming to cre-ate a cultural city with student and faculty accommodations, a theater, an opera house and a convention center, also with partners from abroad.”

Services to be provided in-clude food courts, banks, post offices, and a gymnasium, as well as consultancy offices and conference rooms for private sector partners.

Based on studies of Egypt’s needs, Knowledge City will focus on information tech-nology, engineering, science, finance, medicine, econom-ics, environmental studies, political science and law as well as the tourism and hos-pitality industries.

Knowledge City will oc-cupy approximately 200 acres on the outskirts of Cairo near Badr City and will be located close to Cairo International Airport, the Suez Canal and the Red Sea.

Running parallel to these ef-forts by the private sector are government programs target-ing the many challenges facing Egypt’s public education sys-tem which has suffered years of underfunding, antiquated teaching methods and inad-equate and badly paid teachers who must moonlight as tutors to make ends meet.

According to a survey car-ried out by an international NGO which works with the Ministry of Education, the illiteracy rate in some Egyp-tian schools is as high as 80% and many students complete grammar school unable to read and write.

Also impacting the system is the fact there have been four different education ministers and constant changes in the

public school curriculum since the fall of former president Hosni Mubarak.

Even though the median age of Egypt’s population of 82 million people is just 25, the country spends less than 4% of its GDP on education which compares unfavorably with 5.4% in the United States and more than 6% in the Unit-ed Kingdom.

This results in the equally dismal statistic that more than one fourth of Egyptian youths are unemployed and 54% of women in this age group are jobless.

Egyptians, understandably, are shocked at the situation. Since ancient times the coun-try has been a leading center of intellectual and cultural life and for several hundred years, home to the Arab world’s lead-ing universities and religious training centers as well as host-ing the region’s most prolific publishing industry.

Indeed, for ambitious stu-dents from Morocco to Myan-mar, Egypt boasted the most prestigious centers of learning where they could sit at the feet of renowned scholars and ab-sorb the wisdom of the ages, a glorious time which educators want to see return.

Two years ago, Egypt was ranked last in primary educa-tion quality in the World Eco-nomic Forum’s Global Com-petitiveness Report. Last year it moved up two places among the 144 countries assessed, a slight improvement but there is still a long way to go.

And the Egyptian govern-ment is stepping up. An entire-ly new classroom curriculum has been announced, teaching methods are being overhauled to put more emphasis on criti-cal thinking in place of rote learning and plans call for the hiring of 30,000 better quali-fied teachers and higher wages.

Last year, President Ab-del Fattah El-Sisi appointed an Education and Scientific Research Council which will work to ensure improvements in the school system, a step which Mr. Azazy welcomes.

“This was a significant step and heralds further changes in the public education sec-tor. And this reflects our own visionary efforts to provide young people with the intellec-tual tools and skills needed for success in today’s world.”

Founded almost 60 years ago, the Azazy Group operates 14 primary schools, a secondary school and Future University, one of the newest and most promising uni-versities in Egypt located in the heart of New Cairo. The Group now plans to build Knowledge City, a vast educational and cultural complex which will gather together branches of universities from the United States and the United Kingdom, as well as research centers and other facilities

“We founded our university in 2006 and it has experienced unprecedented growth, even through the revolution ... the education sector is one of the most resilient in Egypt.”

KhAlEd hAssAn AzAzYChairman of the Azazy Group

Key to Future University is its much-admired range of partnerships with such prestigious U.S. institutions as the University of Cincinnati, Louisiana State University, the University of Maryland, Temple University, the University of New Mexico, as well as others in Ireland, Latvia, Italy and Hungary

“We have great respect for the U.S. education system and we recognize U.S. schools are always at the top of the rankings. So the United States means a lot to us. It is the leader in specialized education such as medicine and we want to follow its lead.”

KhAlEd hAssAn AzAzYChairman of the Azazy Group

An artist’s impression of Malvern College

The Theater at Malvern College (artist’s impression)

A classroom at the soon-to-open Malvern College (artist’s impression)


T he political tur-moil that Egypt suffered over re-cent years could, and perhaps

should, have destroyed the country’s economy. And yet it didn’t. Egypt in fact man-aged to wriggle itself out from under potential economic collapse when the country seemed to be facing almost insurmountable challenges. Many point to the character-istic resilience of the Egyptian people as a reason for the country’s survival. Others to the fast-action of President El-Sisi’s government when it came to power last year. While it is arguably down to a combination of factors as to why we are today seeing a great Egyptian comeback, none of it would have been possible without the country’s ever steady banking sector.

Spearheaded by the Cen-tral Bank of Egypt (CBE), the robust banking industry’s capacity to endure the de-bilitating economic impacts of two revolutions (and four Presidents) in little over three years, as well as the global fi-nancial crisis of 2008, is quite incredible to say the least.

The strength of the sector owes to a process – led by the CBE – of consolidation, privatization and increased foreign ownership realized in the early 2000s. This regula-tory reform produced banks that were at times arguably the healthiest out of the de-veloping markets around the world over the past decade, and so, when 2011 and the first Egyptian uprising hit, the country’s banks kept a steady ship – with many continuing to post good profits.

Indeed Egypt’s banks pro-vided a much-needed back-bone to the country during this testing time. Now, with the country’s fortunes slowly being reversed as inves-tor confidence returns to its economy, the sector is well-placed to engineer further widespread economic growth the likes of which Egypt has never seen before.

The recent Egypt Economic Development Conference (EEDC) has highlighted just how much ambitions have changed over recent months. The EEDC, which took place in March, presented 120 proj-ects, including more than 10 so-called megaprojects that straddled across both public-led and public-private partner-ships. Inevitably, Egypt’s well-regarded banking sector was essential to the success of this process. The Ministry of In-vestment has already allocated more than 30 projects totaling in excess of $20 billion to in-vestment banks, and the belief is the strategy will help power the country’s economic growth over the medium to long term.

“I believe that initiating mega projects in the country is

the best way to lead and kick-start the economy and create employment,” says Mohamed Naguib Ibrahim, Chairman and Managing Director of SAIB, ranked as Egypt’s 10th largest institution with plans to expand from 15 branches to more than 40 by 2017. “Es-tablishing large national in-frastructure projects in Egypt will contribute to solving the unemployment problem of the country, and the Suez Ca-nal Expansion Project is a very good example.”

On top of this, the SAIB chairman says that the poten-tial of the banking market can be reached through develop-ments such as those discussed at the EEDC, with projects helping to drive investor con-fidence and further reflect the strength of the Egyptian bank-ing sector around the world.

“Both local and foreign in-vestors, who want to do busi-ness in Egypt, have total confi-dence in the banking system,” says Mr. Ibrahim. “Our bank-ing sector is one of the best in the world when it comes to reserves, loans and other financial aspects.”

Keeping the trustSuch confidence is bolstering growth opportunities, which are widespread across indus-tries, and the banking sector is preparing for expansion of its own across both its retail and commercial operations. Hisham Okasha, Chairman of the National Bank of Egypt (NBE), believes that while the industry has undoubtedly been central to Egypt’s resur-gence following the upheaval of recent years, retaining this trust has been vital.

“The Egyptian banking sector has proved robust and withheld one stress test after the next since the global fi-nancial crisis of 2008,” he says. “This is because our main de-posit base is from the retail industry. 70% of the deposit base in the banking sector comes from households.

“Looking at Europe’s bal-ance sheets, loans to deposits are 120-150%,” he continues. “In Egypt, it’s different be-cause people put their savings in the bank as they have trust in the banking sector. This confidence was more clearly represented over the last four years when there was huge political and social turmoil. Yet, people kept trust in the banks, kept their money in the banks, and now we have around 1.6 trillion EGP ($204 billion) of deposits, and 70% of them are as individuals. This is what gives Egypt’s banking sector stability.”

What’s more, the belief dis-played in the banking sector from investors at the recent EEDC summit in March has already begun to pay off fur-ther. The credit rating agency Moody’s upgraded the coun-try’s prospects in April, notch-

ing up five major Egyptian banks ratings from CA1 to B3.

“The support we received from the attendees at the EEDC showed unanimous interna-tional backing for Egypt, which was translated into the mega-projects that were announced,” says Mohamed El Alfy, Manag-ing Director of Engineering and Investment at the Housing & Development Bank.

Access to finance Though Mr. El Alfy believes that such support is beneficial to Egypt’s growth in the rela-tive short term, he says that one of the main challenges go-ing forward is how to change the culture of banking in the county – one where only a minority of people have bank accounts and work in the in-formal economy. By increas-ing financial services to both citizens and businesses, Mr. El Alfy says that the private sec-tor will be the main driver of Egyptian growth in the future.

“Unfortunately, Egypt is over-banked but under-served. You have almost 40 Egyptian banks operating almost 4,000 branches over Egypt, and you have around 10 million bank accounts with a lot of people having multiple accounts. This leaves a huge gap in the market,” he explains. “Many businesses transactions happen outside the banking sector, so you need to work on the awareness of banking. Everything is moving towards formalizing the economy.”

One way in which the Housing & Development

Bank is going about this is through its partnership with telecoms giant Vodafone to provide mobile banking – a method that has seen the number of people with access to banking increase dramati-cally throughout the Middle East and Africa over recent years. The bank also has plans to expand from its current 60 branches to more than 100 in two years time, largely off the back of booming demand in the real estate sector.

Chairman of NBE, Mr. Oka-sha, agrees that extending ac-cess to finance, especially in extending services to the coun-try’s many small and medium size enterprises (SMEs) – a large portion of which operate informally – will be a key cata-lyst for the extended success of banking and the wider econo-my in the future.

“SMEs are one of the Na-tional Bank of Egypt’s strate-gic targets as there is a plan to increase our portfolio to 25 billion EGP ($3.2 billion) in the following two years,” he ex-plains. “Enlarging the GDP of the country by formalizing the informal sector is a key con-tributor to the banking sector.”

Formalizing the economy this way is just one of the many developmental needs that Egypt is calling for as the coun-try embarks on what is a new chapter in its history. This new Egypt, says Mr. Okasha, is one of opportunity. There are pros-pects for growth wherever you look, and thus, openings for the banking sector too.

“Undoubtedly, a country with a population of 94 million requires real development. You are looking at opportuni-ties in infrastructure, energy, housing and all other sectors that follow, such as the food processing industry, which encompasses a very large and real economy. With such a population and a strategic lo-cation for logistical purposes, such as passage through the Suez Canal and the main ports of Egypt, the key elements for potential growth are formed. This entails fertile ground for the growth of any economy. The potential for growth in Egypt is huge, and that has been perceived by investors.”

Banking on investment Attracting further global invest-ment to Egypt’s banking sector will also facilitate increased growth rates, and NBE plans to build on an existing $600 million international bond it first offered in 2010 which was three and a half times oversub-scribed. Another bond is now being prepared to build on the confidence shown by investors, the majority of whom came from the likes of Asia, Europe and the Arab Gulf region.

Egyptian potential has also enticed foreign companies such as New York-based investment firm Concord Group, which is a leading fund manager of Egyptian securities. Mohamed Younes, Chairman at Concord International Investments, oversees a fund of around $2 billion and believes the banking sector is well-placed to uncover huge potential in Egypt, partly because of its diversified econ-omy and large consumer base.

“If you put the populations of the Gulf countries together (other than Saudi Arabia), they are smaller than Cairo. They are like villages with one in-dustry, oil, and no domestic market of any size. Others look at Egypt and think that it is a poor country with no resources except very nice beaches, nice markets, and a very enterpris-ing population. People don’t use critical thinking in looking at those things,” he says.

That sort of viewpoint seems to be shifting rapidly however, as foreign investors review the opportunities available and the ability of the country’s banking sector to facilitate them.

Cementing further inter-national ties between Egypt’s banks and the global invest-

ment community will indeed be vital for continued growth and SAIB’s Mr. Ibrahim says that while the reforms of 2003 have ensured a solid banking industry, the country must now look outward for further op-portunities. “The banking sec-tor in Egypt is solid, yet we still need to develop ourselves more to handle the increasing chal-lenges the sector is facing every day,” he asserts.

The Egyptian financial in-dustry has sailed through tur-bulent waters with remarkable success over recent years, and it is this strength which is now delivering the stable base for further expansion and more diversified economic growth. Challenges do exist though, not least dealing with the complica-tions of red tape.

“Bureaucracy is a very im-portant issue that goes back a very long time. It involves the laws, policies and culture and to handle those issues one has to think outside the box,” says Mr. Ibrahim, adding that such changes will be vital to encour-age continued investment.

Facing post-revolution economic meltdown, Egypt’s banks were key to its survival and are today the lynchpins in its recovery. As confidence returns to the economy, the sector is now well-placed to engi-neer unprecedented and widespread growth



“The Egyptian banking sector has proved robust and withheld one stress test after the next since the global financial crisis of 2008. People kept trust in the banks, kept their money in the banks, and now we have around 1.6 trillion EGP ($204 billion) of deposits”

hishAM oKAshA, Chairman of national bank of Egypt (nbE)

“I believe that initiating mega projects in the country is the best way to kick-start the economy and create employment. Large national infrastructure projects will contribute to solving the unemployment problem of the country, and the Suez Canal Expansion Project is a very good example”

MohAMEd nAgUib ibrAhiM, Chairman & Managing director of sAib

The twin towers of the national bank of Egypt stand tall over Cairo City

Banks provide backbone of stability

How do you see the current state of Egypt’s economy in terms of stability and po-tential for growth?

Mr. Mohamed El Alfy, Managing Director of En-gineering and Investment, Housing and Development Bank: The only way is up. The support we received from the attendees at the Egypt Eco-nomic Development Confer-ence (EEDC) showed unani-mous international support for Egypt which was trans-lated into the mega-projects that were announced, and we all witnessed the number of Memorandums of Under-standing (MOUs) signed, and I think this will materialize soon with the government. Minis-ters themselves are working energetically to translate these MOUs into real contracts and business on the ground.

Fundamentally, Egypt has all the requirements and plat-forms, which have been there since 2006, to kick start again. In 2011, for obvious reasons, there was a pause, the EEDC restored confidence and pushed a reactivation button that brought the whole inter-national community beside Egypt to support them on an investment, business, econom-ic and political bases. Purchas-ing power is there, consump-tion is there, the demography is there, indicating a young population, so it was an easy kick start or return to business. Out of the 94 million popula-tion 50% is below the age of 35, and they have been exposed to international trends. Consum-er behavior is changing along with demand. Moody’s rating was also the result of the “kick down” that the Central Bank of Egypt (CBE) governor made to the black market, a very smart move. The CBE Governor de-clared a couple of actions espe-cially before the EEDC, and we no longer have a black market for the US dollar. We have one rate in the exchanges and in the banks, so things are mov-ing in the right direction.

What are your thoughts on the overall success of the EEDC, and what do you think will be the most important follow-up post conference?

Tarek Abdel-Rahman, Co-CEO of Palm Hills Devel-opments: In my opinion, besides the MOUs that were signed, the conference was extremely important because it signaled that Egypt is open for business. The govern-ment is even willing to give the private sector the lead in infrastructure projects such as power, which along with real estate were the two most active sectors in the confer-ence. Also, the quality of the speakers was unbelievable. In which conference do you see the CEOs of GE and Siemens along with senior people from Pepsi and Coca-Cola, Chris-tine Lagarde, Tony Blair, Al-bert Speer and delegations from the Gulf countries to-gether? This signals again that foreign investors are interest-ed in Egypt and that Egypt is courting foreign investors.

Tarek Elrefai, General Manager of Barclays Bank Egypt: What happened at the conference is a success story. The real challenge now is how

to manage people’s expecta-tions and to deliver. If Egypt wants to continue doing this conference on a regular basis, Egypt needs to show results and keep up the momentum, which is really a big challenge.

Hisham Okasha, Chair-man of National Bank of Egypt: Investors need to see true changes within the envi-ronment. They must see that the projects are taking place. The projects that were de-signed and showcased at the conference are evidence of a clear building up of a strategy and plan. When you concen-trate on the energy sector and producing electricity, when you concentrate on the roads and the infrastructure, you’re building the main framework upon which you can build an economy. Egypt is looking for a means to enhance its output of energy and improve its mo-bilization through road net-works, railways and ports. It shows that this country is em-barking on a serious industrial development and construc-tion phase. If investors see those roads and energy plants being built, investment laws and tax reforms enforced, the clear message would be that the Egyptian economy is a market economy, the private sector has a major role, and it is open to investors.

Mahmoud Attalla, Group CEO and Vice-Chairman of CI Capital: Actually, the country was much more pre-pared than expected. Now we have to deliver on the promises that were made and be sure to follow all of the commitments and agreements that were signed during the conference very closely. I believe that Egypt will never have a better second chance for a first impression. Now we need to deliver. We as the private sector are pushing on our side, as the government is pushing on its end; if this en-ergy and enthusiasm continues I believe we will achieve great results. We do not want to lose time because as I’m telling you, when we are talking about electricity; it’s not the end but the start of something big. You have to prove that you are fol-lowing the plan, and you will attract investment.

During the Egypt Economic Development Conference, Egypt signed investment contracts and MOUs for projects amounting to over $130 billion. In your opin-ion, how prepared is Egypt for this type of investment?

Omar Mohana, Chairman of Suez Cement: In real terms, we are not prepared. I do not think we could handle this magnitude of investment in one burst, but it will come gradually. For example, energy is a prerequisite and without it, we cannot achieve much. The two main deals, in my eyes, were the GE and Siemens deal. To be able to increase the electricity capacity of Egypt by 50% in over a year and a half was a major breakthrough. The immediate upgrading of existing power stations by GE was really terrific. I met Jeff Immelt right after he met with President El-Sisi; Jeff was en-thusiastic and energized. GE operates in 180 countries. The presence of people like Jeff Im-melt and the CEO of Siemens, Joe Kaeser, along with Chris-tine Lagarde and the rest of the world’s leaders is the real suc-cess of the conference.

Mohamed Younes, Chair-man of Concord Invest-ment: Egypt has always been ready. The question is how these investments will be imple-mented, who will do the imple-mentation, what the time frame is, and what will be the quality of the guidelines. The respon-sibility is that of the companies doing the projects. Some are more prepared than others so it’s important that they launch them. It’s not important that all of them will succeed because

they won’t. It is important to change the mood and views of a country, which is what it takes to make it progress. The big-gest obstacle of the conference was not as much about chang-ing the perception abroad, but about changing the perception of Egypt in Egypt in addition to changing it abroad.

What are your thoughts on the potential of the Suez Canal expansion project, the SCZone and its antici-pated impact on Egypt?

Osama Bishai, CEO of Orascom Construction: The development of the access

is really interesting considering Egypt could be like Panama or any other area where you are creating value around a trans-portation hub. The challenge is to find the right businesses to fit. Egyptians have liked gran-diose things from the time we started building the pyramids. I think we should think a little bit simpler than that. If you talk to those in charge of the master plan, industrial areas are spoken of, however, stor-age hubs, transit businesses, and more dynamic rather than long-term industries need to be taken into consideration since they take a long time to become established.

Do you feel that the SC-Zone project is going to start an industrial revolu-tion in Egypt?

Yehia Zaki, Director of Op-erations, Dar al Handasah Egypt: The Zone should cre-ate an industrial awakening. We have very strong reasons to believe that industry can act as a hub in the area. Car-bon Holdings is working on a heavy industry project which is in our Master Plan in El-Sokhna in the Suez area. That project can act as a catalyst for quite an interesting develop-ment to take place.

Basil El-Baz, Chairman and CEO of Carbon Hold-ings: As we’ve been progress-ing through the financing with these export credit agencies, we’ve also seen many interna-tional manufacturers tracking our progress. In the last six months, there have been ex-tremely serious inquiries from manufacturers who want to set up shop in Egypt.

Imagine if we could give every citizen in Egypt $100 of additional disposable income a day. What would they spend it on? What is the chance that the thing that they buy are im-ported or it contains imported parts? In theory, there could be an additional $9 billion in im-ports if there is not something already sitting in the window labeled, made in Egypt. We must be careful when putting in place a program that en-hances the life of your citizens. It must be insured that there are employment opportuni-ties for the population as well as a manufacturing sector producing the majority of the products that the citizens will consume on a daily basis. Oth-erwise, the trade deficit will completely upend. The macro-economic impact of not ad-dressing this is tremendous.

Do you think the govern-ment is on track with the reforms made so far, and to what extent do you feel they will boost an economic re-surgence in the country?

Mohamed Naguib Ibrahim, Chairman and Managing Director of SAIB: Definitely yes; considering the fact that Egypt has passed through two revolutions. The country has been facing a number of challenges most important of which is the economic chal-lenge. I believe that initiating megaprojects in the country is the best way to lead and kick-start the economy and create employment. This is not an option, but a compulsory ac-tion. Employment is consid-ered a big issue these days, not just in Egypt, but worldwide as well. In fact, establishing large national infrastructure proj-ects in Egypt will contribute to solving the unemployment problem of the country, and the Suez Canal Expansion Project is a very good example. Though mega projects will not totally solve the problems of the country, these projects are a good start and we shall even-tually witness some economic reforms. Additionally, more steps should be taken to attract investors to Egypt. It should be noted in this respect that the new investment law and the EEDC of last March have suc-cessfully managed to achieve this point. I strongly believe that we are on the right track.

Amr Allam, CEO of Hassan Allam Construction: Work-ing with any government in the world is a very systematic and sometimes bureaucratic experience that requires a lot of patience. Over the years we have managed to operate smoothly in all our govern-ment related projects and de-livered them successfully on all fronts. The current govern-ment is business friendly and is exerting great efforts to ensure that businesses operate effi-ciently and in a well-structured environment. The will is there and I trust that the reforms and

changes taking place will ulti-mately enhance the Egyptian business environment. It takes time, but I think we will start seeing the effects soon.

Magdi Kassabgui, Chair-man of the Board, Reliance Egypt: I believe things can only improve as the Western world can now understand what happened in Egypt. They are beginning to com-prehend where we are coming from and where we are head-ed. Political stability will defi-nitely play a key role in Egypt’s economic growth, which will be seen in the next few years.

The government has taken important steps in economic reform, such as policies re-garding the attraction of FDI. However, much more needs to be done. I believe we will see FDI coming into the country and an economic growth rate of 3% to 4%, which is above the average of the rest of the coun-tries in the region. Egypt is on the right track in the sense that it is now politically stable, a state that has not been the case since 2011. Security is gradu-ally being restored.

There is optimism and ap-petite to focus on the oppor-tunities Egypt presents. We believe that the fact that there is better control of the cur-rency when compared to six to twelve months ago is aiding the country to improve its for-eign reserves. This positions the country in a better ranking, which has to be reflected in FDI coming into the country.

What fundamentals moti-vated you to invest millions of dollars in a time when most people were scared to invest in Egypt?

Basil El-Baz, Chairman and CEO of Carbon Holdings: For us, it’s very simple. We take a black or white view on the sur-rounding environment. Egypt has a population of almost 90 million people. It has the largest consumer market in the Middle East, an educated and skilled labor force, and a strategic geo-graphic location. That is, from our perspective, the envy of ev-ery jurisdiction globally. These elements will never change no matter what happens. The population will continue to grow. The consumer market will continue to expand, our geographic location will never change, and the consequence of this is that the fundamentals will always remain strong. Po-litical pressure may be applied to the country in various times as it has throughout our history, but Egypt has always remained, and it will remain central to the global dynamics of the econ-omy, whether from a logistics perspective, an economic lead-ership perspective or from a political leadership perspective.

Sherif Shahein, Vice Presi-dent of Baron Hotels & Re-sorts: We began construction of Baron Palace Sahl Hasheesh in 2010, just one year before the Egyptian revolution. When the revolution erupted, it was either we take the decision to stop or continue. It was a big investment as it is a luxury 6-star hotel with 645 rooms and suites. We took the decision to continue, and to continue with the same initial concept.

We continued because we believe in Egypt and that busi-ness would resume sooner or later. The situation was un-clear during the revolution. The country was in upheaval but we felt it was the right time to send a message to the world that we trust Egypt and that we are Egyptians. Now I can say that Egypt is back and stable. A statement I often hear that gives me pleasure is when guests remark that they did not think such a luxurious hotel existed in Egypt. They tend to expect such luxury in places such as Abu Dhabi, Dubai, or even Turkey, but not in Egypt. This means a great deal to me as it proves that we exceeded the expectations of guests visiting Egypt.


“Megaprojects will not solve the problems of the country, but they are a good start. More steps should be taken to attract investors to Egypt ...the new investment law and the EEDC of last March have successfully managed to achieve this point. I strongly believe that we are on the right track”

MohAMEd nAgUib ibrAhiM, Chairman and Md of sAib

“The real challenge now is to deliver,” affirm business leadersUnited World sat down for a roundtable with some of Egypt’s top executives, who reflected on the remarkable success of the Egypt Economic Development Con-ference, the potential of the Suez Canal extension project, and the reforms being made by the government to boost the country’s economic resurgence

“What happened at the EEDC is a success story. The real challenge now is to deliver. If Egypt wants to continue doing the conference on a regular basis, it needs to show results and keep up the momentum, which is really a big challenge”

TAriK ElrEFAi, general Manager of barclays bank Egypt

Amr Allam, CEo of hassan Allam Construction

“I believe that Egypt will never have a better second chance for a first impression. Now we need to deliver. We as the private sector are pushing on our side, as the government is pushing on its end; if this energy continues I believe we will achieve great results”

MAhMoUd ATTAllA, group CEo and vice-Chairman of Ci Capital




D e l i v e r i n g further eco-nomic growth in Egypt is clearly a key

focus for President Abdel Fattah El-Sisi and the role of investment banking in this task was clearly identified with the creation of a sov-ereign fund earlier this year.

The investment fund has been designed to support economic development by delivering returns on Egyp-tian assets and it is a sure signal that the country is ramping up its efforts to ex-pand its economic output.

Central to this will be Egypt’s investment banks and the creation of the Amlak fund, which will be managed and owned via the National Investment Bank and will help to gen-erate more diversified eco-nomic development.

Such growth has been assisted by an increasingly stable political outlook that has resulted in ratings agency approval and it is enabling Egypt’s invest-ment banks and manage-ment businesses to blos-som.

“Instability is not a con-cern for potential investors any longer in Egypt,” says Mahmoud Attalla, Group CEO and Vice-Chairman of CI Capital. “Moody’s and other rating agencies have been looking very care-fully at the country and its developments. I believe that the Egypt Economic Development Conference (EEDC) in Sharm El Sheikh in March was a very im-portant step for the gov-ernment to earmark their

progress. It was also a great opportunity for busi-nessmen and politicians to come to Egypt and see first-hand how things are very different in Egypt from what most people see and hear on the news.”

Mohamed Younes, Chairman of Concord In-vestments – a New York based group which is one of the leading fund manag-ers of Egyptian securities – concurs with Mr. Atalla regarding the impact of the EEDC, where $130 billion worth of agreements and Memorandums of Under-standing were signed large-ly in energy and construc-tion megaprojects. “The biggest obstacle of the con-ference was not as much about changing the per-ception abroad, but about changing the perception of Egypt in Egypt,” he says.

However, Mr. Younes also believes that the sense

of optimism surrounding the country must quickly be turned into action in order to build on the mo-mentum created by the conference. “We are ex-tremely optimistic [about Egypt’s potential], but the key is going to be imple-mentation. The question is how these investments will be implemented, who will do the implementa-tion, what the time frame is, and what will be the quality of the guidelines. The ease to invest, set up and start producing must be there,” he explains.

“The reason it is so dif-ficult is due to the intan-gibles of dealing with peo-ple’s motivations, energies, and state of mind. There needs to be successes and quick wins more than any-thing else. It will pick up people’s confidence that the system will work.”

Indeed while the Con-cord Investments chairman may understandably have concerns about the viabil-ity of some of the mega-projects unveiled at the EEDC – they are allayed by his trust in a government that has proven it can make things happen. “We’re lucky to have a government which is both down-to-earth and practical,” affirms Mr. Younes.

As work on the mega-projects does get under-way, sectors such as agri-culture, infrastructure and housing are all poised to grow as investment enters the respective markets. Mr. Attalla says his company is preparing to both sup-port and advise investors

on how related industries such as steel, cement and textiles could provide op-portunities.

“We will work with any sector that needs advice, be it in the real estate, renew-able energy, or agriculture sectors,” he vows. “On the private equity side we are most interested in anything that is related to consum-

ing and consumers, such as pharmaceuticals, agricul-ture and the food process-ing industry. The non-bank financial services like leas-ing and mortgages are also very interesting.”

Concord Investments – a company that possesses widely recognized exper-tise in portfolio manage-ment, investment strategy,

corporate finance and stra-tegic planning – is likewise confident in the opportuni-ties that Egypt offers – to the extent that chairman Mr. Younes is happy to fo-cus entirely on the country.

“We know Egypt better and there is a real market here. It is the only country in the area that has a big population with enormous economic demands,” he explains. “Concord Invest-ments is focused on busi-ness. We are not trying to do everything. We manage investment portfolios, mu-tual funds, and funds for companies. We’re not try-ing to be the biggest under-writer or the fastest broker. We are staying focused in investment management in Egypt where we have a rela-tive advantage.”

Using that relative ad-vantage could prove to be a savvy move for the compa-ny’s stakeholders, and ex-pectations are high. While the soaring stock market experienced last year is ex-pected to shift to more sus-tainable levels in 2015, the hope is that the projects and MOUs signed in March will now enable Egypt’s in-vestment banking sector to start powering significant economic growth and wid-er social development.

“Now we have to deliver on the promises that were made and be sure to follow all of the commitments and agreements that were signed during the confer-ence very closely,” says Mr. Atalla. “I believe that Egypt will never have a better second chance for a first impression.”

Sovereign fund aids investment banks to maintain momentumAs Egypt ramps up efforts to expand its economic output, an investment fund has been created to support more diversified development. Investment banks meanwhile are also urging the country to build on the momentum created by the recent success of the Egypt Economic Development Conference

“We are extremely optimistic [about Egypt’s potential], but the key is going to be implementation. The question is how these investments will be implemented, who will do the implementation, what the time frame is, and what will be the quality of the guidelines. The ease to invest, set up and start producing must be there”

MohAMEd YoUnEs, Chairman of Concord investments

Mohamed Younes, Chairman of Concord investments

In early 2011, hoards of hopeful young Egyp-tians came together in Tahrir Square, in the center of Cairo, with

the dream of achieving a bet-ter future for their country. It would be the start of a revo-lution that would go down in history. Fast forward two and a half years later – just months after Egypt’s second uprising – and another group of pro-gressives, many of whom had championed the cause of the so-called Arab Spring, assem-bled in that same area of the city once again with yet more revolution on their minds, though this time an entrepre-neurial one.

Indeed it is the same hope-ful spirit channeled so pas-sionately by Egyptians during the Arab Spring that is said to have inspired a new wave of entrepreneurship in the county over recent times, and which ultimately insti-gated the launch of the first ever RiseUp Summit in No-vember 2013 – a forum for Egypt’s fast expanding start-up scene.

Particularly emblematic of this connection between the country’s 2011 uprising and its burgeoning environment of innovation (research by the Global Entrepreneurship Monitor shows that 2.2 mil-lion Egyptians have become owners of new businesses since 2011, a significant rise from the pre-rebellion period) was that the RiseUp Summit took place just a stone’s throw from Tahrir Square – the site synonymous with the revolu-tion, and today a symbol of possibility and opportunity.

Held at the GrEEK campus of the Tahrir Alley Technol-ogy Park (TATP), a campus inspired by American tech universities, the RiseUp Summit was deemed a mas-

sive success. The two-day event hosted both start-ups and well known businessmen with workshops, discussion panels and keynote speech-es, allowing for the transfer of knowledge, as well as the forging of new partnerships.

However, for Abdel-hamed Sharara, founder of RiseUp, the 2013 summit was just the beginning in a rapidly grow-ing movement that he hopes will one day make Egypt a thriving entrepreneurial and innovation hub, not only in the region, but worldwide. Ambitious Mr. Sharara – a university graduate who used his experience from an en-trepreneurship program to set up the summit – brought back the RiseUp event in Oc-tober last year, with a much bigger and broader concept.

The idea behind the 2014 summit was to reflect the transformational nature of innovation, and specifi-

cally the changing nature of Egypt’s start-up culture, which in its nascent phases had been dominated by tech and mobile apps. More re-cently, as the country’s en-trepreneurial community has grown, so has the diversity of interests and projects, espe-cially as to how new innova-tions can help drive socio-economic development.

“RiseUp 2014’s theme was technology as an enabler for industries,” Mr. Sharara ex-plains. “In other words, what tech can do for hardware, renewables, agribusiness, the financial sector, creative in-dustries and many other ver-ticals. For the first time in the ecosystem in Egypt, we clearly saw opportunities in areas other than mobile and web.”

The forum – which in-cluded around 2,000 start-up projects altogether, as well as more than 150 inves-tors and several high-profile

public figures – undeniably convened a host of excellent examples of how entrepre-neurs can both enable in-dustry, as well as impact the lives of millions through in-novation. From Karm Solar, a company that is changing the way solar energy is be-ing delivered, to EducateMe, a program that is redefining the way education is being accessed by Egypt’s poor, many inspirational projects were seen at the summit.

RiseUp is not just about Egypt and Egyptian start-ups however. True innova-tion after all is achieved by looking outside the box, or that is, by looking away from the familiar to draw in fresh perspective. The 2014 sum-mit, therefore, invited entre-preneurs and investors from over 50 countries globally, each of whom brought new ideas, or potential capital, to the table.

“We realized that we need-ed to focus on bringing in more regional and global re-sources for start-ups,” explains Mr. Sharara. “Our interna-tional partners organized co-working camps, pitch events, workshops and many other activities that helped connect Egypt to the region and to Europe. One of our partners, Startup MENA, also orga-nized an ‘investors lounge’, with 10 start-up pitches and more than 15 investors from Egypt, MENA (Middle East and North Africa), and the around the world.”

While the RiseUp Sum-mit has successfully brought Egyptian innovation to an international platform like never before, it is fair to say that Mr. Sharara and his dedicated team are not the only start-up facilitators in the country. There are today an increasing number of edu-cation and training courses in the subject of entrepre-neurship within universities and professional organiza-tions, such as at the GrEEK campus, several large-scale national business plan com-petitions that bring with them resources, investment and technical support, accel-eration programs, corporate venturing as well as invest-ment firms and groups.

What is special about Egypt’s start-up scene, how-ever, is that many of its play-ers are interconnected – owing both to the budding industry’s small size and the fact that many of its stake-holders share similar moti-vations and goals. Egypt is a country that has begun to completely reinvent itself in the aftermath of revolution, and the entrepreneurial spirit which has taken root as a re-sult is at the very essence of this continuing cultural shift.

“Entrepreneurship in Egypt is very unique in its collaborative culture,” says Mr. Sharara. “The ecosystem stakeholders are all connect-ed and united. We attend the same events, speak the same language, share the same vi-sion and believe in the same values. The revolution had a great impact in shaping this culture and we all want to take it forward.”

Although there is un-doubtedly personal gain at stake, the common vision for many of Egypt’s new entre-preneurs, it seems, is the feel-ing that they can make a real change to their country, one which is still suffering from high rates of unemployment (13.4%) and where over a quarter of citizens are below the poverty line.

“Entrepreneurs are agents of change,” says Mr. Shara-ra. “They can help create a just and productive society through entrepreneurship and innovation. The perks in this case are countless: creat-ing jobs, GDP growth, eco-nomic stability, transparency and many other good things.”

With this is mind, RiseUp Summit, together with its in-dustry peers and partners, is ready to take the great Egyp-tian entrepreneurial revolu-tion to the next level. This Oc-tober 17-18 will see the return of the RiseUp (#RiseUp15), in what Mr. Sharara hopes will be the biggest event yet.

“[This year’s] theme is Quantum Leap,” he says. “The entrepreneurship ecosystem in Egypt has reached a point of take-off, with its destination in sight. The stakeholders are connected, the entrepreneurs are fuelled by mentorship and investment – and it is time to witness the first successes in 2015. This – to RiseUp – is a quantum leap.”

RiseUp Summit sees entrepreneurial revolution take off A wave of entrepreneurial spirit has washed over Egypt just recently. Inspired by the optimism and opportunity of the 2011 revolution, Egypt’s new army of fresh thinking innovators are helping the country to develop in alternative ways, with the now annual RiseUp Summit at the heart of this growing movement


distributed by UsA TodAYEGYPT

W hen ex-amining E g y p t ’s tumultu-ous re-

cent history, there is perhaps one industry that bears the scars of that difficult period more clearly than any other – tourism. Having become a stalwart sector of economic growth over the past three de-cades, with international visi-tors to the country reaching a pinnacle of 14.7 million in 2010, tourism – along with the rest of the economy – was hit hard in the aftermath of the 2011 revolution. While the mo-mentous ‘Arab Spring’ had an invigorating effect for so many Egyptians, for many others, especially those dependent on tourism for a living, it would be a spring that ultimately rained on the summer parade.

Indeed for three consecu-tive summers after the revolu-tion – owing to the extended period of social unrest that followed it – the number of tourists and tourism revenues in Egypt decreased drastically, falling to fewer than 9.5 million annual visitors in 2013, with takings that year dropping by 54% compared to 2010. How-ever, with the return of politi-cal stability in 2014, the sun has steadily started to shine again on one of the country’s most integral industries. Tourism revenues were up 7% in the first quarter of 2015 compared to the same period in 2014, and there is still tremendous potential for considerable growth. Well-aware of this potential, both the Egyptian government and private en-terprises are now mobilizing to create the conditions and pro-vide the amenities necessary to fully revitalize the sector.

Since as far back as 1975, when visa restrictions for Eu-ropean and North American citizens were relaxed, tourism has been a pillar of the Egyp-tian economy. Throughout the late 70s, significant amounts of government money were spent to upgrade hotels and in-frastructure such as road, rail, and air connectivity, which have served the sector well throughout the years. At its peak, the tourism sector em-ployed 12% of Egypt’s work-force and contributed to 19.5% of GDP (2007), in addition to being one the country’s main providers of foreign currency. Despite the sector’s recent de-cline, Egypt’s year-round sun-ny weather and world famous historical and cultural attrac-tions, such as The Pyramids, The Sphinx, the Abu Simbel Temples south of Aswan, and the Valley of the Kings near Luxor, home to one third of the world’s antiquities, imbibe it with an evergreen appeal. Visitors looking for a more lei-surely vacation can retreat to the Sinai Peninsula, which is surrounded by pristine beach-es, rich coral reefs, and an in-creasingly large offering of gas-tronomy and entertainment.

20 million by 2020Leveraging the country’s geo-graphically diverse touristic of-ferings, the Egyptian Ministry of Tourism is drafting a plan to attract 20 million tourists by the year 2020 and boost the sector’s total revenue to $26 billion. It is being bolstered by an international advertis-ing campaign that kicked off at the beginning of the year,

and is focused on the rich va-riety of tourism in Egypt, from the Nile to desert outings, to sports, therapeutic retreats and religious tourism.

According to a report pub-lished by the General Authority for Investment and Free Zones, private investments in the tour-ism sector are soon projected to reach $14.6 billion, and the government is also planning to inject additional investments in the range of $4.4 billion. Significant infrastructural im-provements to accommodate increased visitor traffic are also being made, most notably in Al-Minya, which will see the construction of a new airport, and in Mersa Matrouh, where a corniche that is expected to generate 20,000 jobs is current-ly being built. In parallel, a new passenger terminal is being constructed at the Al-Arab Air-port, and a Cairo-Alexandria high-speed railway is being laid to increase the two-way pas-senger flow between the two largest cities in Egypt.

While such transport ex-pansions aim to make travel-ling to, from and around the country that much easier for the expected influx of visitors over the next five years, a host of other developments are also on the horizon. The Egyptian Company for Tourism and Hotels (EGOTH), for instance, announced at the Egypt Eco-nomic Development Confer-ence in March that it plans to pump $116 million into the de-velopment of hotels nationwide

over the next year alone. This will include funds to develop the Shepherd Hotel overlook-ing the Nile, the Cosmopolitan Hotel in downtown Cairo, and a hotel project in Alexandria. This is just one of the many in-

vestments that represent a wid-er push to reinvigorate the “clas-sic” tourism industry in Egypt, a segment of the sector that was most adversely affected after the period of recent turmoil.

Although the country’s iconic pyramids and temples are a massive part of the an-cient Arab nation’s charm, aside from such classic attractions, tourism authorities and indus-try stakeholders are equally as eager to draw attention to alternative options. While the capital of Cairo remains a popular place for historical and religious tourism, for Christians and Muslims alike, it is also be-coming increasingly renowned as a leading healthcare hub, for example, drawing a rising tide of health-tourism from the Middle East in particular.

Perhaps Egypt’s most entic-ing draw for tourists, espe-cially from Europe, is its vast array of beach resorts dotted along the Red Sea coastline. This, unsurprisingly, is where tourism’s ongoing recovery has been at its strongest, with occupancy rates in the resort towns of Sharm El Sheikh and Hurghada reaching an aver-age of 70% at the beginning of June, while rates have been as high as 90% at hotels such as Sahl Hasheeh this year. Lag-ging behind, however, were resorts in the South Sinai area, which despite ambitious

plans being spearheaded by the Tourism Development Authority (TDA), have been plagued by road closures and security risks. At present, hotel capacity in the area is 62,000, though that number is likely to increase as the TDA begins to propose land to investors keen to diversify their portfolios and develop in less saturated areas, such as the ones around El-Tor and Ras Mohamed. As Adel El-Sherbini, Vice Head of the Tourism Investors As-sociation in South Sinai told Daily News Egypt, these ar-eas, though still relatively less trodden,offer a new tourist product that will distinguish them from more popular plac-es like Sharm El Sheikh.

Setting the standardsof luxuryIt’s critical to note that the speed with which the tour-ism industry has rebounded in Egypt is due to a variety of factors, including government support, bold investments, and the courage to innovate, pio-neer, and develop unknown ar-eas from scratch. Perhaps most important, however, has been the determination of Egyp-tian investors who believed all along that the sector would re-bound, and who remained de-

termined to conduct business as usual, even through very challenging times.

Construction of the Baron Palace Sahl Hasheesh, a 6-star property along the Red Sea, began in 2010 – just one year before the Egyptian revolu-tion. Though it was a difficult decision to proceed with these plans through a time of such uncertainty, Sherif Shahein, Vice President of Baron Ho-tels & Resorts, explains that his company pushed ahead as planned because of his unwav-ering faith in Egypt and the knowledge that business would resume sooner or later.

Today, the 645-room luxury hotel is complete, and has set the standard for a new style of luxury hotel in Egypt. Guests often remark that they are sur-prised to find such a high level of luxury in Egypt, which previ-ously fell far behind properties in places such as Abu Dhabi, Dubai, and Turkey. Yet by in-sisting on quality, an exquisite landscape, and superb service, Mr. Shahein and his team have exceeded the expectations of guests visiting Egypt and have created demand for a higher level of clientele that has never before considered vacationing there. Mr. Shahein insists that the overall image of the Red Sea has benefitted from this infu-sion of luxury, and that the ho-tel’s popularity with the travel industry in the UK, Germany, and Europe in general, is indica-tive of good things to come.

Though competitors in other established tourist desti-nations such as El Gouna and Sharm El Sheikh are quickly emerging, Mr. Shahein insists that his location is really what sets his property apart from the others. “If coming for a true Red Sea experience, where vis-itors can swim safely, snorkel, dive, and go straight away to a sandy beach in a sunny des-

tination, nothing compares to Sahl Hasheesh,” he says.

Opened in April 2014, the Baron Palace Sahl Hasheesh is 60km from the Hurghada air-port. Built with Italian and Bel-gian marble, it sits along a 12km promenade and has a pioneer-ing swim-up suite concept. It also offers a Premium All In-clusive or Ultra All Inclusive concept that includes access to 16 restaurants and bars, which have been recognized by the Jeune Restaurateurs D’Europe.

Within the next three years, Mr. Shahein has plans to build two more hotels in Sahl Hasheesh with a capacity of 360 rooms each. One step up from the Baron Palace, the new properties will feature a 7-star boutique hotel con-cept. “I believe Sahl Hasheesh will be the future of Egypt for perhaps the next 20 years,” he says, with confidence.

Mohamed Kamel, Chief Ex-ecutive Officer of the Egyptian Resorts Company (ERC), is of a similar mindset.

“Sahl Hasheesh boasts the longest uninterrupted stretch of beautiful beach on the Red Sea,” he says. Unlike most other resort areas in Egypt, he ex-plains that everything in Sahl Hasheesh is interconnected

Goal of 20 million visitors set as tourism sector undergoes revival Tourism suffered losses more than any other sector between 2011 and 2014, but as political stability has returned so have the visitors. With revenues up 7% so far this year, the Ministry of Tourism has set a target of 20 million tourists by 2020, helped along by new luxury hotel offerings such as the Sahl Hasheesh

“If coming for a true Red Sea experience, where visitors can swim safely, snorkel, dive, and go straight away to a sandy beach in a sunny destination, nothing compares to Sahl Hasheesh. It boasts the longest uninterrupted stretch of beach on the Red Sea”

shEriF shAhEin, vice president of baron hotels & resorts

Leveraging the country’s diverse touristic offerings, the Ministry of Tourism is drafting a plan to attract 20 million tourists by the year 2020.Private investments in the tourism sector are soon projected to reach $14.6 billion, and the government is also planning to inject additional investments in the range of $4.4 billion

With the return of political stability in 2014, the sun has steadily started to shine again on one of the country’s most integral industries. Tourism revenues were up 7% in the first quarter of 2015 compared to the same period in 2014, and there is still tremendous potential for considerable growth

“Egypt is still fresh out of a revolution... The country has a lot of work to do in order to reposition itself as the region’s most attractive investment destination to both domestic and foreign investors”

MohAMEd KAMEl, CEo of Egyptian resorts Company

18 Thursday, August 6, 2015

and can be easily accessed by foot, providing a sense of tran-quility and interconnectedness that makes it very unique. He also believes that the area is just starting to appear on the radar of favored tourist destinations, and that it will become increas-ingly competitive over the next decade, as new and more differ-entiated hotels and residential offerings are constructed. Al-ready, the area has become a hit for triathlons and other special sporting events. Its calm waters

and uninterrupted roads are ideal for swimmers, runners, and cyclists, and there are sev-eral health and sports events being penciled onto the agenda, including Ironman events.

Hurdles to overcomeDespite a very rosy general out-look, Mr. Kamel is aware that there are still huge hurdles to overcome. For example, beyond the aftershocks of the Egyptian revolution, he explains that the collapse of the ruble also had a

heavy impact on the Egyptian tourism industry. Russia is the largest exporter of tourists to Egypt (19.7% of all tourists in Egypt are Russian), and as a re-sult of the collapse, several Rus-sian and Turkish tour operators were unable to deliver payment as scheduled. Following new regulations by the Egyptian Central Bank, however, Rus-sian operators may soon be able to clear their debts through a semi-barter deal that uses Rus-sian goods as payment for ser-vices in Egypt, given that Egypt imports a substantial amount of wheat and other raw materi-als from Russia.

Yet following the ERC’s sign-ing of approximately $79.4 million in contracts, there are compelling reasons to be opti-

mistic about the future of the tourism industry in Egypt, and especially in the Red Sea area. Mr. Kamel finds it especially heartening that although new developers are being drawn to Sahl Hasheesh, existing devel-opers are also choosing to ex-pand their business there.

Aware of how important an industry such as tourism is for future growth, the Egyp-tian government is also lend-ing its support. The Tourism Development Authority has given permission for ERC to launch its Sawari Marina proj-ect, an ambitious undertak-ing that will span 1.1 million square meters in its first phase. However, at the same time Mr. Kamel argues that taxes need to be decreased, and that the government needs to stabilize the foreign currency situation. “All investors need to feel that they are able to repatriate their profits on any investments they have made – without delay,” he says, emphasizing that Egypt is competing with places like the UAE, where there is no tax in place. “Egypt is still fresh out of a revolution with an econ-omy that has been suffering for more than four years. The country has a lot of work to do in order to reposition itself as the region’s most attractive investment destination to both domestic and foreign investors.”

Continuing the recovery, and beyondWhile both the number of tourists and investments in the industry are back on the rise, there are undoubtedly ob-stacles that still remain for the sector, not only for it to get back to its pre-2011 level, but also for tourism to reach levels that it has never seen before.

“The number one issue we face is pricing,” explains Islam Mahdy, CEO and Chairman of Credence, a mixed-use destina-tion developer. He emphasizes that though the numbers of tourists coming to Egypt are ac-ceptable, the real problem lies in the amount of money spent per visit – most tourists go for an all-inclusive cheap package. “The main reason people come

back is because it’s affordable, they don’t come back because of the experience,” says Mr. Mahdy. This is problematic be-cause it means that guests don’t leave the hotel, and as a result, they rarely spend money be-yond it. Making matters worse is the fact that most of the tour-ism in Egypt is beach tourism, which is almost exclusively controlled by tour operators who require heavy compro-mises on prices and quality. Due to the pricing policies of airports and the lack of budget operators, it’s much cheaper to fly in as part of a tourist pack-age, rather than to separately pay for a flight and hotel, which further drives down pricing, and by extension, quality.

Mr. Mahdy points out that although Egypt seems to be on the travel lists of many people from a variety of socio-eco-nomic backgrounds and cul-tures, when it comes down to actually booking a trip, many people don’t follow through. Cairo isn’t the kind of place where you can buy a guidebook and explore on your own – it’s not easy for independent tour-ists to come to Egypt, which needs to change. He suggests the creation of a fast train join-ing different areas such as Cairo and the Red Sea, so that there can be a bit of cross selling be-tween different attractions.

In order to increase the caliber of touristic offerings in Egypt, Mr. Mahdy’s company is focused on developing life-style hotels, which he believes there will be a strong demand for, despite the current over-saturated market for budget hotels. “We are betting on the fact that tourists, at some point, are not necessarily going to be targeting the package vacation with which they come for seven days and don’t get out of the ho-tel,” he says. By offering lifestyle hotels with quality products designed based on experience, Mr. Mahdy believes he will be able to satisfy a new type of de-mand and overcome the pric-ing dilemma. “It might be hard in the beginning but I believe that eventually this is what’s go-ing to happen,” he says.



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