This Special supplement was prepared by The Worldfolio. The production of this supplement did not involve the news or editorial staff of The Washington Post. For more information contact The Worldfolio.

Africa’s top investment destination

Egypt has been identified as the African continent’s best invest-ment destination for 2019 – an honor it is celebrating for the sec-ond consecutive year.

The accolade, awarded by Rand Merchant Bank (RMD), attributes Egypt’s top-spot to two factors: that the country is Africa’s high-est gross domestic producer, and that it enjoys the single larg-est consumption market in the MENA region.

RMD’s report also observed that Egypt has the most diver-sified market in Africa, and the “strides that have been made to improve the investment and le-gal business environment”. The report’s findings are echoed by FDI Markets, affiliated to the Financial Times, which ranked Egypt first in Africa in terms of foreign direct investment (FDI) flows with $7.4 billion.

“Reforms that took place over the last three years far exceeded our aspirations. For the first time, we are witnessing momentum and real political will to reform the country,” says the Managing Director at the American Cham-ber of Commerce, Tarek Zakaria Tawfik, referring to the recent leg-islative changes that have enabled Egypt’s ascent to the top of the investor rankings.

Besides its status as the top FDI destination in Africa, Egypt is also now the second-largest re-cipient of direct U.S. investments in the Middle East, trailing only the UAE. The United States is among the top 10 countries with direct investments in Egypt, re-cording $2.6 billion at the end of July, 2018.

Oil and gas producer Apache Corporation is the largest U.S. in-vestor in Egypt and is set to make an investment of $1 billion in new wells in Egypt’s Western Desert.

Expressing his admiration for Egypt’s economic decisions over the past three years, and the petroleum sector in particular, David Chi, Vice President and General Manager of Apache Egypt and board member of AMCHAM Egypt, says that the government’s clear vision and “bold decisions” have moved it in the right direction, encourag-ing more investments.

“We are the biggest American investor, so we have become this bridge between these two na-tions. I’m proud to not only be taking a lot of value out of the country, but creating even more value for this country than we put in. We are a great partner for Egypt, and Egypt has been a fantastic partner for us.”

Egypt is now the second-largest recipient of direct U.S. investments in the

Middle East.

After some turbulent years follow-ing the Arab Spring in 2011, Egypt’s economy has bounced back and is now primed and ready to reach new heights. Politically and eco-nomically stable, the North African nation is pushing ahead with a re-form agenda and visionary plan for the future that includes hundreds of billions of dollars worth of pro-jects across the board – from brand new cities to the game-changing Suez Canal Economic Zone, which has already attracted some of the world’s largest companies.

Last April, the Egyptian people voted to keep incumbent president Abdel Fatah El-Sisi in power, allow-ing him to continue with the IMF-backed economic reform program that has put the economy on the road to recovery and laid the foun-dation for strong and sustained growth that will improve living standards for all Egyptians. With the economic reforms and recov-ery luring many foreign investors to enter the increasingly dynamic and diversified Egyptian economy, foreign direct investment is ex-pected to grow significantly over the coming years.

At the peak of the crisis in 2013-2014, Egypt’s growth was hover-ing at under 3 percent, foreign reserves had dropped to as little as $15 billion and unemployment had jumped to almost 14 percent. Since November 2016, and with the help of a $12 billion IMF loan, Egypt has taken bold measures – such as the devaluation of its cur-rency, removing limits on foreign currency transfers, lifting hard currency restrictions for importers, cutting fuel subsidies and raising value-added tax – that have truly paid dividends.

“This country could have been led to disaster if we hadn’t made these bold economic reforms. If we look at the numbers today, in the last quarter, unemployment was at 8.9 percent, down from almost 14 per-cent. The foreign currency reserves are now about 44 billion U.S. dol-lars,” says Egypt’s Prime Minister, Dr. Mostafa Kamal Madbouly.

“For economic growth this year, we are targeting 5.6 percent and for the next year we’ll be work-ing very hard to reach 6 percent. I think this is quite outstanding. I’ve seen a lot of reports show-ing that Egypt was among the top five growing countries in the world. So, in terms of the econo-my, things are moving on and we are very determined to continue our economic reform program in the coming years.”

The real impact on societyAt the beginning of the implemen-tation of the reform program, Presi-dent El-Sisi had asked the Egyptian people to be patient, as the impact of these tough measures was going to take time to trickle down to a societal level. But thanks to a very strong social program that has run alongside the reform agenda, Egyptians, particularly at the lower echelons of society in Upper Egypt, are now feeling the impact.

As a result of the economic re-forms and social program – such as the introduction of food subsi-dies, Takaful financial aid, and a social housing program targeting

200,000 Egyptian families – the poverty rate in Upper Egypt has fallen for the first time, according to the prime minister.

“These social initiatives and pro-grams are moving ahead and with the new government, our target now is to really focus on the coun-try’s human resources. We have more than 65 percent of the popu-lation below 40 years old, this is a real challenge. The most important thing if you would like to make real positive contributions is to focus on health issues and education.”

One of the highlight initiatives in the health sector is the pro-gram to eradicate hepatitis C in Egypt, which has one of the highest rates of the disease in the world. The program aims to screen 60 million Egyptians for hepatitis C and treat those who test positive free of charge.

Another important society-based initiative is the enhancement of the role of women and young people in the government and economy. For the first time in the nation’s history, a quarter of the cabinet is made up by women who currently occupy eight ministerial posts, while the prime minister also points out that the prominence of women in busi-ness is also rising.

“We are now showing the ten-dency on relying more on women and youth, because we do believe they have their major contribution to make for the country,” he says.

Creating a conducive environment for investmentAs the government has pushed on with its economic reform agenda, it has also implemented measures to make the country more conducive to foreign direct investment (FDI) and private sector participation.

In the fiscal year 2017-18, FDI rose by 14.5 percent to $7.9 billion, compared to the previous period. But to ensure the success of the Vision 2030 plan – which envi-sions a competitive, balanced and diversified economy, dependent on innovation and knowledge – and the completion of the plethora of planned mega projects, Egypt will have to secure much higher levels of foreign investment in the com-ing years.

While measures such as the new investment law, the cut-ting of red tape and financial incentives are crucial to attract-ing more foreign investors (see more on page three), the prime minister also points out the im-portance of overhauling the deep-rooted mindset in the lower tiers of government that still adhere to the traditional modus operandi.

“Some in the lower tiers of gov-ernment are still looking back to the historical eras, always looking at any new measures with suspicion and fear to implement them on the ground,” says Dr. Madbouly.

“So it’s our target in the coming period as a government to open more doors, make it more condu-cive and flexible for the private sec-tor, whether from inside or outside the country, to play their planned and major role in the contribution to the growth of the economy.”

Over the past four years, the government has helped to steer the country in the right direc-tion – implementing reforms and laying down the plans for major infrastructure and other development projects that will ultimately allow the private sec-tor to take the driving seat on the road to Vision 2030 and beyond. The government has also set out a plan to support the creation of a thriving SME sector, which in-cludes programs such as expand-ing micro-financing for women in rural areas to create 100,000 jobs and the Central Bank of Egypt’s SME-financing initia-tive that has compelled banks to expand their SME lending to 20 percent of their portfolios. Through all of the SME-focused initiatives, the government wants to raise the SME sector’s share of GDP by 25 percent.

“Even if you look at the new fis-cal budget that we’re introducing to the parliament, the contribution of the private sector in the overall budget and investment is almost around 78 percent. The whole role of the government is about 20 percent maximum, which will continue in terms of infrastructure and paving the way for private sector contribution,” explains the prime minister.

The most important thing right now, Dr. Madbouly believes, is im-

“It’s our target in the coming period as a government to open more doors, make it more conducive and flexible for the private sector, whether from inside or outside the country, to play their planned and major role”

DR. MOSTAFA KAMAL

MADBOULY,

Prime Minister of Egypt

plementing new initiatives to subsi-dize exporting and the contribution of the private sector to improving the country’s negative trade bal-ance, which stood at $3.87 billion in December 2018.

“We are now working very hard with the Ministry of Investment to really overcome any kind of prob-lems facing the investors, whether from the local or the international market,” he adds.

Mega projects create 4 million jobsAs part of the economic recov-ery, the El-Sisi government has launched thousands of projects costing tens of billions of dollars to overhaul Egypt’s poor infra-structure. Unlike the shorter-term fiscal problems, infrastructure is a decades-old issue that needed to be addressed.

Some of the highlight projects that have been launched under El-Sisi’s government include: the $8.2 billion extension of the Suez Canal; the creation of the 285-square-mile Suez Canal Economic Zone (SCZone) set to become a hub for logistics, manufacturing, ICT and petrochemicals; a $45-billion New Administrative Capital; a national roads projects; two new inter-national airports; modernization and extension of ports along the SCZone; as well as several power projects to meet growing electric-ity demand, including the world’s largest solar park. It is safe to say that there are very few countries in the world witnessing development on this scale.

“According to our calculation, these mega projects have man-aged to generate around 4 mil-lion new job opportunities. We have dramatically and substan-tially improved the infrastruc-ture, roads, water, sanitation, gas and electricity. We’ve also managed to lower the deficit of housing and other services. We have paved the way for horizon-tal expansion on desert land,” the prime minister proudly explains.

“This was another challenge that Egypt has faced in the last three or four decades. Targets have been achieved by these mega projects. We now have a good base for the contribution of the private sector, which can make use of all these facilities that we have introduced to boost the economy. This is our belief: that without these kinds of programs, the Egyptian econ-omy wouldn’t have survived.”

Bold economic reforms pay major dividends

Produced by The Worldfolio: Editorial Director: Alvaro Llaryora.

Project Director: Monica Perez-Ilzarbe. Design: Ruben Salgueiros.

Production Coordinator: Wael Atef Ismail. Contributing writers:

Aled Bryon, Helen Watson, Jonathan Meaney.

President Abdel Fattah El-Sisi swearing in Prime Minister Mostafa Kamal Madbouly in June, 2018.

Apple CEO Tim Cook meets with Prime Minister Madbouly in Davos.

witnessing momentum and real political will to reform the country”

TAREK ZAKARIA TAWFIK, MD,

American Chamber of Commerce

The Egyptian government has implemented reforms and laid down the plans that will ultimately allow the private sector to take the driving seat on the road towards sustainable development and inclusive growth.

“For economic growth this year, we are targeting 5.6 percent and for the next year we’ll be working very hard to reach 6 percent. I think this is quite outstanding. I’ve seen a lot of reports showing that Egypt was among the

the world”

#Egypt#TheWorldfolio

SUNDAY, APRIL 14, 2019 01

The WorldfolioSUNDAY, APRIL 14, 201902

PUBLIC POLICY

Vision 2030 sets out inclusive vision of the future EgyptIncorporating the economic, social and environmental dimensions of sustainable development, Egypt’s Vision 2030 puts forward a strategy to achieve inclusive growth that promotes a balance between all segments of society.

“Egypt’s Strategy for Sustain-able Development,” says Egypt’s Minister of Planning, Hala El Said, “is the roadmap that will shape the future to which the country’s citizens aspire.”

Implemented in 2016, this national strategy, known com-monly as Vision 2030, aims to harmonize the goals of govern-ment with the outlooks of the private sector, civil society, na-tional and international organi-zations, experts and academics.

“It is a very ambitious and long-term plan,” explains Min-ister El Said, the woman in charge of overseeing the strat-egy. “It is our national version of the SDG. It is rooted in the concept of sustainable devel-opment and seeks to improve quality of life in Egypt today without prejudicing the rights of future generations.”

Incorporating the economic, social and environmental di-mensions of sustainable devel-opment, Egypt’s Vision 2030 sets up various pillars beneath each of the main policy areas. On the economic front, these pillars include energy, innova-tion and scientific research, to-gether with the transparency and efficiency of governmen-tal institutions. Social devel-opment factors include social justice, education and training, health and culture, while there are also pillars for environment and urban development. For-eign policy, national security and domestic policy form the overarching schema for the strategy and set the determi-nants of the pillars.

“Each sets out strategic tar-gets and performance indica-tors that identify the current situation and the standards to be attained by 2020 and 2030,” says Minister El Said. “They also outline anticipated challenges and the programs and projects that will be carried out in order to meet our goals.”

Absolutely central to these

objectives is inclusive growth, stresses the minister: “Inclu-sive growth seeks to promote a balance between the different classes of society and the various regions of the country in order to ensure that positive outcomes reach all segments of society and all parts of the country.”

Inclusivity is not just about class, but about gender and age too. “Vision 2030 is an inclusive strategy, and that means women and young people,” says Minister El Said.

With 60 percent of the Egyp-tian population now under the age of 30, representing one of the country’s main assets and its

future, the ministry has been at pains to include a cross-section of young people in the planning and execution of Vision 2030.

“We have a very big team of young Egyptians working very closely with the ministry, discuss-ing all the targets and objectives of the vision, its implementation and its achievements.”

When it comes to inclusive growth and greater opportuni-ties for Egypt’s female popula-tion, Minister El Said highlights that her role at the helm of such an important national ministry is symbolic of the government’s commitment to achieving gen-der equality.

“We are very privileged to have a president that believes very much in the capabili-ties and abilities of Egyptian women,” she says. “In fact, we have eight females in the ministry responsible for the core portfolio of government, as well as 89 female parlia-mentarians. “On a wider note, we want to increase the rate of women in the workforce to 35 percent by 2030, espe-cially in leadership positions.”

In order to reach its short-term aim of 8 percent econom-ic growth within the next four years, the minister says that one of main objectives of the govern-ment is increasing job offers in the employment market.

“Reaching 8 percent is quite feasible and achievable with the amount of investment that the government and the pri-vate sector are putting into the country. However, we have 750,000 graduates every year that enter the labor market, so our major challenge resides in providing enough positions for those people.”

To achieve this, and all of the goals outlined by Vision 2030, the minister stresses that “more participation be-tween all parties and sectors of society is required in order to move forward.”

Egypt and the United States share a long history of mutual interests, with the strategic economic, political and security partnership between the two countries now stronger than ever. 

Few bilateral relationships have deeper roots than those between Washington and Cairo. With spheres of interest across Africa, the Middle East and even beyond, Egypt has proved an in-dispensable partner for the U.S. in the Middle East, most notably in the global fight against ter-ror and extremism, a fact which has not gone unrecognized by the Trump Administration. Just last September during the UN Gener-al Assembly, U.S. President Don-ald Trump described the role of President El-Sisi as “outstanding” in confronting the global menace, putting Egypt “at the forefront” in an ongoing battle.

This came shortly after U.S. Secretary of State Mike Pompeo authorized the release of military aid to Egypt to boost its defense and security capabilities in the region in order to bolster national and regional security, calling the U.S.-Egypt relationship “one of our deepest and broadest part-nerships in the region.”

Sameh Shoukry, Egypt’s Foreign Minister, explains: “The conflicts that exist in Syria, Yemen, Libya and the threats and dangers of terrorism are all challenges that we deal with through coordina-tion and cooperation with the United States. We share com-mon interests when it comes to maintaining peace and security in the region.”

Egypt’s strength as a long-standing arbiter of peace in the

Middle East and beyond has gained further credibility due to its achievements at home. It has been just over two years since the country signed a $12.4 billion deal with the International Monetary Fund (IMF), putting into place initiatives such as the liberaliza-tion of the currency, restructuring of energy subsidies and austerity measures to rebalance the budget and thus the economy. 

While these reforms have caused hardships, they have been at the same time, regarded as necessary to the reform of the economy. “The stability of Egypt itself has been demon-strated by what it steadily en-dured and accomplished in the last few years, particularly in terms of regaining the compe-tence of the institutions of gov-ernment and their responsibility towards the Egyptian people,” says Minister Shoukry.

Just last January, IMF man-aging director Christine Lagarde heralded the country’s progress on the economic front, noting

that “Egypt has made substantial progress as evident in the suc-cess achieved in macroeconomic stabilization. Its growth rate is now among the highest in the region, the budget deficit is on a declining trajectory, and inflation is on track to reach the Central Bank of Egypt’s target by the end of 2019. Unemployment has declined to around 10 percent, which is the lowest since 2011,

and social protection measures have been expanded.”

Egypt remains a steadfast emerging market; its name is no longer synonymous with risk for U.S. and global investors. The an-nual Gallup Global Law and Or-der poll, published in June 2018, ranked the country 16th out of 135 countries in terms of safety, making it the safest country in Africa and even safer than the U.S., which ranked 35th. 

“Our economic relationship with the U.S. is supported and enhanced by our strong political ties today, and the mutual desire is to continue cooperation in the

Forty years on from the signing of the Camp David Accords, Egyptian Foreign Minister Sameh Shoukry sheds light on the dynamics behind the evolving strategic partnership

economic sector at higher levels. It has been beneficial, to both Egypt and the United States, therefore they continue to ex-plore advantageous avenues,” clarifies Minister Shoukry.

Indeed, even before the re-forms, Egypt has long been a preferred destination in the region for U.S. commercial in-terests. American foreign direct investment (FDI) in the country

stood at $22.2 billion as of the financial year 2016-17, equiva-lent to a staggering 38.6 per-cent of the U.S.’ total FDI in Af-rica. Meanwhile, in the Middle East, Egypt comes only second to the United Arab Emirates. Today, the government sees at-tracting as much as $11 billion in FDI in the current financial year – up from $7.9 billion last year and a clear sign of grow-ing investor confidence in the recovering Egyptian economy.

“Major American companies are heavily invested in Egypt and have been here over the last 40 or 50 years, and in general, they

have been rewarded quite hand-somely by their operations in Egypt … President El-Sisi has also always shown a high degree of receptivity in meeting with inter-ested American companies, and in highlighting the opportunities that exist in Egypt; the invest-ment opportunities,” Minister Shoukry explains, adding that “with the current discoveries of huge gas reserves [in the Zohr

offshore field], Egypt can be an energy hub for the eastern Medi-terranean, Europe and beyond.”

Commerce is tightly bound into Egypt’s DNA, with a trading history that spans over five mil-lennia. For American investors, the country represents not only a 100-million strong domestic market, but also a hub through which they can access major markets without tariffs as a re-sult of a number of preferential trade agreements with the Arab countries, the EU, Turkey, and the COMESA, SADC, and the EAC blocks, which together comprise 26 African countries.

“The Suez Canal corridor pro-vides for American companies a base to expand production lines and to take advantage of the free trade arrangements that Egypt has with the Arab world and also with Africa. The Continental Free Trade Area (CFTA) is another additional element that can be attractive to U.S. companies to be based in Egypt and expand into Af-rica. All components of a solid Egypt-U.S. relationship are on track to mutually benefit both sides,” notes Minister Shoukry.

This tight regional integra-tion will come into sharper focus this year, as the country assumed the leadership of the African Union. In his keynote speech as he took the helm of the bloc, President El-Sisi un-derscored the need for greater regional integration, economic ties and investment within the continent, calling for the CFTA to be put to its full use.

Meanwhile, the Trump Adminis-tration recently unveiled its Africa strategy as yet another opportu-nity for Egypt to shine as both a trusted partner and a core eco-nomic and socio-political power hub. The strategy’s aims, which include enhancing U.S. trade and commercial ties with African na-tions through arrangements that benefit both sides, and countering the threat of terrorism, play to Egypt’s strengths, while U.S. com-panies, which already have a base in the country, will increasingly be able to use it as a springboard into the rest of the continent.

“We have very special things happening, our relationship has never been stronger, we are working with Egypt on many dif-ferent fronts including military and trade,” President Trump re-cently said.

Closer than ever: the strategic partnership between Egypt and the United States continues to unfold

“Our economic relationship with the U.S. is supported and enhanced by our strong political ties today, and the mutual desire is to continue cooperation in the economic sector at higher levels”

SAMEH SHOUKRY,

Foreign Minister of Egypt

“Major American companies are heavily invested in Egypt and have been here over the last 40 or 50 years, and in general, they have been rewarded quite handsomely by their operations in Egypt”

Egypt’s Minister of Foreign Affairs Sameh Shoukry (right) meets U.S. Secretary of State Mike Pompeo in January, 2019.

“We are very privileged to have a president that believes very much in the capabilities and abilities of Egyptian women. In fact, we have eight females in the ministry responsible for the core portfolio of government, as well as 89 female parliamentarians. On a wider note, we want to increase the rate of women in the workforce to 35 percent by 2030, especially

in leadership positions”

DR. HALA EL SAID,

Minister of Planning

The Worldfolio SUNDAY, APRIL 14, 2019 03

Following some difficult meas-ures taken to stabilize the economy, in the context of a complex global economic envi-ronment, Egypt’s recent package of reforms have been specifically aimed at revitalizing local and foreign investment and position-ing the country as a business and trade gateway to the African continent, and the world.

More than two years since the start of the reform program, ana-lysts argue that these actions – such as devaluing the Egyptian pound and slashing energy sub-sidies – are now showing gains.

While the fiscal reforms and a weaker Egyptian pound have made it easier to do business, the drive to open up the private sector to foreign investment has included the passing of other crucial legislative and institu-tional reforms, ranging from a new investment law to the cut-ting of red tape. As a result, the Egyptian government is today re-porting a spike in new companies coming to its shores, as well as an expansion of existing ones, and a rise in foreign investment.

Tax incentives“Our economic reform measures were indeed bold and ambi-tious—and are paying off, set-ting the economy on the right track to achieve inclusive and sustainable growth,” explains the Minister of Investment, Dr. Sahar Nasr. “The Government achieved progress on fiscal consolidation efforts, eliminated foreign exchange distortions, en-couraged domestic and foreign investment, and increased the private sector contribution to growth and job creation.”

“Improving the business envi-ronment with the aim of promot-ing a more competitive and dy-namic economy was a key pillar of these reforms and has signifi-cantly contributed to increased productivity and employment generation,” the Minister says. “This entailed comprehensive leg-islative reforms, ranging from a new Investment Law, and Factor-ing and Leasing Law, to amending the Companies Law and Capital Markets Law, and introducing, for the first time, a Bankruptcy and Insolvency Law.”

The new investment law, rati-

fied in May 2017, has provided a particularly important landmark in Egypt’s bid to improve the business climate. With an aim to modernize and reduce barriers to how international companies invest and operate in Egypt, it looks to facilitate economic growth, domestic production, exports and foreign investment, and is designed to boost employ-ment opportunities and increase Egypt’s competitive edge across the region. The law is also helping to improve equality of opportu-nity, empowering youth, protect-ing the environment and public health, and enhancing good gov-ernance and transparency.

Investments in key sectorsIn order to specifically attract more global capital to Egypt, a number of new safeguards and incentives were written into the law, including certain guarantees of residency and tax exemptions for foreign investors.

“Alongside the investment law, this full-fledged parcel of reforms, which entails an attrac-tive package of incentives and guarantees, has led to a marked improvement in investor con-fidence, which has translated into increased investments in key sectors and regions, and

subsequently boosted economic growth,” the minister affirms.

Consequently, companies in Egypt are now able to establish themselves faster and more ef-ficiently, while small businesses have increased access to low-cost debt. Meanwhile, the coun-try is seeing the formation of public private partnerships and large private sector investments in mega-projects, including the energy sector, new cities such as the New Administrative Capital, and in developing public services.

Public-private sector collabo-ration in Alamein, Galala, the Suez Canal Economic Zone and the New Administrative Capital have accelerated the develop-ment of these regions particu-larly, and supported the govern-ment’s urban development plan.

“In addition, legislative reform to promote financial inclusion, in-

cluding the Leasing and Factor-ing Law, is continuing to boost private sector participation through SMEs,” explains Min-ister Nasr. “We are committed to working full force to increase access to finance to smaller com-panies, as well as provide them with the technical assistance they need to operate more ef-fectively and grow.”

Strengthened relationshipsOn the foreign investment front, bold policy reform, political sta-bility, and a resilient economy are also helping to build trust and strengthen mutually-beneficial relationships with its interna-tional business partners, with Egypt maintaining its position as the leading destination for foreign direct investment (FDI) in Africa last year.

Egypt witnessed the highest percentage of foreign direct invest-ment flows in Africa during 2018, accounting for 19.8 percent of to-tal foreign investments. The value of foreign investments received in Egypt increased by 7 percent during 2018 to reach $7.9 billion, compared to $7.4 billion dollars in 2017. Most of the investments in 2018 have been concentrated in the real estate, food, oil and gas and renewable energy sectors,

according to the World Invest-ment Trends report of the United Nations Conference on Trade and Development (UNCTAD).

“In addition, it is very impor-tant to note that while FDIs globally have been on a down-ward trend, Egypt’s share of global FDIs is increasing, which is a positive signal that we are on the right track and that our reforms are bearing fruit,” says Minister Nasr. “We’re already achieving promising results, signing investment agreements worth almost $2 billion during the Africa 2018 Forum.”

Egypt’s economy, particularly in light of the improved business environment, offers ample op-portunities to foreign investors in a variety of sectors. Inter-national businesses can part-ner with the government on urban development projects in mega-projects, including but not limited to the construction, IT, healthcare and education sec-tors, while its Investment and Economic Zones are also of note-worthy importance, leveraging on enabling infrastructure and strong incentives within the investment law, and aiming to drive strategic sectors, such as ICT, renewable energy, and qual-ity public services.

Gateway to AfricaBesides being home to 100 mil-lion consumers of its own, Egypt also aims to become a gateway to Africa and the Middle East, positioning itself as a technology, energy, manufacturing and trade hub in the region.

“Our objective is to contin-ue supporting the continent’s transformation into a global economic powerhouse by re-sponsibly capturing the full potential of its resources and capabilities,” says Minister Nasr. “Egypt strongly believes in facilitating the movement of capital, labor and goods and fostering pan-African invest-ments, while building stronger and more mutually-beneficial partnerships.

“I strongly believe that the African Continental Free Trade Agreement is creating oppor-tunities for producers to ac-cess a wider market and, by reducing costs and barriers to trade, creating a more com-petitive landscape that will drive nations toward further economic diversification.”

“Africa, with a GDP of $3.5 trillion and 1.2 billion consum-ers, will witness 50-percent trade growth under the AfCFTA, as per the UN Economic Com-mission on Africa, and Egypt is committed to playing a piv-otal role in this development,” stresses the minister.

“Today, Egypt has invested almost $10.2 billion across Af-rica, and our regional agree-ments serve as a powerful catalyst to further encourage such investments.”

Foreign investment on the rise amid improved business climate

“It is very important to note that while FDIs globally have been on a downward trend, Egypt’s share of global FDIs is increasing, which is a positive signal that we are on the right track and that our reforms are bearing fruit”

“Improving the business environment with the aim of promoting a more competitive and dynamic economy was a key pillar of the reforms and has significantly contributed to increased productivity and employment generation”

DR. SAHAR NASR,

Minister of Investment and International Cooperation

President Abdel Fattah El-Sisi (far right) and Minister of Investment Dr. Sahar Nasr (far left) at the inauguration of the Investor Services Center.

INVESTMENT

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Sustainable investment in renewable energyWith Egypt’s goal to generate 42 percent of its energy capacity from renewables by 2035, private investors have prime opportunities to reap the huge potential in solar and wind.

Regionally, energy demand is expect-ed to increase three-fold by 2050, presenting MENA governments with a concrete timeframe to push ahead with renewable energy pro-jects while phasing out fossil fuels.

Egypt’s Integrated Sustainable Energy Strategy is designed to tap 20 percent of the country’s electricity needs from renewables by 2022 and 42 percent by 2035, with solar the primary industry ripe for expansion in one of the nations with the greatest potential in that field on the planet.

Although total installed capacity of renewables in Egypt currently stands at 3.7 gigawatts, Mohamed Mansour, CEO and co-founder of In-finity Solar, which in 2014 qualified for the Feed-in Tariff (FiT) program, says there is vast potential for more.

“We’re looking to get into wind projects, and hopefully we’ll do that next year. We’re also looking to di-versify where our plants are and to buy plants in the U.S. and Europe. We are looking to develop further plants in Africa through our network. Our target is to, hopefully, reach 10 giga-watts of generation by 2030. That’s a bit of a stretch, but if we manage half of that it’s an achievement.”

The International Renewable En-ergy Agency shares Mr. Mansour’s optimism. A recent report estimated Egypt could potentially generate up to 53 percent of its electricity from renewable sources by 2030, which would shave $900 million annually from the country’s energy bill.

Meanwhile, the World Bank’s Regulatory Indicators for Sustain-able Energy ranks Egypt among the three fastest-improving countries in the world in terms of regulatory frameworks. The private sector already accounts for over 70 per-cent of investment in renewables and Mr. Mansour envisages huge developments on the horizon.

“Nationally, we’re talking about generation capacities of around 25-26 gigawatts of wind, and an-other 35-40 gigawatts of solar. So it’s a huge market. We have lots of empty land, lots of demand for electricity. If you come here with an open mindset then a lot of doors open and things move a lot quicker than you might expect.”

In July 2018, the International Fi-

nance Corporation assigned $660 million in funding to 13 FiT projects in Benban with a total capacity of 500 megawatts and The Euro-pean Bank for Reconstruction and Development is planning to finance 16 further solar projects in Egypt with capacity of 750 megawatts.

Benban, a region considered the most ideal place on earth outside of Chile for solar power production, is one of Infinity’s major projects and a perfect example of the company’s commitment to improving the lives of people in their areas of operation; many employees at the $2.8bn de-velopment are local residents.

“It’s part of our DNA,” says Mr. Mansour. “We got into the solar business precisely for that reason. We don’t want to just make money; we want to help our country in a positive way. Not only are we reduc-ing carbon but we employ and edu-cate because our plants are not in the middle of the city, they are in the middle of the desert, where there are very poor villages. And we see the effect of our presence immediately.”

This viewpoint is shared by Mu-hammad Al-Fouly, Executive Direc-tor of the UN Global Compact Net-work Egypt. In addition to acting as an advisor to private industry as Egypt strives to meet the Sustain-able Development Goals laid out as part of the Egypt 2030 initiative, Mr. Al-Fouly’s remit is to ensure that the needs of the population are first and foremost in the mindset of big business. Indeed, rather than view-ing population growth as a negative, Mr. Al-Fouly espouses the benefits of a well-educated next generation, pointing out that Egypt has taken great strides in that area as part of the country’s reform program.

“The late Secretary General Kofi Annan praised our structure and made it clear from the very begin-ning:  the Global Compact is there to give the global market a human face, and that is what we do,” says Mr. Al-Fouly. “We urged business to stop operating selfishly and for-getting their mandatory ethical re-quirements. We stressed that those businesses that are primarily there to tender to the needs of humans have to be ethically structured, ac-countable, and responsible.”

Private sector called to f ill $230 billion investment gap to meet infrastructure needsRecent measures aimed at improving the business cli-mate, particularly focused on fostering private sector participation in sustainable development, include tax in-centives of 30 to 50 percent for investments in national projects, with an emphasis on areas most in need.

According to the World Bank’s latest report on the Egyptian economy, published in Decem-ber, a significant increase in private infrastructure invest-ment is needed in Egypt to free up public funds for improving education, health and social protection.

In the report, the bank reaf-firms the need for a “shift” in Egypt’s development model, where the private sector plays a “pivotal role” in attracting substantial new investment across high potential economic sectors.

The report also quoted a G20 global infrastructure outlook that says  Egypt will require $675 billion in investments over the next 20 years to meet its infrastructure needs. While the government is expected to provide $445 billion in financ-ing, this leaves an investment gap of around $230 billion for the private sector to fill.

In order to help plug this gap, the Egyptian government over the past four years has under-taken significant structural and legislative reform that have not only stabilized the economy, but importantly made the business climate suitable to attracting more private capital.

Though tough structural re-forms, including substantial subsidy cuts and the floating of the Egyptian currency, have been necessary to create mac-ro-economic stability, addition-al legislative reforms adopted by the government in turn have taken a particular focus on cre-ating an encouraging environ-ment for the private sector to participate in the sustainable development process.

“It is noteworthy what the Egyptian government has been able to do in terms of structural

adjustments, and the President should take a lot of credit for these actions,” says Dr. Ahmed Heikal, Chairman and Founder at Qalaa Holdings, a leading energy and infrastructure in-vestment company in Africa and the Middle East. “That’s the first reason that Egypt is currently doing relatively better than most countries. However, in the coming period it will be crucial for the Egyptian govern-ment to ensure that it is able to attract international, regional and local capital.”

The Egyptian Government has indeed been busy on this front, with the Organization of Eco-nomic Cooperation and Develop-ment (OECD) in January praising Egypt’s recent promotion of the private sector, as well as the country’s ambitious economic reforms over the past four years.

Recent measures aimed at improving the business climate, particularly focused on foster-ing private sector participation in sustainable development, in-clude tax incentives of 30 to 50 percent for investments in na-tional projects, with an emphasis on areas most in need. And these are opportunities that both in-ternational and domestic inves-tors are now welcoming with open arms.

“If we can generate employ-ment, profit, and taxes, then these investments are all that the private sector could and should be making. We should be creat-ing shared value for ourselves and for the country,” stresses Dr. Heikal, whose company’s in-vestments in the core industries of energy and infrastructure are helping shape Egypt’s and the wider region’s future.

One method identified to help plug the $230 billion private in-vestment gap in infrastructure, and equally providing an impor-tant tool for the government to appropriately allocate risks and responsibilities associated with expanding the economy and stimulating job creation, is that of Public-Private Partner-ships (PPPs).

“I believe the role of the pri-vate sector in infrastructure in-vestments is paramount,” says Ahmed El Sewedy, President and Chief Executive Officer at

Elsewedy Electric Group. “And for this, public-private partner-ships are the future. The govern-ment has to open this space for the private sector and invest in the future. PPPs are the most im-portant approach to take now.”

“Egypt is full of opportunities, especially when it comes to the energy sector,” highlights Mr. El Sewedy, pointing to the renew-able energies tariff being imple-mented that is currently driving investment into the sector.

Energy is also a key sector for Qalaa Holdings, a company that opportunistically invests in pro-jects that increase the efficiency of energy utilization.

“These investment opportuni-ties wouldn’t have been possible without the structural adjust-ment approach program that the government has taken,” stresses the Qalaa Holding founder. “Be-cause once you remove subsidies, people will be forced to utilize resources in a much more effi-cient manner.”

When it comes to PPPs, Dr. Heikal says that “the challenge for the Egyptian government will be finding private sector players that are credible enough with the right kind of experience to man-age the high quantum of debt [that many of the country’s large infrastructure projects will re-quire] on a non-recourse basis. This is a challenge, not only in Egypt but across the African continent as well.”

“However, the bottom line is, the private sector has a sig-nificant role to play on multiple fronts, and I think the govern-ment recognizes that and wants the private sector to step in and play a leading role in the coun-try’s sustainable development,” concluded Dr. Heikal.

“If we can generate

and taxes, then these investments are all that the private sector could and should be making. We should be creating shared value for ourselves and for the country”

DR. AHMED HEIKAL,

Chairman, Qalaa Holdings

“The government has to open this space for the private sector and invest in the future. PPPs are the most important approach

to take now”

AHMED EL SEWEDY,

President and CEO, Elsewedy Electric Group

PRIVATE SECTOR ENGAGEMENT

The Worldfolio SUNDAY, APRIL 14, 2019 05

Banking sector embraces digitalization towards

inclusion.

For more than six decades, Banque du Caire (BdC) has been the first port of call in the Egyptian finan-cial services sector and today plays a leading role in the na-tion’s Vision 2030 plan – in part by pumping financing into SMEs and micro-finance sectors, while also remaining a key financier to some of Egypt’s largest blue chip companies and infrastructure de-velopment mega-projects.

Following the appointment of Tarek Fayed as Chairman and CEO in January 2018, BdC’s new board approved a five-year strat-egy that includes expanding its domestic branch network and regional presence, upgrading its infrastructure, enhancing digital services, promoting financial inclu-sion and expanding its SME loan and microfinance portfolios.

So far the adoption of the new strategy is already paying off, with BdC achieving net profit of EGP 2.5 billion ($144 million) in 2018 versus only EGP 800 million in 2017. In 2018, BdC also achieved growth rates of 105 percent in SME financ-ing and 97 percent in micro-financ-ing, supporting the Central Bank’s target of having 20 percent of all lending directed towards those seg-ments by the end of 2019. Today, microfinance and SME loans com-prise some 15 percent of BdC’s total loan portfolio.

“BdC is the microfinance leader and pioneer in Egypt, distinguish-ing itself from other commercial banks in the market, with a market share of 25 percent. To capitalize

on our leading position, we have developed a successful, well-con-trolled model of servicing a profit-able microfinance customer base and we continue to see this as a key segment going forward,” says Tarek Fayed, Chairman and CEO of Banque du Caire.

With 222 branches and 7,500 employees in Egypt, BdC is one of the oldest and most-respected fi-nancial institutions in the country and one with a clear vision of the direction in which the sector needs to head to meet the demands of an increasingly digital society.

“We are planning to offer our clients a well-diversified suite of products that will enrich their banking experience, rolling out in-novative solutions in addition to state-of-the-art technologies and digital platforms,” says Mr. Fayed.

“At the heart of our strategy is a renewed focus on developing world-class, customer-centric value propositions, transforming our ser-vice models by focusing on innova-tion and digitalization.”

In light of Egypt’s efforts to serve a sizeable unbanked population, de-spite widespread internet penetra-tion and a booming mobile phone market, Mr. Fayed notes the sector is ripe for expansion: “The Egyptian banking sector is flush with liquid-ity and our strategy is to establish BdC as a fully-fledged universal bank that caters to clients’ needs and recognizes achievement while also building up value across every facet of our community.”

As part of its financial inclusion strategy to tap into and develop the unbanked population, BdC aims to add 90 more branches across Egypt over the next three to five years, as well as launching inter-net and mobile banking services, enhancing mobile wallet services for its customers and expanding its ATM network.

Outside of Egypt, the bank also plans to expand its footprint in the Gulf, where it has established a representative office in the UAE to serve the entire Gulf region.

“Egypt has strong bilateral trade with the Gulf counties. We, there-

fore, aim to leverage on our pres-ence in the UAE in order to open up new opportunities for our top-tier local corporates in Egypt who have potential to export goods and ser-vices to the UAE and the Gulf region. The office also plays a pivotal role in showcasing that Egypt is ready for foreign direct investment from the region in light of the enhanced investment climate and significant regulatory improvements that are now in place,” explains Mr. Fayed.

Another avenue for BdC is in fast-growing Africa, where it operates its subsidiary Cairo International Bank in Uganda. Like BdC itself, its Ugandan subsidiary has also under-gone restructuring overseen by a new CEO and new board that have laid down a five-year strategy to strengthen BdC’s African network.

“We aim to use our subsidiary in Uganda as a hub for opening new business opportunities in east Af-rica, and to also improve the bank’s position in the next three to five years to be among the top 10 banks in the market,” says Mr. Fayed.

With the launch of its five-year strategy, BdC’s transformation is well underway. But to ensure its continued success in the medium to long-term, the bank is planning to go public, staging an IPO with a free float of up to 49 percent of its shares on the stock exchange. “We have to tap all business venues. So, we have very strong plans for growth in the next phase and we believe that the IPO will greatly help us to achieve these objectives,” Mr. Fayed explains.

“We are planning to offer our

of products that will enrich their banking experience, rolling out innovative solutions in addition to state-of-the-art technologies and digital platforms”

TAREK FAYED,

Chairman and CEO, Banque du Caire

”With 222 branches and 7,500 employees in Egypt, BdC is one of the oldest and most-respected

the country and one with a clear vision of the direction in which the sector needs to head to meet the demands of an increasingly digital society”

Tackling Egypt’s long-standing structural challenges has kept fi-nance minister Mohamed Maait extraordinarily busy in the months following his appointment in June 2018. But his efforts have begun to bear fruit. Named African finance minister of the year by The Banker in January, his work in driving Egypt’s ambitious program of economic re-form has seen him win plaudits from around the world, with good reason. Today, Egypt’s hard-won macroeco-nomic stability is laying the founda-tions for future sustainable growth, attracting investment and providing ever-increasing employment oppor-tunities for the country’s rapidly-growing population.

In February this year, the execu-tive board of the International Mon-etary Fund (IMF) carried out its fourth review of the North African nation’s economic reform program, and praised its progress. “Egypt’s macroeconomic outlook remains fa-vorable, supported by strong policy implementation. Robust growth and a narrowing of the current account deficit reflect a rebound in tourism and strong remittances, while unem-ployment has declined to its lowest level since 2011,” said David Lipton, first deputy managing director of the IMF, who also underscored the country’s stringent monetary policy stance, which has kept inflation under control despite temporary increases in global food and energy prices.

“Our inflation decreased from 33 percent in July 2017, having de-creased to 12 percent in December 2018,” says Minister Maait, adding that he expects to finish the current financial year, which runs to the end of June, with single-digit inflation.

For the minister, the numbers speak for themselves. “To assess the situa-tion we have to compare the coun-try’s growth to three or four years ago, when GDP growth was around 2 percent. This year, it is 5.6 percent and next year it will be 6 percent,” he says. “For the first time in 15-20 years, we have moved from a primary deficit to a primary surplus of 0.1 percent last year and 2 percent this year. This is continuing to improve, decreasing the overall deficit from 12.9 percent in FY 2012/13 to 8.4 percent, and next year we expect it to be 7.2 percent.”

With this growth and stability comes renewed investor confidence. The Egyptian stock market is now among the most profitable markets in the world, and the VanEck Vectors Egypt Index ETF, a U.S.-listed ETF dedicated to Egyptian equities, is up by nearly 20 percent year-to-date, making it one of the best-perform-ing single-country ETFs. As a result, international ratings agencies are beginning to lift their outlook on the country’s debt. Most recently, Fitch Ratings upgraded Egypt’s long-term foreign-currency issuer default rat-ing to B+ from B, with a stable outlook. “Egypt has made further progress in implementing economic and fiscal reforms, which are driving improved macroeconomic stability, fiscal consolidation and stronger external finances,” Fitch clarified in a report.

But this progress has not been without its difficulties. Reducing the country’s debt burden remains a key target. “We have challenges. Our debt on 30 June 2017 reached 108 percent of our GDP, which was very dangerous. Our debt service was more than 55 percent of our expenditure,” says Minister Maait. “What we did was we finally re-duced it 92.8 percent this year and 89.2 percent next year.”

The government has been able to do this, in part, after implementing a value-added tax (VAT) regime which has substantially increased tax reve-nues, alongside a reduction in energy subsidies which has shored up the country’s financial situation.

Perhaps the most important out-come of the government’s reform efforts has been the decrease in unemployment from 13.3 percent to 8.9 percent. For a country with a vast youthful population, this metric not only indicates economic stability, but also contributes to the stabil-ity of society, as unemployed youth in Egypt represent a key risk. With unemployment figures now down to pre-revolution levels thanks to the economic recovery and an uptick in national development projects which provide jobs, the future is once again bright for the people of Egypt.

As Minister Maait points out, “We are adopting policies aimed at enhancing the living standards of citizens and protecting the most vulnerable groups.”

years, we have moved from

surplus of 0.2 percent last year and 2 percent this year. This is continuing to improve,

percent, and next year we expect it to be 7 percent”

DR. MOHAMED MAAIT,

Minister of Finance

Exporters primed to benefit from newly expanded Suez CanalThe development of the new Suez Canal Economic Zone and the Suez Canal, which “saw the largest increase in income in history” at $600 million last year, is attracting tens of billions of dollars of investments and is set to turn Egypt into a global export hub.

sets the stage for sustainable growthkey structural reforms, strengthening the business climate, attracting investment, and increasing employment.

If the Nile is the lifeblood of ag-riculture in Egypt, the Suez Canal has served as the heart of interna-tional trade for the country for a century and a half, pumping trade across the region and the globe. A 120-mile stretch of water between Port Said and Suez, the Canal is effectively the original Hyperloop, slashing the distances container shipping needs to cover to access the four corners of the planet.

On January 2, 2019, the Ca-nal recorded the second-highest single-day traffic statistics in history, with 5.1 million tons of goods transported along the waterway. In 2017-18 revenues from the Canal had increased by $600 million over the previ-ous year, which Suez Canal Ad-ministration President, Mohab Mamish noted, was the “largest increase in income in history.”

Mr. Mamish also added that revenues are forecast to double by 2023, proving that the Egyp-tian government’s sweeping re-form program has nowhere been more effective at turning water into dime.

The opening of The Suez Canal Economic Zone (SCZone), com-plemented by the 2015 Suez Canal Extension Project, has already paid dividends, contrib-uting to over $15 billion in rev-enues between 2015 and 2018, the most recent figures avail-able. At almost two-thirds the size of Singapore and servicing 1.8 billion consumers worldwide, the potential for the SCZone’s growth is almost off the scale.

Egypt’s main export destina-tions are the United Arab Emir-ates, Italy, Turkey and the United States and Germany. But the dy-namics of its external trade could very well change with the estab-lishment of the African Free Trade Agreement, which is set to drasti-cally increase traditionally weak intra-African trade – opening up a market of 1.2 billion people, with over $4 trillion in combined con-sumer and business spending, to Egyptian exporters.

Helping Egyptian exporters to reap the new opportunities is the Export Development Bank of

Egypt (EDBE). EDBE has estab-lished itself as the main funding source of export operations in the country and holds a  70 percent stake in Export Credit Guarantee of Egypt, a company that guaran-tees and provides insurance and factoring services to exporters.

“When I joined a couple of years ago, we had around 250 clients; we are close to 500 clients now, split almost evenly between large corporates and SMEs,” says Mrs. Mervat Soltan, Chairperson of EDBE. “As a bank, strategically, we are trying to grow our base of exporters. We are trying to help those who export 10-20 percent to export more and those who do not export to understand the ben-efits. We have a strategy to help boost exports anywhere. We’ve done a bit of restructuring and we’re establishing a new group that should start working very soon, like an international banking group. We partnered with banks like Afrexim and the African De-velopment Bank. We also have a

good network of correspondence across the world where we could actually help exporters reach any-where in the world.”

The SCZone is one of the chief beneficiaries of the IMF’s $12bn development loan and the flota-tion and subsequent devaluation of the Egyptian pound, coupled with the country’s industrializa-tion drive, has attracted several lucrative foreign investment deals.

LG and Samsung are to in-crease investment in Egypt, with the Vice-Chairman of the former, Koo Bon-joon, noting: “LG Elec-tronics in Egypt marked exports of $200 million during 2018, which represents 75 percent of the company’s production.” Egypt’s Minister of Investment, Sahar Nasr, recently successfully

courted more South Korean in-vestment in infrastructure.

“Egypt is one of the countries where, as difficult as sometimes it is, once you get in and start working, the margins are really high,” notes Mrs. Soltan. “Slowly but surely, I think everything is moving towards making Egypt more attractive to foreign and local investors alike.”

As Basil El-Baz, Chairman and CEO of petrochemical firm Carbon Holdings, notes:  “If the world was flat, Egypt would be in the middle. It is one of the few places globally where you can service north, south, east, and west competitively.”

Carbon Holdings is building the Middle East’s largest petrochemi-cal plant – a circa $11 billion in-vestment at the SCZone which falls in line with nation’s plan to become a hub for downstream petroleum industries. By build-ing a hub for petrochemicals and its derivatives, such as plastics, Egypt can create the eco system to create a thriving manufactur-ing sector, which would feed off petrochemical producers such as Carbon Holdings.

“The company that is going to manufacture plastic coat hang-ers on a world-scale basis is go-ing to do very well in the SCZone. The company that makes plastic pipes for plumbing is also going to do very well. In Egypt, there are all the ingredients that would allow, with a disciplined industri-al program, a manufacturing sec-tor to emerge relatively quickly,” says Mr. El-Baz.

“I believe we have put the legal framework in place to allow that. It is now a function of putting in place production of the base raw materials to allow those manu-facturers to say: ‘Yes, this makes sense. Let me manufacture this in Egypt’. Egypt is in a very fortu-nate position because on one side there is a large trade deficit and on the other a small manufactur-ing sector; it has a tremendous opportunity. You’re dealing, effec-tively, with very attractive virgin territory and I am excited by the future of our country.”

Dr. Mohamed Maait was named African finance minister of the year by The Banker in January.

BANKING AND FINANCE

Your Banking Destination

16990www.bdc.com.eg

“At almost two-thirds the size of Singapore

consumers worldwide, the potential for the SCZone’s growth is almost off the scale”

The WorldfolioSUNDAY, APRIL 14, 201906

How Egyptian banks are supporting national developmentWith the largest banking sector in the region, Egypt is now leveraging upon the wisdom of its banking sector to buttress its ongoing development.

When rating agency Moody’s announced recently that it had upgraded its outlook for Egypt’s banking system to positive from stable, few were surprised. Bank profitability has surged over recent months, and total deposits are on a steady upward trajectory, reaching EGP 3.82 trillion ($220 billion) by the end of December 2018.

This strong performance from the banking sector is providing the foundations the country needs in order to cement its progress and reach its development aims. A key objective for the government is the activation of the private sector.

“This is an economy that is now standing on its two feet after a few years of heavy, extremely daring economic reforms,” Ferid Belhaj, World Bank vice-president for the Middle East and North Africa said recently. “The economy’s standing, now it needs to walk, and we be-lieve that the private sector is re-ally the driver.”

In order to achieve this, the Central Bank has set an ambitious target for the banks to boost SME lending to 20 percent of their total loan portfolios by the end of 2020. But doing so involves rethinking the way banking is carried out in what has been up until recently a very traditional sector.

The Egyptian Arab Land Bank, established in 1880, has embraced innovation as it seeks to meet – or even exceed – the Central Bank’s goal. “For me, banks as institutions are like big elephants. They move very slowly,” says Amr Fouad Ka-mal, the bank’s chairman. “Penetra-tion is very low for banking SMEs because Egypt is a very wide country. This is a hard job for the banks.” To overcome this challenge, the bank is looking at new ways of reaching underserved clients. “NGOs are much more flexible in penetration and we have decided that we are going to lend money to them,” says Mr. Kamal. By lever-aging the network of NGOs in the country, the Egyptian Arab Land Bank can extend its reach far be-yond its branches. “I can see a lot that can be done by banks. We are taking those steps and the national banks are also taking steps: it is coming,” adds Mr. Kamal.

Of course, in order for banks to be able to increase financial inclusion in the country, they require a con-ducive environment and favorable regulatory environment, and Cen-tral Bank governor Tarek Amer has been at pains to provide one. By putting into place rules which al-lowed banks to reduce the level of mandatory reserves held with the Central Bank by the amount lent to SMEs, SME lending is now very profitable for lenders, providing a real incentive.

With an unbanked population standing at 84 percent of the to-tal, the opportunities for banks to make a difference to the country are enormous. Putting new financial tools such as savings, insurance and credit facilities into the hands of its 50-million-strong under-25 popula-tion will enable Egypt to fully capi-talize on the demographic dividend it has available to it as a result of its youthful populace. New initiatives, from microfinance to online bank-ing, are helping to bring the banking sector closer to young Egyptians.

Following the appointment of a new board of directors in Septem-ber 2017, the Egyptian Arab Land Bank is now positioning itself as a fully-fledged services bank ca-tering to retail, corporate, invest-ment and its traditional area of expertise of real estate financing. Mr. Kamal adds that the Egyptian Arab Land Bank is currently in-vesting heavily in automation and technological upgrades.

“We need to build up a very ef-fective technology platform. This is something that has been considered by the Central Bank and the govern-ment, who are sponsoring this move to fintech,” says Mr. Kamal.

The banking sector has surged in popularity, and is now emerging as a viable investment opportunity for foreign entities. With the Cen-tral Bank of Egypt saying in March that it has received a flurry of re-quests from major international banks for new licenses to operate in the local market, the banking sector will soon see further oppor-tunities for transfers of expertise and sophisticated banking tech-nology, as it continues to support the growth and development of the Egypt of the future.

EDUCATION

Harnessing the demographic dividend through educationWith sweeping education reforms, Egypt’s enormous youth population will soon have the tools it needs to drive the economy forward.

“Do you want real education or do you want your kids to just get ‘degrees’?”

This hard-hitting message, de-livered by President El Sisi at the Sixth National Youth Congress, set the stage for the implemen-tation of Egypt’s new education system, which aims to turn dec-ades of rote learning on its head and bring in a new focus on tech-nology, in order to future-proof Egypt’s vast human resources.

As recently as 30 years ago, Egypt represented the pinnacle of educational prowess in the re-gion. Its doctors, teachers and engineers were a prized resource in the Gulf and beyond, which led to the Egyptian variant of Arabic becoming the lingua franca of the Arab world. But a failure to modernize the system saw the country fall behind. By 2018, it ranked 129th globally in terms of the quality of its education. As President Sis pointed out during his speech: the current system produces neither well educated nor highly skilled citizens, result-ing in a mismatch between their qualifications and market needs.

This year, however, this is set to change. President El Sisi has declared 2019 the ‘year of edu-cation’, boosting public spend-ing on the sector by 8 percent. Today, Egypt’s education system is set to become a showcase for Egyptian renewal.

At the beginning of the current academic year last September,

Egypt’s 22 million public school students started studying an en-tirely new curriculum, as part of Vi-sion 2030, an agenda focusing on economic, social, and environmen-tal developments in the country.

Empowering Egypt’s youth is key for its future development, and this new focus on education will, the government hopes, al-low them to take part in build-ing the future of their country by enabling them to qualify for skilled jobs.

While the government is a key actor in promoting a better education for Egyptian youth, the private sector plays a vital role. The founders of Badr Uni-versity, which opened its doors in 2014, have long worried about the divergence between the knowledge and skills genuinely needed by the Egyptian economy versus the knowledge and skills possessed by university gradu-ates, and have sought, in the five intervening years, to address this issue. “When I started all this effort 25 years ago, I said I wanted to create a locomotive to take Egypt forward,” explains Hassan El Kalla, the university’s chairman. “I need to see my graduates everywhere occupy-ing leading positions to make Egypt the star it should be.” He adds that Egypt occupies a fun-damental place in human history, and that its education standards should reflect this.

Cognisant of the potential

to create a two-tier education system, divided between those who can afford top schools and those who cannot, Mr. El Kalla has sought from the very begin-ning to make Badr University as affordable as possible. “While we’re keen to provide quality edu-cation, cost containment is our religion. There’s always a way to save money and still produce a quality product, and that’s what we’ve been trying to do all the time since we started. We’re go-ing to contribute to Egypt’s pro-gress. After succeeding in show-ing that this model is working and replicable, we have then moved to creating a bigger mass to be really able to impact education in Egypt.”

Another initiative underway to reduce wealth-based inequali-ties in education in Egypt is the scrapping of the Thanaweya Amma. This standardized test – the secondary school leaving certificate – determines entry into university, and the high stakes involved have tradition-ally seen those families who can afford to do so turning to pri-vate lessons outside the school. The new education system will switch to a grade point average (GPA) system, based on the three years of study in that educational stage, instead of the final year in the current system. To ensure transparency, it will be mainly based on technology, with tab-let devices being provided by

the government to students and teachers. Unveiling the new ap-proach during the National Youth Conference, the country’s educa-tion minister said that he believes that the new system will elimi-nate the phenomenon of cheat-ing and private tutoring, and will increase learning and creativity skills in students.

The potential of Egypt’s educa-tion sector is demonstrated by the interest shown by the private sector in investing in it. Cairo for Investment & Real Estate Devel-opment (CIRA) is Egypt’s most acknowledged investor in the area of education, serving over 14,000 students. Its managing director, Mohamed El-Kalla, explains its at-tractiveness. “The Egyptian mid-dle class alone is larger than the population of three or four other Arab countries combined. We are the first entity to provide blended learning to the masses in Egypt, and the first entity that looks at the middle and lower-middle class with specialized services.” The firm, which started invest-ing in schools in Cairo, has now moved to other governorates. “We’re in Minya, we’re in Asyut, we’re in Hurghada, we’re in Suez, we’re opening in Delta… We’re seeing where Egypt is growing and we’re always there. We open schools in new cities before people start moving in, that means that we are part of the story of why people would like to move to a new city, because the school is there.”

Egypt is already the third-most popular destination country for international degree students within the Arab world, surpassed only by Saudi Arabia and the United Arab Emirates, and nine of its institutions were included in the top 31 of the 2018 Times Higher Education ranking of uni-versities in the Arab world. As it overhauls its education system, it looks set to regain its position as the academic hub of the region.

“When I started all this effort 25 years ago, I said I wanted to create a locomotive to take Egypt forward”

HASSAN EL KALLA,

Chairman, Badr University

The Worldfolio SUNDAY, APRIL 14, 2019 07

Despite its 100 million-strong pop-ulation – three-fifths of whom are aged under 30 – and its 103-per-cent mobile phone penetration, the e-commerce revolution sweeping the globe has yet to reach the banks of the Nile. All this, though, is set to change, and change is coming from the unlikeliest of quarters: the 154-year-old governmental postal service provider.

“We are redefining the role of Egypt Post,” says Dr. Amr Talaat, Minister of Communications and Information Technology. “We aim to transform the Egyptian Postal Authority to become a services and financial hub.”

The barriers to e-commerce in Egypt are twofold: the first, pro-hibitive shipping costs, and the second, a strongly cash-based society, which makes online payments difficult, explains Es-sam Mohamed El Saghir, Chair-man of Egypt Post. To address this, Egypt Post has agreed to facilitate e-commerce through a consolidation hub at the postal service’s logistical center at Cairo International Airport.

Of course, logistical chal-lenges to e-commerce don’t just affect Egyptians. Difficulties in receiving goods have led to the e-commerce market across the whole African continent ac-counting for less than 0.5 per-cent of GDP, far below the global average of 4 percent. But Egypt is well-placed to tackle this is-sue. Mr. El Saghir, describes how he brought together his coun-terparts in a number of African countries to develop the Ecom@Africa Initiative, positioning the postal network as a key enabler and facilitator of e-commerce, and enabling Egypt to become Africa’s e-commerce gateway.

“A big number of African coun-tries signed with us and are now using this facility, from the U.S. to Cairo to African countries,” says Mr. El Saghir. “We enabled e-commerce not just for Egypt, but we’re now a huge gateway for Africa as well.” Egypt Post has now signed agreements with several U.S. e-commerce plat-forms and marketplaces, includ-ing Amazon, to open enormous opportunities in the Egyptian and African markets.

“The postal organization plays an evident role in the bigger pic-ture of the digital transforma-tion strategy and financial inclu-sion initiative of Egypt. Uniquely, Egypt Post enjoys the trust of the Egyptian people across all segments of society and has a very wide footprint of more than 4,000 offices nationwide; possessing an extremely strong brand identity. Due to its simple interface, Egypt Post, therefore, is well positioned to serve as one of the main arms for providing digital and financial services for our citizens as part of the digi-tal inclusion initiative,” stresses Minister Talaat.

“The government is now work-ing with the Egypt National Postal Organization to make microfinancing and other fintech applications available to every citizen through a digital platform as well as through digital offices, to allow people to buy and sell goods online,” says the minister, “We’re building an inclusive plat-form at ENPO to support small manufacturers and artisans mar-ket their goods online.”

All of this is part of the govern-ment’s plan to double the number of businesses selling products and services online by 2020, making use of e-commerce to provide job opportunities, increase competi-tiveness in the market, as well as raise business-to-business e-com-merce volume from the current 0.5 percent of GDP to 1.5-2 percent.

Postal provider becomes vibrant

services and

The barriers to e-commerce are being eroded thanks to Egypt Post, which is ena-bling online trade so that Egypt can serve as a gate-

way to Africa.

The Egyptian ICT sector is on a steady tick upwards, bringing with it sweeping changes that are touching every sector. Tipped at 15 percent growth for the current fis-cal year, the government aims for the sector to contribute 5 percent to the country’s economy within the next three years, up from 3.2 percent in 2017, as it transforms Egypt into a digital economy.

“The ICT sector grew by 14 per-cent in Q1 and 16.2 percent in Q2, which is an enhancement to what has been realized in the past fiscal year,” says Amr Talaat, Minister of Communications and Information Technology. “We’re eager to sus-tain our contribution to GDP at 4 percent and then grow to 5 percent and beyond in the coming years.” Remarkably, ICT investments in the country soared by 38 percent to $21.8bn in the 2017-2018 fiscal year. The minister adds that the government plans to achieve this by attracting ICT companies to expand in Egypt and participate in the implementation of Egypt’s digital transformation strategy.

The Ministry of Communica-tions and Information Technology (MCIT) recently signed MoUs with a number of global technology innovators to develop the local skill base in order to support the country’s digital transformation program currently being imple-mented. A mindset shift is under-way in Egypt, with plans to create 100,000 ICT job opportunities by 2022 in fields such as software de-velopment, cyber security, artificial intelligence and blockchain.

While the impact upon Egypt’s GDP of this digital transformation is impressive, the government doesn’t want to stop there. Instead, it aims to position itself as Africa’s digital hub. At the Cairo ICT Forum in No-vember last year, President Abdel Fattah El-Sisi launched the Africa Games and Digital Applications Ini-tiative, which will see the creation of 100 Egyptian-African start-ups and provide training for 10,000

young people across the continent to develop mobile applications and digital games to meet the needs of the Arab and African markets.

It is interesting to shed light on examples of companies with solid investments in Egypt, such as: Uber, with its second largest center of excellence in Egypt; IBM’s six deliv-ery centers serving the entire globe; Dell Technologies center of excel-lence providing IT and business process services in 14 languages; and Microsoft Egypt’s Advanced Technology Lab (ATL) which works on many exciting services and re-search areas like speech processing, machine learning, and computer vision, which contributed to build-ing Microsoft flagship products and cloud services. Additionally, Mentor Graphics’ R&D Center in Egypt is one of its biggest centers outside USA; Vodafone has its center of excellence for the Group’s artificial intelligence and robotic process au-tomation (RPA) activities in Egypt; and Valeo Egypt has evolved to be Valeo’s main software R&D center, providing all services in the field of automotive embedded software.

In business process outsourcing (BPO), too, the country is rising in prominence. Ideally situated in the GMT+2 time zone, it can serve the

U.S., Europe and Asia. The world’s major subsea telecommunications cables run along the north coast of the country, ensuring always-on connectivity. The resource pool of competitive labor stands out with its global competency standards and competitive cost. Egypt poses a large English and French-speaking population, supported by other lan-guages including German, Italian, Spanish, Greek and Portuguese. To-day, the number of global technology firms seeking Egypt as a destination

of choice to offer their global deliv-ery services is on the rise.

Egypt is turning its sights to digi-tal transformation in order to drive forward its economy, starting with government services. “This will create a collaborative environment among the government itself that will contribute towards a more ac-tive and stronger ICT industry in Egypt,” says Minister Talaat.

The digital transformation pro-gram includes offering up to 25 digital public services in its first

phase. This includes notarization, re-newing driving licenses, and utilities and electricity bills. Alongside that, the government is technologically advancing its various agencies to provide better citizen services, while an aggressive plan is underway to integrate members of our society in the mainstream formal economy.

“We’re working in collaboration with the Central Bank of Egypt and other government entities to leap for-ward en route to financial inclusion,” says the minister. “A unique initiative we’re working on is a unified card for citizens to receive all their govern-ment entitlements such as salaries, pensions or subsidies. The card is tied to either a bank or an Egypt Post account. When this initiative is completed, 20 million citizens will be banked. We’re also working aggres-sively on encouraging our citizens to use mobile money and mobile wallets and enrich the portfolio of services offered. We’re collaborating with the Central Bank of Egypt to offer microfinancing through mobile appli-cations. All these initiatives help in moving towards a ‘less-cash’ society.”

The private sector has lauded the government’s progress. Adel Hamed, CEO of Telecom Egypt, says: “Digital technology has been on the table since the early 2000s, but people were talking about digi-tal transformation of technological entities inside each organization. Today, the digital transformation is beyond that.” Notably, President El Sisi has mandated the reform of the education sector as a top na-tional priority. Mr. Hamed shares Telecom Egypt’s role as a major contributor to the reform project, extending fiber infrastructure to 2,550 schools nationwide.

“The Egyptian market is extremely promising,” says Minister Talaat. “Our ability to attract foreign investments in ICT remains strong and we are aim-ing to strengthen it further. This ability stems from the young, vital, vibrant, eager people ready to learn and make a future for themselves. We’re looking to create an internationally compe-tent talent pool of young technology savvy professionals specialized in ad-vanced technologies in order to ca-ter to the demand of ICT firms with promising expansion plans.”

As the digital revolution transforms business, society and the global economy, Egypt’s growing ICT sector is laying the foundations for sustainable progress.

ICT sector hits double-digit growth amid digital transformation

“We’re eager to sustain our contribution to GDP at 4 percent and then grow to 5 percent”

DR. AMR TALAAT,

Minister of Communications and Information Technology

”Our ability to attract foreign investments in ICT remains strong and we are aiming to strengthen it further. This ability stems from the young, vital, vibrant, eager people ready to learn and make a future for themselves”

DR. AMR TALAAT,

Minister of Communications and Information Technology

Essam Mohamed El Saghir, Chairman, Egypt Post

Egypt remains one of the larg-est producers and consumers of pharmaceuticals in the Middle East and Africa and aims to po-sition itself as a leading provider of medicines to the region, despite the economic instability it has witnessed following the currency devaluation. The pharmaceutical sector is seeing increasing atten-tion from investors and the grow-ing stability of businesses capable of adjusting to the new economics of a changing industry.

With the shift towards complex molecules and advanced therapy medicinal products (ATMP) to ac-commodate unmet medical needs, Minapharm is leading a transition to high-value biologicals in devel-oping markets. Aside from the production of life-saving and life-enhancing medicines, the company is adopting an international opera-tion platform for biotechnology and cellular engineering.

With over 50 years of experience in producing the highest-quality products based on cutting-edge re-search and innovation, Minapharm covers a broad spectrum of medi-cines, ranging from small molecules to extremely complex bioengineered proteins. Key to Minapharm’s success and its regional leadership has been its strategic alliances with world leaders at the forefront of pharma-ceutical innovation. The cooperation with European and U.S. partners has enabled the transfer of technologies to provide locally manufactured prod-ucts in an affordable way, not only for the Egyptian market but for other emerging countries.

“While the focus in Egypt is still on small molecules, Minapharm was an early recognizer of the shift in the health-care industry and embarked on a transition towards large, com-plex molecules ready to bridge to

next-generation medicines,” says Dr. Wafik Bardissi, Chairman and CEO of Minapharm.

By its part, the Egyptian govern-ment has made efforts to facilitate the growth of the pharmaceutical industry, however, more attention needs to be given to address the ob-stacles to encourage local manufac-turing of innovative products and to develop strategies to accommodate the growing demand for biologics versus the production of simple molecules. “For example, several national health authorities across the world have put in place regula-tions to encourage the use of inno-vative technologies for biosimilars by authorizing tax incentives and subsidies,” says Dr. Bardissi.

As itself a leader in the region, Minapharm established its biotech subsidiary in 2003 in Cairo, the first biopharmaceutical facility in Egypt,

Africa and the Middle East, special-ized in the research, development and manufacturing of complex geneti-cally engineered proteins for unmet medical needs. Taking a leap into cell line engineering, Minapharm further consolidated its biotech business model in 2010 by acquiring ProBio-Gen AG, a Berlin-based internation-ally renowned contract development and manufacturing organization and technology provider of biopharma-ceuticals. This business model al-lowed Minapharm to cover the full value chain from cell line to launch of finished product, so patients in devel-oping countries can also benefit from the latest innovations.

“The establishment of a hybrid bioengineering R&D community of Egyptian and German scientists al-lows us to constantly innovate, with synergistic projects driving tech-nology transfer between Cairo and

Minapharm continues to venture into the future of biotech by investing in new facilities in Egypt and Berlin, opening the door for synergy projects to jointly develop and produce modern immunotherapies for Egypt, the MENA region and beyond.

Putting Egypt at the forefront of biotech for the region

Berlin to develop high-quality, yet cost-effective, genetically engineered drugs,” explains Dr. Bardissi.

Enabled by its acquisition of Pro-BioGen AG, Minapharm has trans-formed from a regional technology driven manufacturer of affordable complex medicines to a global pro-vider to the biotech industry at large.

Minapharm continues to ven-ture into the future of biotech by investing in two new facilities in Cairo and Berlin, enabling synergy projects to jointly develop modern immunotherapies for Egypt, the MENA region and beyond.

“It is, therefore, not unlikely to see Minapharm implementing a radically ongoing transformation of the global healthcare industry from traditional chemical compounds to today’s complex genetically engi-neered medicines and tomorrow’s ATMPs,” adds Dr. Bardissi.

TECHNOLOGY AND INNOVATION

“While the focus in Egypt is still on small molecules, Minapharm was an early recognizer of the shift in the health-care industry and embarked on a transition towards large, complex molecules ready to bridge to next-generation medicines”

DR. WAFIK BARDISSI

Chairman and CEO, Minapharm

The WorldfolioSUNDAY, APRIL 14, 201908

Steadfast development of hous-ing, new cities and infrastructure projects have made Egypt’s real estate one of the most attractive investment segments for foreign investors. With high population growth, around 500,000 new housing units are needed per year, leaving a huge demand gap to be filled both by government social housing schemes and private de-velopers, who currently deliver around 50-60,000 units annually.

The real estate sector is poised to take off following the inau-guration of 14 cities worth 22.5 billion dollars. It is projected that 700,000 units will be added in 2020 by the Ministry of Housing, which also wants to engage the private sector in the development of social housing.

With Egypt’s old towns and cities too congested and unable to han-dle more capacity, the construc-tion of liveable, breathable new urban centres has been deemed the way forward for the country, which still has vast swathes of un-occupied land primed for devel-opment. (Egyptians currently live on just 7 percent of the country’s total land area).

“Now we have the land, we have different projects, the new administrative capital and other new cities, I think that the government spending in infra-structure is just opening the way for more investments to come in to the country,” says Ahmed Shalaby, CEO and Managing Di-rector of Tatweer Misr for Real Estate Development.

“I think we developers should consider expanding our work, es-pecially now that the government is opening new cities everywhere in the country. I also see the op-portunity for other types of real estate developments – not just housing, but schools and univer-sities and also hospitals. I think this diversification in portfolio between locations and products will be very helpful in the coming few years to sustain the growth

of the real estate sector and real estate developers.”

This type of integrated devel-opment, incorporating schools, universities and hospitals in new liveable spaces away from congested old population cent-ers, is something Tatweer Misr is already doing at its Bloom-fields development located just 15 minutes from the New Ad-ministrative Capital.

As Tatweer Misr has called it, Bloomfields is “a breakthrough perspective on integrated living offering new concept homes de-signed for every lifestyle, rang-ing from one up to four-bedroom residences.” With education, sci-ence and innovation at its heart, the 415-acre development will also comprise an entrepreneur-ial university, a lively college town, internationally acclaimed schools, and is set to become Egypt’s hotbed for startups and entrepreneurs.

Tatweer Misr has held talks with a number of U.S. universities and recently penned an agreement with the New Jersey Institute of Technology (NJIT) and Ocean County College (OCC) in order to establish Egypt’s first American International Branch Campus (IBC) at Bloomfields.

This agreement follows the es-tablishment of another partner-ship with Global Entrepreneurship Network (GEN) to launch “GEN@Bloomfields”, the first hub for in-novation and entrepreneurship in the Middle East and North Africa managed by GEN.

“We decided to have the GEN hub in the heart of the universi-ty campus. Through this hub we will have all GEN activities. It

will be connected with all GEN networks around the world and will enable young entrepreneurs to present their ideas, get ad-vice and secure financing, etc.,” says. Dr. Shalaby.

“The hub will host executive courses from different institu-tions around the world, training courses and conferences. So, it will act as the main value to connect the schools, the univer-sity, the surrounding residents in Bloomfields and the others to this area – to make this area the cen-tre of life, innovation and science.”

As one of Egypt’s most innova-tive and forward-thinking young companies, Tatweer Misr wants to instill the ethos of innovation and entrepreneurship at “GEN@Bloomfields”, at the university campus and across the whole of Bloomfields, in order to build a thriving ecosystem for creativ-ity and start-ups. As Dr. Shalaby points out, the next generation of Egyptians will have to be job creators rather than job seek-ers and Tatweer Misr aims to support that landmark shift at Bloomfields.

As Egypt looks to plug the huge demand gap in housing, Tatweer Misr has developed a unique project that will integrate housing, education facilities, a university and start-up incubators that will become a hub for living, innovation and entrepreneurship.

Disrupting the Egyptian real estate market with unique integrated developments

From mountain to sea: IL Monte Galala and Fouka BayAside from their ambitious Bloom-fields project, Tatweer has two other major developments target-ing tourists, domestic and foreign second-home buyers and Egyptians on the higher-income scale.

Nestled in the mountains of Galala on the Red Sea coast, IL Monte Galala is Tatweer Misr’s first pro-ject, whose design was inspired by the blend of architectural sophisti-cation and natural beauty found in the mountains of Portofino, Italy. Named ‘Best Project’ at the City-scape Global Awards in 2016, IL Monte Galala’s 2.2 million square meters will offer residents and visitors a unique lifestyle proposi-tion, boasting luxury housing, hotels, serviced apartments, retail and lei-sure, office spaces, and the world’s first man-made Crystal Lagoon on a mountain, which will include three kilometres of white sandy beaches.

“In terms of location and natu-ral beauty and also proximity to Cairo, IL Monte Galala is the per-fect location,” says Dr. Shalaby. “Unfortunately, it is also a location where there are many houses and beautiful vistas but very little life. And here lies our vision to change this through the different activi-

ties and lifestyle factors that we will add to this amazing place.”

Tatweer Misr’s second project, Fouka Bay on the North Coast, consists of double-decked twin houses and townhouses, stan-dalone chalets, spacious cabins and bungalows – all of which are located facing the white sandy beachfront along the stunning Ras El Hekma coastline – and like its sister resort, includes a huge Crys-tal Lagoon making every home in the resort a waterfront home.

At both IL Monte Galala and Fouka Bay, Tatweer Misr has part-nered with Kerten Hospitality to build a total of seven boutique ho-tels operated by the Cloud7 and House brands, which will also of-fer serviced apartments, villas and cabanas. The House Hotel Fouka will be the first of the seven to be launched in 2020.

“Between hotels and serviced apartments, we will add about 2,400 keys both in Fouka and IL Monte Galala,” Dr. Shalaby explains. “We believe in this di-versification, we believe that we should diversify our portfolio to have typical residences, serviced apartments and hotel rooms, and I think there’s a huge opportunity for that in Egypt.”

“I think we developers should consider expanding our work, especially now that the government is opening new cities everywhere in the country. I also see the opportunity for other types of real estate developments – not just housing, but schools and universities and also hospitals”

AHMED SHALABY,

CEO and Managing Director, Tatweer Misr

“We decided to have the GEN hub in the heart of the university campus. Through this hub we will have all GEN activities. It will be connected with all GEN networks around the world and will enable young entrepreneurs to present their ideas, get advice and

“The aim is to really change the narrative,” says Minster of Tour-ism, Dr. Rania Al-Mashat, refer-ring to the political, economic and security impacts that had in recent years severely ham-pered tourist numbers to one of the world’s most popular des-tinations. However, with more than 11.5 million visitors to the country in 2018 – a return to pre-revolution levels – it appears the recent sectoral reforms im-plemented by the ministry are already facilitating success.

Yet creating sustainable tour-ism – the central aim of the reforms – is not just about in-creasing the number of tourists, explains the minister, it’s about “making sure that the local com-munities are part of the economic spillover that tourism generates.”

With one in every ten jobs in Egypt coming from the sector, the need to build capacity and develop infrastructure have been identified as areas for achieving sustainable growth. For this, the government is leaning heavily on the private sector.

“The priority must be to con-tinue to build infrastructure,” agrees Khaled Bichara, Group CEO of Orascom Development, a  leading developer of fully in-tegrated destinations in Egypt which include hotels, residential units and leisure facilities. “That’s why at Orascom Development, we build whole towns! In every town we build, there’s residen-tial, touristic, educational, and the commercial component. Our most mature towns have their own hospitals, a university, even its own football team and sta-dium! It’s basically a complete community.”

“We can do all that our role asks of us, as a community devel-oper,” continues Mr. Bichara, “if we have the right conditions in terms of airport services, roads, power infrastructure, and the political will to promote Egypt as a safe destination – which fortunately, we now do.”

Key tourism players like Oras-com will not only look to govern-ment to create these necessary conditions for growth, but other industries too, such as the trans-port sector.

Nile Air  is Egypt’s largest private full-service carrier op-erating scheduled and charter services from Cairo and Alex-andria to emerging airports in the region, giving international and domestic visitors easy and comfortable access to many destinations inside Egypt.

“Tourism is helping Egypt bring in foreign capital once again. It’s very important for us,” says Nile Air CEO, Hassan Aziz, stressing that tourism cur-rently represents a third of the airline’s network.

“We have all the safety aspects and quality, including IOSA ac-creditation – a remarkable cer-tificate to prove that the airline is providing the highest safety standards in the industry.”

With tourism levels rising again to their highest in ten years, Nile Air is ramping up to support in-dustry growth, says Mr. Aziz, highlighting the two new routes from Madrid and Paris to Luxor, as well as a deal in the pipeline with a German partner to link the Red Sea and North Coast of Egypt. The airline is also adding another two Airbus aircrafts in 2020, and another in 2021, bringing its total fleet to 10. However, the sky is the limit in the long term says Mr. Aziz, with the sustainable development of the communities it serves at the forefront of expansion plans.

“I would like to grow the air-line to 20 aircrafts and add more destinations to Nile Air, which will be a huge success for the country. We are part of this country and we must contrib-ute to society. We train, educate, hire, and recruit the Egyptian people. We work in Egypt, so must cater for them.”

Amr Badr, Managing Director at Abercrombie & Kent Egypt, a leading luxury travel company, agrees that the outlook for the Egyptian tourism is once again “extremely positive”.

“Tourism is growing phenom-enally,” he says.“The potential is great. Egypt is gifted by the fact that it’s one of the few destinations in the world that is on everybody’s bucket list. Importantly, the coun-try is building the infrastructure to support this. To double our tourism numbers, we’ll have to build more roads, more accommodation, air-ports, and the manpower capacity. Do we have today the readiness to do it? It’s a challenge – it’s buildup of things that we need to do, but we can do it.”

Egypt eyes sustainable

tourism growth

Following the devaluation of the Egyptian pound in November 2016, real estate prices rose around 30 percent year on year as citizens and investors invested in property as a means to keep their money safe. At the same time the weakened pound also drew more foreign property buyers, which also contributed to high price rises.

As the currency has stabilized, the rate of growth of prices has fallen. But despite the slowdown, the real estate sector is still growing at a healthy 15 percent and is buoyed by stable economic fundamentals and real demand for housing that is not going to let up.

With Egypt’s population growing by 2.5 million a year, 500,000 hous-ing units need to be built annually to meet current demand. A sizeable part of this demand can be attrib-uted to newly married couples that still adhere to tradition. Even today, modern newlyweds in Egypt will look to immediately buy a house or apartment rather than rent like their counterparts in Europe and the U.S.

“Egypt is a very unique country in terms of real estate. It’s a country of 103 million people. There is defi-nitely genuine demand because of the number of marriages and peo-ple who want to move out of Cairo, maybe moving to the west and east as Cairo doesn’t expand to the north and south,” says Mr. Yasseen Man-sour, Group CEO and Chairman of Palm Hills Development.

“We’ve seen unbelievable de-mand over the last few years. Our sales two years ago totaled roughly 8 billion Egyptian pounds ($460 million). Last year it was 12.5 bil-lion and this year we’ll probably hit close to 14 billion Egyptian pounds.”

Another unique feature of the

Egyptian property market is the extremely low rate of mortgages, with many home buyers having to pay for their houses up front due to the lack of mortgages on offer. This, Mr. Mansour says, acts as a doubled-edge sword.

“It works as a bad thing because there’s such huge potential to be un-locked in the real estate market if we have an efficient mortgage system,” he says. “It’s good in the sense that it works as a shock absorber in case of bad times. We’ve seen this with the crises in 2008 and 2011 – one was the international financial crisis and the other was Egypt specific. In both cases, Egypt’s real estate mar-ket was extremely resilient.”

With a new law on residency per-mits for foreign property owners, there is expected to be a surge in demand from abroad that will also drive real estate sector growth, alongside increasing demand from Egyptian expats. A one-year residen-cy permit will be granted to buyers of properties valued at $100,000; while three-year and five-year per-mits will be offered to those who buy properties worth $200,000 and $300,000 respectively.

Mr. Mansour is particularly opti-

mistic about the opportunities this new law will bring about for Palm Hills, which has already seen its portion of sales going to Egyptian expats jump from around 6 per-cent to 18 percent following the currency devaluation.

“The new law which grants resi-dency to foreigners is a huge thing that will help us a lot. When I say we will have new sales of 14 billion this year: that is from the sale of around 3,400 to 3,500 units. I can easily see us increasing this by 50 percent by going abroad and try-ing to sell this residency program,” says Mr. Mansour, who sees most of the demand for permits coming from citizens from other countries in the Middle East and North Africa (MENA) region.

Badya Creative CitySet to become a hub for entrepre-neurship, creativity, art, education and healthy living, Badya City is Palm Hills’ flagship development. Situ-ated on 3,000 acres west of Cairo and adjacent to 6th of October City, Badya’s location capitalizes on the new road, monorail and high-speed train networks that connect it with new points of interest and bridges

Cairo’s west and east sides. Aside from 30,000 residential

units, 16 percent of which will be standalone, Badya Creative City will also comprise of commercial, retail, educational, leisure and medi-cal facilities. A beacon of health and sustainability, Badya promotes a

healthy lifestyle – applying the ‘5-10-15 urban walkabilty’ rule with highly accessible pedestrian zones – and is the first city in the MENA region to fully comply with the UN Sustainability Goals.

Another important goal for Palm Hills with the Badya development was not only promoting healthy liv-

An estimated 500,000 new homes need to be built every year to keep pace with the expanding population and to address the estimated backlog of 3 million housing units. Meanwhile, a new law that grants residency to foreign property buyers is expected to prompt a surge in demand from abroad.

Real demand and stable economic growth provide strong fundamentals for real estate sector

ing, but also providing a lower cost of living for residents through the adoption of technology and innova-tive building.

“We think our selling point in Badya will not only be creative, innovative and high-tech knowl-edge, but it’s also the reduction of opex (operational expenditure) using high technology. People were always worried about the capex (capital expenditure) to buy the unit. Now what’s becoming more important is the upkeep of the unit. With the removal of the subsidies in electricity, water and gas, life is becoming much more expensive,” explains Mr. Mansour.

One highlight innovation that will help to reduce opex is the city’s de-sign. Palm Hills purposefully con-structed the city in such a way that the placement of the buildings cre-ates a corridor of air that decreases the temperature by 2 to 3 degrees centigrade, which in turn will reduce consumption of electricity to power air conditioning.

“We’ve also reduced the size of the unit and improved engineering to make it more efficient. We’ve done this with our intention to re-duce people’s opex (their monthly payment) by up to 30 percent of what they’re paying, which I think will help a lot of people to move and live comfortably in Badya.”

Badya will also be one of the ME-NA’s smartest cities thanks to Palm Hill’s collaboration with IBM, which aims to pioneer the notion of cognition in a multitude of lifestyle solutions. As such, Badya will be the first truly cognitive city in Africa, the Middle East and Europe, designed to attract the talented, tech-savvy and creative class of young Egyptians that will help to build the Egypt of tomorrow.

“Egypt is a very unique country in terms of real

million people. There is

because of the number of marriages and people who want to move out of Cairo”

YASSEEN MANSOUR,

Group CEO and Chairman, Palm Hills Development

Two of Tatweer Misr’s developments: Fouka Bay and Bloomfields.

REAL ESTATE AND TOURISM

The Worldfolio SUNDAY, APRIL 14, 2019 09

Private sector investments in the hospitality sector to increase as a show

With tourism forming a core part of Egypt’s Vision 2030 plan, the government and stakeholders in the private sector are pushing to market resorts such as Sharm el Sheikh on the Red Sea and the Mediterranean coast’s El Alamein as 365-day world-class lifestyle destinations, poised to attract families, business travelers and international events.

From ancient Egyptian heritage and culture, to luxury hotels, spas and a protected coral reef that has made it a world-renowned diving destination, Sharm el Sheikh truly has it all. Famed for the decisive vic-tory of the Allies in the WWII North Africa campaign, El Alamein, mean-while, has several historical sites, glistening Mediterranean beaches and is the perfect base from which to discover Egypt’s stunning North Coast. And one company that aims to put El Alamein and Sharm el Sheikh firmly on the global tourism map is Latif Group, owner of Rixos Hotels, one of the world’s fastest-growing luxury hotel chains.

Established in 2000, Rixos Hotel Group has found success offering traditional Turkish hos-pitality coupled with a unique spa experience in the finest sur-roundings and luxury ambience, operating premium resorts and villas in Europe, the CIS coun-tries, North Africa and Middle East. The hotel chain is reputed for its hospitality, attentive per-sonalized service and fine cuisine and has received global recog-nition and top ratings from the likes of the American Five Star Diamond Award, Conde Nast, World Travel Awards and Great Hotels of the World.

“As Rixos we aim to create an environment where our guests feel they are experiencing the true meaning of hospitality. The Rixos brand is very versatile in the implementation of new ideas and concepts and that’s why we can quickly adapt to our guests needs,” says Nasser Abdel Latif, Chairman and founder of Latif Group. “Passion and attention to detail is something we value and undertake from the planning phase when building the proper-ties to when the guests check out of our hotels.”

Buoyed by the prospect of longer term investment, increas-ing visitor numbers and a growing number of incoming international flights, Latif Group is making in-vestments in Egypt, which include plans to add several new develop-ments across the country to its

existing properties in Sharm el Sheikh and El Alamein.

In line with the widespread development of tourism-related infrastructure and resources to al-low Egypt to accommodate more than 10 million tourists annually, Rixos plans to increase its capacity from 2,000 to 15,000 rooms over the next five years, and will focus its resources on niche tourism, luxury hospitality and attracting world events to its properties to drive awareness of the destination and the brand internationally.

Having spotted the niche ap-peal of Egypt’s up-and-coming destinations, Rixos entered the country in 2011 with the launch of Rixos Sharm El Sheikh, intro-ducing the pioneering ‘Ultra-all-Inclusive’ and concept to the Egyptian market.

Since then, the company has added two more five-star prop-erties to its portfolio in Sharm el Sheikh; the Ritz Carlton and the Rixos Premium Seagate. Rixos Seagate offers 1,000 luxurious and elegantly decorated rooms, suites and villas, a conference room and seven swimming pools, and has its very own protected coral reef, designed to provide di-rect access for divers and snorkel-ers from its very own jetty.

On the back of its outstanding reputation, Latif Group signed a management agreement to bring the Ritz-Carlton Sharm El-Sheikh Resort to the Sinai Peninsula in 2016. Located in Sharks Bay, often

described as the gem of the Red Sea, the Ritz Carlton is set to open its doors in 2020 following a $600 million dollar investment. Aimed at the affluent leisure tourism mar-ket, the resort will comprise of 252 rooms, including 12 villas, three restaurants, several pools, a spa, a range of water sports activities, as well as the one of the biggest shopping, entertainment and inter-national restaurant complexes in Sharm El Sheikh.

In February, Rixos Sharm el Sheikh in Egypt ranked eighth in the TripAdvisor’s ‘Top 25 All In-clusive Resorts in the World’ list-ing. Meanwhile, Rixos Premium Seagate was named ‘Best Hotel in Egypt’ and ‘Best Luxury Hotel’ in Egypt, and won the fourth spot in the ‘Best Hotel in the Middle East’ category, making it one of the best hotels in the Middle East. Rixos has also won various awards from Top Hotels, Holiday Check and received many distinctions from global tour operators. The Turk-ish-inspired, Ultra-all-Inclusive luxury resorts were awarded with the highest TripAdvisor honors based on their distinct quality, ser-vice, value and overall experience – which have led to the thousands of positive reviews these hotels have received from their guests. Such international recognition for Rixos’ Sharm el Sheikh Hotels will help boost the area’s global ap-peal as a world-class destination for luxury, leisure, business and conference tourism.

Following the great success of its Sharm El-Sheikh properties, the company opened Rixos El Alamein in 2014 as the brand’s iconic representation on northern Egypt’s Mediterranean coast. Mr. Latif is particularly optimistic about the potential of El Alamein to become one of the world’s pre-mier destinations.

“We believe the Alamein area will be one of the leading tourism destinations. Seventy percent of travelers’ worldwide travel during the summer/spring sea-sons which are over six to seven months a year, and Alamein, with one of the most beautiful coasts in the world, is an attractive destination,” he explains. “With the continued infrastructure de-velopments and support from the government, Alamein will very soon become a name that resonates on the world tourism stage. There is huge potential for real estate, hotel and tour-

ism projects, as Alamein is a very safe destination for investment.”

As it looks to increase its room capacity from 2,000 to 15,000 rooms over the next five years, Rixos expansion plans include adding properties in Hurghada, Magawish, Makadi Bay, Sahl Hasheesh, Marsa Alam and Cairo.

“With 2,000 rooms already under its portfolio, Latif Group is moving forward to increase the number of hotels and rooms throughout the country with a concept that is continuously perfected across Rixos Hotels in Egypt,” says Mr. Latif.

“We are aiming to expand in Hurghada with two properties being unveiled in the end of 2019: Rixos Makadi Bay and Rixos Magawish. Latif Group is plan-ning a construction of a 4,000 key resort in Sharm El Sheikh that will feature four international brand-name resorts, a congress center, 40 serviced villas, enter-tainment and shopping complex, a sports village, an aquaventure park and a 20,000-square-meter, state-of-the-art crystal lagoon. We are also planning to expand to other destinations with the same strength.”

Latif Group’s ambitious ex-pansion plans throughout Egypt speak volumes about its belief in the country’s tourism po-tential and its commitment to supporting the development of tourism in line with the goals of Vision 2030.

Latif Group, in line with the widespread development of tourism-related infrastructure, is planning to add several properties to its portfolio in Egypt, which includes the award-winning Rixos Sharm el Sheikh and Rixos Premium Seagate.

“With 2,000 rooms already under its portfolio, Latif Group is moving forward to increase the number of hotels and rooms throughout the country with a concept that is continuously perfected across Rixos Hotels in Egypt”

“With the continued infrastructure developments and support from the government, Alamein will very soon become a name that resonates on the world tourism stage”

NASSER ABDEL LATIF,

Chairman and Founder, Latif Group

Photo left: Latif Group’s multi-hotel project in Egypt; Photo center: Rixos Premium Seagate’ swim-up suites; Photo right: Alex Kyrakidis of Marriot International (left) and Nasser Abdel Latif (right) sign a contract management agreement for the Ritz Carlton Sharm el Sheikh.

TOURISM