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

EGYPTMonday, February 6, 2017

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 – unitedworld@unitedworld-usa.com – www.unitedworld-usa.com

#EgyptTheWorldfolio#TheWorldfolio

In spite of the many great challenges that Egypt continues to face as a nation following an extremely tumultuous recent period in terms of security and economic issues, 2016 turned out be another breakthrough year on certain fronts.

If 2015 was marked by the momentous Egypt Economic Development Conference – a bold statement to the world that the country was back on its feet again and open to business (investment deals worth a total of $130 billion were signed at the landmark event), 2016 was characterized by the implemen-tation of the boldest reform plan seen in Egypt since the 1980s; reforms that persuaded the IMF to agree to a long-delayed $12 billion loan program over three years, intended to restore public finances and refresh the interest of foreign investors.

The new reform program seeks to revive Egypt’s growth prospects by restoring stability and confidence in the economy, and implementing structural reforms that will create jobs. As noted by IMF Managing Director Christine Lagarde on announcing the loan, “the program is by the Egyptian government, for the Egyptian people, and to help the Egyp-tian economy.”

Egyptian President Abdel Fattah el-Sisi has ensured that he is committed to pushing through the reforms necessary to turn the economy around, seemingly undeterred that one of major facets of the plan is the slashing of subsidies, a poten-tially politically troublesome issue that previous administra-tions have thought best to avoid.

“It is not only you who will judge me,” said President el-Sisi addressing the nation on the re-forms. “God will also judge and so will history. All the difficult decisions that many hesitated to take over many years, that they were afraid to take, I will not hesitate to take for one second.”

And President el-Sisi hasn’t gone back on his word. Just since October 2016 the govern-ment has implemented tough measures that successive gov-ernments had postponed, such as imposing a value-added tax, capping public sector salary increases, cutting fuel subsi-dies, and allowing the Egyp-tian pound to float so its value halved against the dollar. While the immediate impact of these actions has been a spike in in-flation, Mr. el-Sisi has sought to help the poorest segments of society with cash handouts and a government-funded food program.

As a positive consequence of the measures in the short-term, the Egyptian finance ministry is aiming for an economic growth rate of 5% in the next financial year, according to its 2017/18 budget (up from 4.3% in 2016). The ministry also hopes to re-duce the budget deficit to 9.5% of GDP, and the total public debt to 94%, while targeting an unemployment rate of 11%, down from the current 12.6%.

With further sound implemen-tation of the reform program, growth could rebound to 6% by 2021 – similar to the levels in 2005-2010 – according to the IMF.

In terms of long-term eco-nomic strategy, then there is Egypt’s Vision 2030 too, of which the final draft was also outlined during 2016 by Presi-dent el-Sisi. The government’s sustainable development plan for the next decade and a half aims to raise GDP growth to 12% by 2030 and expand the contribution of the private sector to 75% of GDP up from 60%. Additionally, the unem-ployment rate is targeted at 5% in 2030 (down from 12.8% in 2015), while the population poverty rate should fall to 15% (down from 26.3%).

On unveiling these ambi-tious plans, President el-Sisi pointed to the developmental progress already made by his government over the previ-ous 24 months, including the 5,000-kilometer national road network currently under con-

struction, the state’s success in addressing its power shortage problem (new power added to Egypt’s national grid by the end of 2017 will amount to half of the country’s total generating capacity), as well as the fulfil-ment of the New Suez Canal project.

The Vision 2030 program, which aims to revive Egypt’s leading role in the Arab world, is not just a purely economic strategy however. Aside from sustainable economic devel-opment, the program aims to turn Egypt into a fairer, more interdependent society, char-acterized by equal economic, social, and political rights.

Whether Egypt can achieve such lofty ambitions remains to be seen over the coming decade or so. But one thing that is for certain is the immense poten-tial the country holds. It has a dynamic and young population, a large market size, a favorable geographic location, as well as access to important foreign markets, while the opening of the parallel Suez Canal, large in-

vestments in the energy sector, and the discovery of a major gas fields also bode well for Egypt’s development.

Despite the many internal and external challenges affect-ing the country, you can always count on Egyptians to show re-markable grit and determina-tion too, affirms Osama Bishai, the Chief Executive Officer of one of the Middle East’s leading

construction and engineering firms, Orascom Construction.

“Egypt has always been a country where growth expan-sion and achievements are made by real hard work,” he says. “We never had sudden influxes of wealthy oil discov-eries. It’s all done through hard work, focusing on markets and creating value.

“Egypt also represents a huge consuming market of currently 90 million people. And you can see that over the years, when its people and organizations went through tough times, they’ve weathered through and sus-tained their existence. It is the nature of the Egyptian people.”

Mohamed S. Younes, Chair-man of one of the leading fund managers of Egyptian securi-ties, Concord International Investments, agrees. “We are a nation that has developed a survivor culture,” he says. “We’re the only country that has nowa-days almost the same borders we used to have 5,000 years ago. That’s got to tell you something.”

Mr. Younes particularly be-lieves that the key to the na-tion’s future success lies with its large youth population. “We’re a country with 90 million people; and this is growing at a fantastic rate,” he stresses. “Twenty-seven percent of the population is un-der the age of 30, which is such a tremendous resource. Embrac-ing this the right way and tak-ing advantage of it is the greatest challenge.”

The New York-based Con has seen first-hand the interest of U.S. investors in the Egyptian market.

“In the last year, Concord generated two billion dollars by selling [Egyptian compa-nies] Amon and Bisco Misr, which were both sold to U.S. investors. It’s a matter of timing, investors are prepared to come to the market.

“We will keep buying the companies and offering them, that’s what we do. We are inter-ested in managing money. We want to be the best at what we do, which is investment man-agement, and we want to do this by being completely focused. So, we’re not jumping and venturing into buying banks or brokers, we’re not interested in the headlines.”

Our World

A UNITED WORLD SUPPLEMENT PRODUCED BY: Dasha Seddon, Project Director. Oscar Crespo, Editorial Director.Jonathan Meaney, Chief Editor.

“God will also judge and so will history. All the difficult decisions that many hesitated to take over many years, that they were afraid to take, I will not hesitate to take for one second”

ABDEL FATTAH EL-SiSi,President of Egypt

Tough decisions get Egypt back on trackThe new reform program seeks to revive Egypt’s growth prospects by restor-

ing stability and confidence in the economy, and implementing structural reforms that will create jobs

“We are a nation that has developed a survivor culture. We’re the only country that has nowadays almost the same borders we used to have 5,000 years ago. That’s got to tell you something”

MOHAMED S. YOUnES,Chairman, Concord international investments

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

2 Monday, February 6, 2017 Distributed by USA TODAYEGYPT

Egypt’s development aspirations in the run up to 2030 will depend heavily on the nation’s builders. Building a sustainable and diversified economy and a better future for the Egyptian people, as envis-aged in the Vision 2030 plan, re-quires building new roads, power plants, schools, affordable hous-ing and even entire new cities.

Since President Abdel Fattah el-Sisi came to power in 2014, a large number of construction mega projects have been launched, attracting billions of dollars of in-vestment from abroad. One of the country’s flagship projects entails building a brand-new capital city 28 miles east of Cairo. In October, the Chinese state-owned China Fortune Land Development Company signed a deal to pro-vide $20 billion of the total $45 billion needed for phase one of the project, which commenced in February 2016.

In January, U.S. investors trav-eled to Egypt to look at opportu-nities at another grand venture of the el-Sisi administration – the New Suez Canal Economic Zone (SEZ), an enormous proj-ect which aims to transform the land around the newly expanded Suez Canal – an important global shipping waterway connecting the Red Sea and Mediterranean Sea – into a transport, logistics and manufacturing hub.

Megadevelopments such as the SEZ and the new capital city, as well as a number of other large-scale housing, transport and power projects, are why Egypt’s construction industry has been named the “most prosperous” in the Middle East and North Africa (MENA) by British-based bank HSBC in a regional construction report released in January. Anoth-er report by Timetric released in August predicts that the Egyptian construction sector will experi-

ence average annual growth of 8.24% between 2016 and 2020. “The growing number of public-private partnership (PPP) projects and the increasing pace of foreign investment will also drive indus-try growth over the forecast pe-riod,” the report stated.

Also driving growth is Orascom Construction. The largest construction company in Egypt, Orascom has a diversified project portfolio, and is heav-ily invested in the power sector, supporting the nation’s rapidly growing demand for electricity. In January it was announced that Orascom will form part of a con-sortium to develop the Assiut and West Damietta combined-cycle power plants, costing a combined $650 million. Orascom is also in-volved in the $8 billion New Capi-tal power plant project, which will have a generation capacity of 4,800 megawatts once completed.

Orascom’s CEO Osama Bis-hai shares particular praise for the el-Sisi government’s success in enticing investments in the power sector. “Investment in power generation has been suc-cessful because the government understood that in order to drive the growth in power availability and resolve the power problem in Egypt, they needed to be able to promote Egypt as the center of attraction for major manufactur-ers. They closed one deal after an-other to generate this climate that attracted investors and manufac-turers. So, I think the challenge here is how to replicate this in all the other segments of infrastruc-ture development,” he says.

Beyond Egypt, Orascom’s project portfolio expands across the MENA. The company also has business interests in the U.S., where the company has wit-nessed significant growth since 2012.

“Right now, we have two sub-sidiaries in the U.S. One of them is working for the U.S. govern-ment. The other subsidiary was acquired from a U.S. construc-tion company back in 2012. And, in fact, this company has doubled its revenues over the last four years.”

Another builder, Saudi Egyp-tian Construction Co. (Secon) is one of the largest companies op-erating in the real estate market. In January, it announced that it plans to pump over 2 billion Egyptian pounds (approx. $130 million) into its projects in Egypt this year.

Luxury developments make up a large part of Secon’s portfolio, but the company is also develop-ing affordable housing. “We have chosen to invest in South Egypt, but we are not creating luxury projects for luxury people,” says CEO Darwish Hassanein.

“We have to take social require-ments into consideration. Yes, we have to make a profit, and we are doing so, even with this project in South Egypt, but also, we have to put our social responsibility into perspective.

“I really hope that in the next five years, we would have solved the problem of Egyptians living under unsuitable conditions. Of course, we will achieve this by either improving areas where people are living or building new areas for them to live. Existing areas can be improved, and new housing projects carried out to prevent similar problems in the future. In this sense, I believe there is a 500,000 low-cost hous-ing project currently in progress.”

A country that only five years ago was in the midst of experiencing political turmoil and revolution, Egypt has come a long way in the last half of the decade. Last year, the Minister of Trade and Industry approved an 820 million EGP ($92 million) plan to establish an industrial zone in South Sinai that will create jobs and attract foreign investment to the Peninsula. A vocational school will be set up as well as low-cost housing units that will be made available for workers.

The Ministry of International Cooperation also announced last year that with the almost $6 billion in aid accumulated from the Arab entities, major efforts in urbanization of almost 620,000 acres is planned to link Sinai with the Delta area, concentrating on infrastructure, roads, water and sewage plants. These developments coincide with the boom of the Suez Canal Zone project that has the potential to double revenues in the next ten years.

The Suez Canal has long been the prominent economic stream for Egypt and is expected to represent 30-35% of the country’s improving economy. What the zone also does is create an opportunity for even more industrialization to develop the surrounding areas and to draw in attention from investors from across the globe to the potential of this region.

The rise in construction and focus on infrastructure is bringing into existence

a higher demand for the production of steel, an industry in Egypt that has been expanding since the 1950’s. In the brief period of time between 2004 and 2010, steel consumption in the country rose from 3.4 to 8.5 million tons due to the rising population and the need for rapid urbanization as a result.

The construction sector continues to be affected positively by the growth of government projects and private expenditures. And though the unrest in 2011 did cause some stagnation within the industry, production has been steadily increasing and is expected to continue to do so with the recent sanctions announced by the Ministry of Industry.

In March 2016, the government reduced the price of natural gas to steel and iron factories from $7 to $4.50 per million thermal units. By doing so, the government has given companies within Egypt a much-needed break on domestic production since the conversion of raw material into steel plates is a high gas-consuming process.

The reduction of the price of natural gas for steel producers will cost the state an estimated EGP 1.2 billion ($135 million), but is expected to increase the export of steel to $600 million. The current price of steel ranges between EGP 4,500-4,800 per ton and will be carefully watched as the dollar is revaluated. As the industry continues to evolve, companies like Egyptian Steel Group are focusing on eco-friendly technology and the long-term conservation of resources.

Egyptian Steel Group was established in 2010 and despite the turmoil in 2011, has in a few short years become a leader in the steel industry and corporation with a social responsibility program that is improving the lives of the Egyptian population as well. As Chief Executive Officer Ahmed Abou Hashima puts it, “We decided to go in and bet on the country on the hardest times, just after the big turmoil. We invested on this market after the revolution, when everything was on standby, and now the results are there.”

And indeed, like Mr. Abou Hashima says, this investment has given the company room

to grow and to support the community where he believes it matters most. “Egypt has high percentage of poverty, and I can’t see myself not supporting my community and my people, as we try to improve lives by helping address the problems they face from the position we are. I think it’s all about sustainable growth, generating profits but also caring about the environment and the next generations.”

Egypt looks to the future as it recovers from the unrest of 2011 but if many of the people involved with the private sector adopt the same attitude as Mr. Abou Hashima, the country will be propelled forward in a way that builds confidence from local investors first, and then engages the global economy to further participate.

When asked why the Egyptian economy and people are so resilient, Mr. Abou Hashima says, “Because we are the largest population of the region. There’s no room for failure, as the 90 million we represent, it’s on us to push together during hard times and build a straightforward and strong mentality.”

And that is what the company intends to do. Revitalizing the economy is based on their will to work and produce, and combined with the corporate social responsibility program;

Egyptian Steel will pursue planned expansion projects that play a vital role in the success of their industry in the country.

Part of what makes Egyptian Steel a leader in this sector of the economy is the focus on meeting domestic and international needs. They have contracted the Italian Group Danieli to operate production plants that reduce waste of rolling mill lines. The introduction of new technologies like the preheated scrap charging systems are energy saving, optimize scrap utilization and have ultimately increased productivity in factories all over the world.

Egyptian Steel is developing a world-class business model and corporate governance structure that hopes to achieve a production capacity of 2.3 million tons per year by 2018. Reaching 20% of market share in the steel market will position the company as one of the leading rebar manufacturers in the country with the ability to export quality products to other markets around the globe.

The cooperation between the public and private sector is vital to the future expansion of the Egyptian economy and it’s clear through the visions of groups like Egyptian Steel that the industrial sector is on the right path to stimulating growth. As Mr. Abou Hashima sees it, “We have an absolute role in this campaign. The Government organizes things, but it is our responsibility to take the bet on the country. The private sector is the engine that portrays the economic wellbeing of Egypt. If we do manage to invest at the right moment, at the right time, our returns and profits will convince everyone else that this market is solid.”

Infrastructure and construction expansion pave the way for steel industry boom

Construction industry ‘most prosperous’ in MENA region

Egyptian Steel Group was one of the first to invest in Egypt after the 2011 revolution, a bet that has clearly paid off as the company now looks to increase its market share to 20% and achieve a production capacity of 2.3 million tons per year by 2018 to meet the rising demand for steel in the country

“Egypt has a high percentage of poverty, and I can’t see myself not supporting my community and my people, as we try to improve lives by helping address the problems they face from the position we are. I think it’s all about sustainable growth, generating profits but also caring about the environment and the next generations”

AHMED ABOU HASHiMA,CEO, Egyptian Steel Group

DARWiSH HASSAnEin, CEO, Secon

“Because we are the largest population of the region. There’s no room for failure, as the 90 million we represent, it’s on us to push together during hard times and build a straightforward and strong mentality.”

AHMED ABOU HASHiMA,CEO, Egyptian Steel Group

U.K.-based bank HSBC named Egypt’s construction industry, which is predicted to grow by more than 8% annually, in the Middle East and North Africa