SMALL GROWING - APRIL 2019 - AMCHAM EGYPT INC
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www.amcham.org.eg/bmonthly
APRIL 2019
GROWING
SMALL
Syrian investors seek inclusion
ALSO INSIDE
NEW MSME LAWS
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EDUCATION LOANS
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Advertorial
New Heights for Memar el Morshedy
Memaar Al Morshedy are successfully questioning conventions of building mixed-use developments in Egypt,
garnering them international recognition as real estate trailblazers.
Constructing the biggest residential building in
the world, which looks like nothing else in
Egypt, epitomizes Memaar Al Morshedy
CEO, Hassan el Morshedy vision for his com-
pany. “I want our projects to be different,” he
says. “Skyline perfectly embodies this.” Such
innovation led Harvard University to invite Al
Morshedy and his father, who founded the
company, to make two keynote speeches as
the Arab Conference at Harvard in April. They
are the first Egyptian company to be invited to
said event. “This is a truly crowning moment for us,” says el Morshedy. Memaar Al Morshedy also sponsor the event
Memaar Al Morshedy was founded in 1983. At the time, they pioneered the idea of combining residential
units with administrative and commercial facilities. They are also among a handful of local real estate pioneers
with a portfolio of projects ranging from economy housing to premium developments.
Skyline is the company’s current flagship. “We have built similar complexes in terms of concept. Now we are looking
scale up,” says Al Morshedy. Skyline is a single, 3,500 residential unit, building erected on 200,000 square
meters. It has all the amenities that residents want, including retail outlets, green areas within the complex, enter-
tainment facilities and the world’s largest rooftop pool. “Once completed, it would hold the Guinness World Record as
the largest residential building in the world,” says Al Morshedy.
International Recognition ments,” says Al Morshedy. In 2019, three of these
The invite to speak at the Arab Conference at Harvard showrooms will be opened. “We are also planning
is an acknowledgment of Memaar Al Morshedy out- to hire 100 people in our sales team this year.”
of-the-box, and relevant, solutions in real estate. “It is
a validation for the entire team,” says Al Morshedy.
Fundamentally Strong Market
Despite rising unit prices due to higher construction
“My keynote will revolve around innovation in real
costs, Memaar Al Morshedy saw sales grow by 25
estate, and how it contributed to our success.”
percent in 2018. “Almost all major developers
For him, the huge benefit of being involved in the saw record-high increases last year,” says Al
event is exposure to around 5,000 international atten- Morshedy.
dees expected to be at the conference. “The biggest
This has been down to Egypt’s strong fundamentals.
benefits will be the connections and collabora-
tions we will secure with international players,” “We are a fast-growing population with half of
says Al Morshedy. “It can be a great opportunity for
them youth. They will likely be looking for homes
us to secure partnership agreements there.”
when they get married,” says Al Morshedy. Another
plus is relevant government policies. “The government
The Next Step is working heavily in the New Administrative
The company’s next development will be on the North Capital. We still don’t have anything there, but we
Coast, built over 1,000 acres in the Golden Triangle are looking into the opportunities over
area, close to the New Administrative Capital. “It there,” he says. “Overall, I am
would not be big villas and fancy apartments,” says very optimistic.”
Al Morshedy. “I want it to be more functional, but
with an edge.” The project is currently being designed
by the same team as the one that worked on Skyline.
Memaar Al Morshedy is also developing a new gen-
eration of showrooms with holograms, virtual reality,
and augmented reality. “These showrooms will take
visitors on an interactive tour of our develop-
azha.life
Advertorial
Madaar Developments:
The Art of Developing
Landmarks
A
s Madaar Development is approaching delivering mentation of a plot in Sheikh Zayed, where the oldest
their landmark development Azha, a beachside water park is located; Crazy Water. “We are planning a
resort on the last naturally-sandy beach in Ain commercial, services and hotel complex to be built
Sokhna, it is looking at new opportunities for its next there,” says Salah. The project is budgeted at EGP 7 bil-
landmark development. Madaar contracted iCommunity lion in investments, to be built over 45,000 square meter.
to develop a mobile app for the complex, making it the The other plot is in New Sphinx district, close to where
first resort in Ain Sokhna developed from day one to be the newly-minted Sphinx Airport is located.
a smart beachside resort. “People will be able to live in Madaar is also looking for plot auctions by the New
the complex by the end of 2019, as all the facilities will be Urban Communities Authority and government. “We are
up and running and online by then,” says Maged Salah, scanning for opportunities nationwide, including those in
Madaar Chief Executive Officer. smaller cities,” says Salah. “This was only possible
Azha is built on 400 acres comprising 3,000 residential because the government policies and strategies currently
units and 2,600 hotel rooms. The resort has several swim- prioritize the construction of new cities.”
ming pools as well as three man-made lakes contracted Post floatation price hikes in property has led many to
to renowned specialists Crystal Lagoon. “They are still believe that the Egyptian real estate market is stagnating.
under construction, but will be ready by the time owners “This is not true, as the entire sector has seen more sales
take delivery of their units and they extend over 10 km in 2018 that any year before,” says Salah. “Why some
water front,” says Salah. people say that there is stagnation may be down to the
As of the end of 2018, half of the project had been sold fact that so many new companies entered the market last
with 400 fully finished units to be delivered in the first year, and so sales are divided among a larger number of
delivery phase by the end of 2019. “These units will companies.”
include a fully prepped kitchen and AC units in each To face up the rise in competition, Madaar is focusing
room,” says Salah. on improving the quality of its offerings, winning
The other landmark development that Madaar has is the awards such as the company’s latest award the
Azhalife Clubhouse within the Azha complex. To cele- Cityscape 2019 Award for Leisure and Hospitality
brate its inauguration, the clubhouse will hold events (Built) Category.. “Despite rising competition from
throughout the Easter break; Visitors will enjoy many and new players and existing ones, We have a very strong
diverse family-friendly, fun-filled events. “Azhalife sales position and this year’s sales Target at Cityscape
Clubhouse is the heart of entertainment at Azha project,” was achieved,” says Salah. “We are highly respected
says Salah. “We designed it to cater to the needs of all in the local market with projects that warrant atten-
our residents. tion, given that we are not just thinking of clients’
Azha is not the only project that Madaar has planned. needs today, but also anticipate what they will need
Currently, the company is finalizing paperwork and docu- tomorrow and every day after that.”
Advertorial
Attijariwafa bank Egypt
SMEs Build-up
T
he strategy of Attijariwafa bank Egypt is tailored Financial Inclusion
to define and rollout a market-leading SME To promote financial inclusion, Attijariwafa bank
model, leveraging the bank’s capabilities and Egypt is taking part in the Central Bank’s Nilepreneurs
capturing non-lending opportunities. initiative, which offers non-financial, advisory services
to bankable and non-bankable SMEs clients, and aims
Attijariwafa bank Egypt established a unique platform to enhance the capabilities of young entrepreneurs to
to serve SME clients through a dedicated sales and grow their business.
coverage model executed by experienced relationship
mangers specifically for SMEs nationwide. The bank Moreover, Attijariwafa bank Egypt is working on
initiated the SMEs Business Centers and Business Units increasing financial inclusion and empowering innovation
in strategic branches to cover the entire network, through electronic payment services, by launching
ensuring smooth management of transactions and soon contactless payment cards. This type of card will
excellent service to all SMEs clients. speed up and facilitate cashless payments.
Moreover, the bank has an experienced commercial Using contactless payment cards, buyers only need
customer service team, who understand all of our to swipe their cards close to a contactless payment
clients’ needs. In 2019, they are launching new prod- terminal to execute the transactions, without needing
ucts that support SMEs, thereby allowing their busi- to enter their PIN number. By comparison, conventional
nesses to thrive. The bank also has the SME Academy payment cards consume time, and limits cardholders
where Attijariwafa bank Egypt provides training to its as well as merchants from using electronic payments,
staff to better serve SME clients. In 2018, 15 especially when transactions are in small amounts.
Relationship Officers graduated and joined the bank’s
SME sales force. The second round of the SMEs The reason these cards will encourage more people
Academy started this year, with another 15 candi- to use them, especially in small transactions, is
dates. because of their convenience. Thereby solving the
lack-of-small-change problem, which has been getting
In 2018, the bank partnered with Credit Guarantee worse recently.
Co. (CGC) and Egyptian Takaful Insurance Co. to offer
credit facilities to more SME clients than ever before, Contactless cards’ transactions are easy to use while
as well as reduce the turnaround times. Moreover, the guaranteeing a more safe transaction, due to its
bank is aiming to launch a number of lending pro- advanced encryption system. In order to complete
grams such as Fast Track Lending with predefined cri- local and international transactions, the contactless
teria to facilitate access to finance to this segment. card and the POS device must support the contactless
technology.
Headquartered in Morocco, the bank operates in 25
countries with 4,930 branches as of December 2018.
Attijariwafa bank employs over 20,125 people, serving
approximately 9.7 million clients. Attijariwafa bank has a
large footprint in 14 African countries, catering to a
wide customer base. Based on the bank’s expertise in
the region, Attijariwafa bank continues to support and
work on connecting different businesses in Egypt with
potential counterparts in Africa.
Small and Medium Enterprises Finance Build your company and expand your project with QNB ALAHLI
BUSINESS PARK WAREHOUSES RESIDENTIAL AREA INDUSTRIAL PLOTS
Advertorial
Women Empowerment at ABC
Ensuring diversity and understanding employees’ needs says El Shazly, ‘Throughout the years ABC had really sup-
on and off the job have made Al Ahram Beverages ported me a lot.’
Company (ABC) a standout employer in Egypt. For Mona Fawzy, ABC Medical Adviser, the position
This is evident in the number of women working across was literally created for her ‘I am the first Medical
all levels and functions at ABC. Adviser and my ambition was to build bridges between
Nashwa Sabry is ABC’s HR Director ‘I managed several ABC and the medical providers to create wellbeing for
HR functions at ABC until I made it to the top. I’m now ABCians’, Fawzy says. ‘My hardwork paid off as Egypt is
responsible for more than 1800 employees’. Throughout now recognized as the medical hub for the AMEE Region
this journey, Sabry’s challenge was to advance in her within the Group’.
career as a woman and at a young age.
Chadene El Tarouty, Stella Brand
Manager, is another example of
the fast career path ABC offers
‘I dreamed big and my hard work paid off,’
to those with the right skills.
‘After 2 years as a lawyer, I took a leap of
faith and joined ABC as a management trainee in my true Moving across functions is a flexibility not available at
passion, Marketing’, says El Tarouty. many companies. Caren Waheed, Jr Channel Manager,
As part of ABC’s top Management Team (MT), Nancy says ‘I started off as Commercial Analyst in 2014 but I
Girgis, Marketing Director was promoted into the role in felt I wanted more’. Caren applied for a Trade
2015. ‘Back then, the MT was all men. The first meeting Marketing role and she got it ‘Despite having little
was a bit uncomfortable for them but after a couple of experience and the new job being more challenging,
months we started to work smoothly together, says this didn’t stop me from having it’.
Girgis. No function is off bounds for ABC women, Angelieky
Another senior manager is Shams Eweis who heads the Atef – Senior Brand Manager Birell and Malt
Corporate Affairs. ‘I joined ABC in 2013; a tough time for Innovations, says ‘I was responsible of two strategic
both ABC and the economy’, she recalls. ‘however, chal- brands whose main communication is football and I lit-
lenges are what get me out of bed and with the diverse erally knew nothing about football. Through my owner-
agenda of the corporate affairs, challenges are part of ship and commitment I managed to succeed in these
my daily life’. two brands’
Having been with company for almost 20 years, Sahar Sally Magdy, Helpdesk Engineer overcame the chal-
El Shazly evolved from packaging line engineer to being lenge of being in the IT department which is predomi-
the Plant Manager of Sharkeya Plant. ‘It is ABC’s largest nantly males, ‘I am really proud that ABC gave me the
plant in terms of capacity and number of employees’, chance to work in the field I love’.
Visit www.alahrambeverages.com to watch more about the ABC Women.Advertorial
A Good Life
at the Nile Ritz-Carlton
Master of culinary craftsmanship gathered for the debut
of a new culinary concept “The Good Life” at the Nile
Ritz-Carlton in Cairo. The event took place from April 1st
to April 5th. Guests were invited for a gastronomical jour- Bugra Keles the Executive Chef and Chef Jean Francois
ney by six international chefs from Italy, Turkey, Canada, Lavialle the Executive Pastry Chef of The Nile Ritz-
France, and Spain. The chefs showcased their incredible Carlton, who delighted attendees with his renowned
culinary talent and varying of cooking styles, tastes, and chocolate creations.
flavors during the five-day adventure. Guests were “We are proud to debut a new culinary concept in
inspired by the handcrafted cuisine and delectable cock- Cairo, which celebrates cuisines from around the world,
tails accompanied by exciting entertainment, all served in and created by a group of incredibly talented chefs. The
an intimate and engaging setting. Good Life is a cornerstone for an unforgettable experi-
The event included a series of cooking classes which ence for connoisseurs, aspiring chefs, and foodies who
will feature signature dishes from each of The Good Life’s will evolve every year,” said Joe Ghayad, general manag-
chefs. Each station represented the Chef’s culture, dis- er of Nile Ritz-Carlton in Cairo.
tinctive flavor and culinary style. Classes will take place on The Ritz-Carlton Hotel Company is a subsidiary of
Tuesday April 2nd and Wednesday April 3rd at Bar’Oro, Marriott International. It currently operates in more
Nox, Bab El-Sharq and Vivo restaurants. than 100 hotels and over 45 residential properties in
In addition, The Good Life featured a unique farm-to- 30 countries and territories. The Ritz-Carlton is a
table Friday brunch, and concluded with a gala dinner. member in Marriott Bonvoy, the new name of
The Good Life’s six distinguished chefs included: Chef Marriott’s travel program that replaces Marriott
Gianni Mallao; Executive Chef of Hotel Romazzino, a lux- Rewards®, The Ritz- Carlton Rewards®, and
ury hotel chain at Costa Smeralda; Chef Eric Meloche, Starwood Preferred Guest® (SPG). The program
Director of Culinary Food and Beverage at Al Bustan offers members an extraordinary portfolio of global
Palace, a Ritz-Carlton hotel in Muscat; Chef Jesus brands, experiences on Marriott Bonvoy Moments
Caballero Executive Chef of Hotel Maria Cristina, a luxury and unparalleled benefits including earning points
hotel chain at San Sebastian; Chef Ozgur Ustin, Executive toward free hotel stays and nights toward Elite status
Chef of The St. Regis Istanbul. They were joined by Chef recognition.
For reservations, please contact 02 25778899.Engage with AmCham’s
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Email: cyberlink@amcham.org.egW W W . F I A T. C O M . E G WITH FIAT PROFESSIONAL, CHOOSE FROM THE DUCATO & DOBLO WHAT FITS YOUR PROFESSIONAL NEED .... BECAUSE WE ARE PRO LIKE YOU. A PRO LIKE YOU Authorized Dealer: Dynamics Distribution S.A.E (Call Center :19984) - Cairo: 42 Abu Bakr El Seddiq Street, Safir Square, Heliopolis (Tel: 0227799174 – 0227799175) - El Obour City: Showroom and Service Center: Street 100 (Tel: 44814934/36/37) - Alexandria Showroom: Down town (Tel: 03-3854166 – 01016957176) - Alexandria Service Center: 27 KM Alex-Cairo desert Road (Tel: 03-39613137 – 01003881124) - Damietta City Service Center: Shata Village beside El Omda fuel station, Damietta-Port said Road. (Tel: 01060979111)
APRIL 2019
VOLUME 36 | ISSUE 4
Inside
22 Editor�s Note
24 Viewpoint
The Newsroom
26 In Brief
An analytical view of the top
monthly news
28 Depth
20 Tale of Two Laws
Egypt is developing two new
draft MSME laws
At a Glance
44 Egypt�s Key Economic
Sectors
A story in infographics
Market Watch
42 Market woes deepen
© Copyright Business Monthly 2018. All rights reserved. No part of this magazine may be reproduced without the prior written consent of the editor.
The opinions expressed in Business Monthly do not necessarily reflect the views of the American Chamber of Commerce in Egypt.
18• Business Monthly - APRIL 2019APRIL 2019
VOLUME 36 | ISSUE 4
Cover Story
32 Immigrant entrepreneurs
Syrians Spur Economic
Growth
Cover Design: Nessim N. Hanna
American Impact
38 Education Loans
Comparing Egypt to the U.S.
In Focus
41 Government incentives
for CSR
Executive Life
46 Dining Out
A Steakhouse with a Flair
48 Travel
Egypt�s Baris
The Chamber
52 Events
61 Exclusive Offers
64 Media Lite
An irreverent glance
at the press
© Copyright Business Monthly 2018. All rights reserved. No part of this magazine may be reproduced without the prior written consent of the editor.
The opinions expressed in Business Monthly do not necessarily reflect the views of the American Chamber of Commerce in Egypt.
20• Business Monthly - APRIL 2019MYSTERIOUS, EXOTIC AND
FUN TOO... TORII’S RE-
STYLED JAPANESE MENU
BRINGS A MODERN TWIST.
‘Japanese Tacos’ and ‘Torii bites’
with tuna, salmon and scallops...
‘sharing’ dishes with US Wagyu
beef , shrimps and prawns... soups,
salads, sauces, spices and herbs.
Don’t miss the mouthwatering
sushi and sashimi “All-You-Can-
Eat” feast every Monday and Friday.
Take front row seats for the
shimmering blades and flaring
flames of teppanyaki with sea bass,
tenderloin beef and lobster tail.
Eat, talk, share, relax... have fun!
ASI AN FUSI ON...
SHARE
DELI CI OUSNESS
AT TOR I I .
16 SARAY EL GEZIRA ST., PO BOX 33 ZAMALEK, CAIRO 11211, EGYPT.
T: 00. 202.27.28.3000
CAIROMARRIOTTHOTEL.COM
ARABIC.MARRIOTT.COM/ CAIEGEditor’s Note
Director of Publications & Research
Khaled F. Sewelam
Editor-in-Chief
Nadine Abou el Atta
Contributing Editors
The Repetitive Muse Tamer Hafez
Kate Durham
E
Consulting Editor
very weekday it�s the same routine, I walk into the office turn on my PC Bertil G. Peterson
and head straight into the kitchen to fill my humongous smiley mug with
coffee. I then scroll through my email to see what has happened in the Writers
world of Business Monthly while I was asleep. Always trying to improve Ola Noureldin
my mornings, I keep promising myself to change my routine for something more Adam Sakaria
productive, more instagramable �Yup, that�s a verb now�. I promise myself to climb Senior Art Director
the stairs instead of the elevator and finish my bottle of water first while I chat with Nessim N. Hanna
my colleagues, but then I remember that my office is on the fifth floor and that I
become a lot slower if I don�t have coffee as early as possible. While routines are Senior Graphic Designer
often perceived as a rut, they may be the result of our unconscious mind�s efforts to Emy Emile
find the formula that works best for us. Graphic Designer
The same may be said for Egypt�s economy. Changing the status-quo is instagramable Verina Maher
and media-worthy, but in reality, what Egyptians and the local market dynamics will eas-
ily accommodate are changes that fit well into the existing system. One example is how Advertising & Business Development
well millions of Syrians integrated into the local Economy. Out of the millions of immi- Director
grants Egypt received from all over the world, Syrians represent the highest percentage Amany Kassem
of success. Largely due to the similarities between the identities of both countries, Advertising Coordinator
Syrian entrepreneurs have thrived in Egypt, however, the regulations have limited many Lamia Seleit
within the borders of an informal economy. This month, Business Monthly leads with
the stories of Syrian investors, their market impact, the challenges they face, and the Circulation Coordinator
potential of moving them to the formal economy. Veronica Gendy
On the topic of entrepreneurship, a parliamentary committee as well as Egypt�s Photographers
MSME Development Authority are each developing a new draft law for micro-, Yasser el Rassoul
small-, and medium-sized enterprises. In this issue, we delve into the differences Mohamed Essam
between both drafts, the potential of each, and more importantly the opinion of Said Abdelmessih
business owners on the matter.
Production Supervisor
Focusing on startups hasn�t shifted our attention from the digital progress the
Hany Elias
government is making. We have previously covered digital transformation in govern-
mental entities and financial inclusion, this issue we chose to zoom in on banking. The Market Watch Analyst
state along with VISA and Mastercard are changing all payment cards to contactless. Amr Hussein Elalfy
Expected to appear in the market by May, Business Monthly looks behind the scene on
Chamber News Contacts
Egypt�s implementation as well as the lessons we could learn from U.A.E.�s adoption
Nada Abdalla, Azza Sherif,
process a couple of years ago.
Susanne Winkler
With that, I wish you a fulfilling month and a productive routine.
NADINE ABOU EL ATTA
EDITOR-IN-CHIEF
natta@amcham.org.eg
U.S. address: 1615 H Street, NW • Washington, D.C. 20062
Please forward your comments or suggestions to the Egypt editorial office:
Business Monthly
American Chamber of Commerce in Egypt
33 Soliman Abaza Street, Dokki 12311 • Cairo • Egypt
Tel: (20-2) 3338-1050 • Fax: (20-2) 3338-0850
E-mail: publications@amcham.org.eg
www.amcham.org.eg/bmonthly
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@BusinessMonthlyEg @BusinessMonthly @BusinessMonthly
22• Business Monthly - APRIL 2019The right reaction
comes automatically...
...in every
situation.
—
Smarter Building
Inspiring automated
environments
Being able to automatically control your building not only adds flexibility
to building management, it has a positive effect on efficiency, security and
productivity too. With products and services such as movement detectors,
harmonious lighting, door communication, automated heating, air-conditioning,
ventilation and shutter management, ABB offers a range of possibilities to putViewpoint
An Egypt-U.S. Journey
I
t is Doorknock time, an event that further fosters a warm Egypt-U.S. relation,
a feat we have been gradually witnessing its growth for quite some time.
Coinciding with the mission is the 40th anniversary of the inauguration of the
U.S.-Egypt Business Council and the 40th anniversary of the signature of Camp
David accord, which also marks the late president Sadat�s congressional gold medal
award, the highest award given by the U.S. Congress, an event that will be celebrated
later this year.
Furthermore, a gala dinner will be held on April 9th in Washington D.C. to
commemorate the U.S.-Egypt Business Council anniversary. The event will be co-
hosted by the American Chamber of Commerce in Egypt and co-chaired by Minister
of Foreign Affairs Sameh Shoukry and Secretary of State Michael Pompeo. HE
President Abdel Fattah el Sisi is expected to attend the dinner during his visit to the
U.S.
It is a busy week that will have the Doorknock delegation from Egypt engage in
more than 100 meetings including the House of Representatives, the Senate, think
tanks, the State Department, the Department of Commerce, Department of Treasury,
media pundits, opinion leaders, among other organizations that will ensure a 36th
strong AmCham delegation, dedicated to communicate with the said circles the story
of Egypt.
One has to admit that it is a daunting task that requires preparations and extensive
knowledge, as you will be challenged on everything you say and every step you take.
In reality, this is how Washington D.C. functions. High-profile and high-intensity
encounters. It is a much-appreciated task on both sides of both countries and the
perception of AmCham has evolved over the last 36 years as the credible impartial
ambassador for Egypt in the U.S. This credibility is shared amongst the highest
decision-making circles in Egypt and close attention is given to the preparation of the
visit and the outcome of our encounters in D.C. In fact, the atmosphere is far more
receptive as opposed to the post-2011 period, and a great deal of that has to do with
the economic reform program in Egypt, now in its third year.
We have a good story to tell, supported by plaudits from most international and
financial institutions, the outcome of which will be the topic of next month�s
Viewpoint. Meanwhile happy Easter, and early happy Ramadan.
TAREK TAWFIK
President, AmCham Egypt
24• Business Monthly - APRIL 2019Doing business in Egypt? So are we... Our guide “Doing business in Egypt” provides companies and individuals with the vital information they need when considerding to operate in Egypt. Al Tamimi & Company is the only firm in the Middle East with an established presence in nine countries. This means that wherever our clients are doing business, we are there with them. 17 Offices I 9 Countries I 350 Lawyers www.tamimi.com
THE NEWSROOM
IN BRIEF
Updates on Social Housing Projects in Upper Egypt
Egypt is implementing several social housing projects in the New Awsan Social Housing
new cities of Upper Egypt, most notably in New Aswan, New
1,213 units
Qena and New Assiut. Delivered
A total of 66 fully-finished villas and 2,880 social housing 2,880 units
apartments are being developed in New Aswan�s 1,050-acre Underdevelopment
tourist strip, according to the Ministry of Housing, Utilities,
and Urban Communities. As of March 2019, the number of
completed social housing units in New Aswan stands at 3,840,
3,840 units
in addition to the already delivered 1,213 social housing units. Completed
Further being implemented is New Aswan�s government dis- EGP 231 M
trict as well as the New Aswan Club, which will encompass Total Investments
swimming pools, terraces, football fields, a mosque, and a social Source: Ministry of Housing
club. Other facilities under construction include three primary
schools, a 158-bed general hospital, a nursery, a gymnasium, a New Assiut City
medical center, a commercial center, and mini-malls. This is in
addition to a 2,651-acre industrial area that will host all of the EGP 4.1 5
Total Investment Nurseries
city�s industrial activities. Total investments for the New
Aswan�s service projects are estimated at EGP 231 million. 8
In New Qena, a total of 6,068 social housing units are set Mini-malls
to be implemented, out of which 5,324 units are already com-
plete. The rest of the units are scheduled for completion by
the end of September, according to the New Qena 11,928
Development Authority. Additionally, 43 national housing Social Housing Units
3
projects, compromising 1,548 units, were implemented in the Schools
new city, which is set to inhabit around 700,000 people. Source: Ministry of Housing
Located on the Qena-Safaga road, east of the Nile, the new
city�s construction will cost a total of EGP 3 billion. New Qena City
Construction will cover an area of 24.2 thousand acres and 6,068 units
will include social, health, and commercial services. Social Housing Units Planned
700,000
Lastly, in New Assiut 470 social housing building, Expected Inhabitants
including 11,280 units have been constructed, with 648 43
social housing units in 27 buildings yet to be implemented. Residential
Total investment cost for New Assiut is estimated at EGP Projects
4.1 billion. A number of service projects including three
schools, five nurseries, eight mini-malls, a mosque, football 24,200 acres
EGP 3 B
courts, and a youth center are already built. Similarly, Area
Total Investments
water and drainage networks are completed. Source: New Qena Development Authority
26• Business Monthly - APRIL 2019In Brief
GAFI to Establish 12 New Free Zones
The General Authority for Investment and Free
Zones �GAFI� is currently studying the establish-
ment of 12 new investment zones in a number of 12
Egyptian governorates. The new zones include four New
Investment
in Cairo, two in Qalyubia, and one in each of Cairo 4 Zones Damietta 1
Sharqia, Alexandria, Fayoum, Giza, Dakahlia, and
Damietta. The zones will include projects in logis- Qalyubia 2 Dakahlia 1
tics; nano and biotechnology; higher education;
scientific research; small and medium-sized enter- Sharqia 1 Giza 1
prises �SMEs�; crafts and furniture. The yet-to-be-
established free zones will provide around 208,000 Alexandria 1 Fayoum 1
job opportunities and will attract investments
worth EGP 78 billion. Additionally, GAFI is plan-
ning to establish six other investment zones in the Source: Ministry of Investment and International cooperation
near future in areas such as Suez, Qalyubia, Aswan,
Luxor, and Cairo, with investments worth EGP 70
billion. GAFI had already established five investment Demerdash, the head of the agricultural exports council said.
zones in Giza and Sharqia, including 259 projects with He, however, noted that a portion of the incentives will be in
investments worth EGP 11 billion, offering employment cash, with the balance written off against taxes. Moreover,
opportunities for around 59,000 workers. exporters will be required to obtain a certificate from the
Industrial Development Authority �IDA� making clear their
percentage of local content to determine their eligibility for
Egypt to Implement New Export subsidies. The new program will come as part of a larger
Incentive Program Zones strategy to double exports of manufactured goods to $50 bil-
lion by 2025 and to encourage foreign and domestic invest-
The government will begin implementing a new, flexible
ment in key sectors. Non-oil exports rose 10 percent year-on-
export incentive program next fiscal year to boost produc-
year in 2018 to $24.8 billion, up from $22.6 billion in 2017,
tion and maximize the export capacity of all sectors, accord-
data from the General Organization for Export and Import
ing to a Cabinet statement. The program will be implement-
Control showed. Arab countries accounted for the lion�s
ed for a year as a trial with periodic meetings between the
share of Egypt�s exports during 2018 amounting to a total of
prime minister and export councils to review progress and
$9,066 billion followed by the E.U. at $7,450 billion, the U.S.
evaluate exporters� performance. However, how much
at $1,594 billion, and Africa, excluding Arab countries, at
exporters will receive is not yet confirmed, Abdel Hamid
$1,521 billion.
Egypt Ranks 4th Highest Real Yield for Local Currency Bonds in EM
Yields on Egyptian debt ranked as the fourth most attractive U.S. bonds,� which are recorded at 1.07 percent and 0.75
in emerging markets, when adjusted for inflation, percent, respectively.
according to a Bloomberg report published in March. Global inflation forecasts have recently dropped after
Egypt�s real yield recorded 4.12 percent, while the three top the weighted average price-growth among the 23 economies
countries Brazil, Indonesia, and South Africa recorded 5.19, tumbled to 2.1 percent in January from 3.1 percent in
4.42, and 4.16 percent, respectively. September. According to the Bloomberg Barclays index,
The real yields are calculated by taking the average 10- emerging-market government debt lost 0.3 percent in
year sovereign debt yield minus the current inflation. February after gaining 7.6 percent in the previous three
The report shows that 18 of 23 emerging markets �offer months �as mounting evidence of a global slowdown outweighs
higher compensation for inflation risks than China and the benefits of a dovish Federal Reserve.�
Business Monthly - APRIL 2019 •27In Depth
Tale of Two Laws
Despite the government�s ongoing efforts, startups still struggle. Now, two com-
peting draft laws are in the works, each envisioning a different solution.
By Tamer Hafez
28• Business Monthly - APRIL 2019In Depth
I
n 2012, Egyptian entrepreneur Amr the fund proposed both new laws and started in 2008 by exempting banks
Saleh registered the first company updates to existing legislation to make from retaining 14 percent of the loan�s
he founded�Integreight�in the life easier for MSMEs. In 2004, Law 141 value as collateral, a practice designed to
U.S. �Egypt doesn�t have several regula- added support for microenterprises to protect against defaults. In 2016, a CBE
tions for micro, small and medium the fund�s mandate. initiative partnered with banks to allo-
enterprises �MSME� that are very In 2015, the Central Bank of Egypt cate EGP 200 billion for MSME lend-
important when seeking partnerships �CBE� announced its own classification ing. The interest rate was set at 5 per-
with foreign investors,� says Saleh. for MSMEs in Egypt. At the time, the cent, compared to overnight interbank
�That is why all innovation and tech Ministry of Trade and Industry had no rates of 8.75 percent to 14 percent at the
companies seek registration outside such classification. The CBE stated that time. The initiative�s interest, however,
Egypt.� Integreight, which develops microenterprises must employ no more has not increased despite CBE rates
artificial intelligence tools, raised 8.5 than 10 people, have initial capital of reaching 15.75 percent, at press time. �It
times its capital goal on Kickstarter, a EGP 50,000 or less, and generate an is a sign of how important it is to retain
global funding platform. annual revenue less than EGP 1 million. that low rate to ensure it is affordable to
However, the majority of MSMEs, Meanwhile, small and medium enter- MSMEs, regardless of the gap in prevail-
especially manufacturing companies, prises must employ no more than 200 ing rates,� says Mohamed el Agamy, an
find it legally challenging to register out- people. Small enterprises� revenue levels economics and finance professor at Ain
side the country. This, along with other must not exceed EGP 20 million a year Shams University.
domestic laws, has tempered their and its initial capital must not exceed Last year, the CBE established an
growth prospects, says Mahmoud Sarg, EGP 5 million for industrial companies EGP 2 billion risk guarantee to reduce
a board member at the Federation of and EGP 3 million for non-industrial the banks� exposure to default risk,
Egyptian Industries �FEI� and SME enterprises. Medium-sized companies, which is generally higher than that of
expert. on the other hand, must make less than large companies, Lobna Helal, deputy
The government hopes to reverse this EGP 100 million annually, and their ini- governor of the CBE, told Mubasher in
trend with a new MSME law drafted by tial capital not exceed EGP 10 million September.
the MSME Development Agency, and EGP 5 million for industrial and
which has been overseen by the Cabinet non-industrial enterprises, respectively.
since 2017. Meanwhile, the MSME par- A legislative update was introduced in
Good Financial
liamentary committee is drafting its 2017, which saw the MSME Outcome?
own version. Both are expected to be Development Agency superseding the According to Gamea, MSME
sent to Parliament this year. Onlookers SFD. Under its founding law, the agency Development Agency, the CBE�s EGP
hope one of the laws will pave the way could establish funds to support 200 billion initiative had lent EGP 110.8
toward solving persistent difficulties for MSMEs, whether individually or in billion since its inception through the
MSMEs. �I just want the government partnership with third parties. end of 2018. The biggest beneficiaries
and banks to realize that we need to be Furthermore, it can become part of an have been small-scale enterprises, hav-
quick to seize opportunities. Quicker existing company or fund that supports ing received a total of EGP 62.7 billion,
than your average large company,� says MSMEs. Its input is taken under advise- followed by medium-size firms at EGP
Mina Adel, owner of a leather goods fac- ment when changing laws and regula- 39 billion, and microenterprises at EGP
tory, who requested an EGP 3.5 million tions and introducing incentives. 9.1 billion. Meanwhile, the MSME
loan to buy raw materials and boost pro- Additionally, it can represent a group of Development Agency lent EGP 5.3 bil-
duction. He received the loan four clients in bulk purchase negotiations to lion last year compared to EGP 5 billion
months too late to close a EUR 4 mil- achieve economies of scale. Finally, the in 2017. The plan, according to Gamea,
lion export deal to Montenegro. agency has the ability to help MSMEs is to lend EGP 6 billion this year.
secure funding from lenders, among Yet, it is hard to assess the effect of
Government Support other responsibilities. According to these figures, as no benchmark has been
The idea that MSMEs and large corpo- Executive Director Nevine Gamea, the announced with the exception of the
rations have different needs and should MSME Development Agency has fund- CBE requiring that MSMEs represent
be regulated by different laws and agen- ing deals with more than 450 non-bank 20 percent of all banks� lending portfolio
cies surfaced in 1991 with the introduc- lenders that cater to informal microen- by 2020. �We need to have more official
tion of the Social Fund for terprises and 18 banks to deal with regis- interim benchmarks, as well as progress
Development �SFD�. It focused solely tered SMEs. reports, made public,� says Hala Aboul
on developing SMEs by offering finan- Moreover, the CBE provides addi- Saad, a member of the MSME parlia-
cial and other incentives. In addition, tional funding options for MSMEs. It mentary committee. �Otherwise, how
Business Monthly - APRIL 2019 •29In Depth
would anyone know how far are we more MSMEs are established by young to these companies, according to
from achieving the CBE�s ultimate tar- people with little financial backing and Mohamed el Morshedy, head of the
gets, and how are decision-makers resources. �If banks continue to use Investors Association in Obour City.
expected to make informed decisions assessment procedures similar to those �My business is chugging along, I can�t
about whether it is necessary to change used for large companies, these entre- deny this. But on the ground I have no
our approach.� preneurs can�t secure the funds they incentives, exemptions or easier access
need to start their businesses,� says to markets or local suppliers compared
Tweaks Needed Hamza. �This is the opposite of what to much larger companies in Egypt,�
For many MSMEs, the impact of these the government wants to do.� says Adel, the small ready garments
government and CBE efforts is a mixed manufacturer. �I have to keep my mar-
bag. �I got an EGP 1 million loan under gins really tight to compete. And there-
the EGP 200 billion initiative in 2017,� Old Problems Not fore I don�t have the resources to grow.�
El Morshedy is also worried about
says Tamer Mahmoud, owner of a small Tackled possible repercussions of the next wave
enterprise manufacturing electronic Sadly, some problems have been
parts for large home appliance manufac- of reforms that may inadvertently hurt
bypassed despite the government�s his business, as there are no provisions
turers. �The conditions were not as crip- avowed commitment to support startups
pling as I thought,� he says. Granted, it to protect MSMEs against such an
and MSMEs. Integreight�s Saleh, for event. �One of my simplest problems is
took the bank three months to approve example, faces difficulties with import
the loan. �I even lost EGP 2 million that I don�t know how much my elec-
laws and regulations regarding Wi-Fi, tricity and fuel costs will increase start-
because I had to decrease production as Bluetooth, and other communication
I waited for the money,� recalls ing July,� says Mohamed. �I can�t raise
equipment he needs for both his compa- my prices to match the increase because
Mahmoud. Adel, the owner of a leather nies. �To import them legally, I need to
goods factory, still laments the loss of they have been locked in by contracts
take approvals from local security agen- since the start of the year.�
the export deal to Montenegro. �This cies first, which is never a straightforward
would have been my biggest contract to process,� says Saleh. �It doesn�t make
date,� he says. �I planned for the worst, sense as these devices are basic hardware Law Versus Law
which was that it would take two designed for commercial use.� The lack of comprehensive and effec-
months to secure approval for the loan. As the number of tech and innova- tive MSME laws and initiatives encour-
It took six.� tion startups increase, so will demand aged Aboul Saad of the MSMEs parlia-
Yasser Elsakka, the executive director for such equipment. Maintaining the mentary committee to lead a team in
of the Association of Investors for Small current situation could encourage drafting a new law this year. �Our ver-
and Medium Enterprises �AISME� smuggling, says Saleh. sion would replace the 2004 law, rather
believes that Mahmoud and Adel were Moreover, he points out that Egypt�s than complement it,� she says. Its flag-
lucky because they eventually got the weak patent laws and processes are one ship stipulation is the creation of an all-
entire amounts they asked for from the of the reasons he focuses on selling to new autonomous and financially inde-
banks. �In many cases, banks would international, rather than domestic, pendent body that deals with all things
only cover 50 percent of the needed clients. �If I have a patent in the United related to MSMEs in Egypt. Its board
amount,� he says. This is a huge obstacle States, then it provides me with protec- would report directly to the President.
for startups and microenterprises, in tion inside the U.S. only,� says Saleh. �If The newly created entity would
particular, since their average loan is I want to sell elsewhere, I have to apply develop MSME strategies, policies, and
about EGP 1 million. for patents in those markets.� long-term goals spanning relevant min-
Meanwhile, Ali Hamza, head of the Saleh further laments the lack of vest- istries to ensure they are comprehensive
Investors Association in Assiut, says the ing and founder/investor protection reg- and consistent. Furthermore, the
CBE�s EGP 200 billion initiative is ulations in Egypt. They are standard agency would be the sole provider of
structured to cater to startups, but fol- elsewhere in the world, defining the general licenses and approvals as well as
lows the standard loan process that ben- relationship between the owner of a set land prices for MSMEs in conjunc-
efits only well-established companies. startup and outside investors to protect tion with the General Authority for
�This is why many weaker MSMEs the rights of both. Investment and Free Zones. �MSMEs
don�t get approvals for their loans,� he For many, the missing piece of Egypt�s must get plots at the cheapest prices,
adds MSME puzzle is a government-support- whether the plot is sold or used under a
This problem will only increase as ed integrated national strategy specific usufruct agreement,� says Aboul Saad.
30• Business Monthly - APRIL 2019In Depth
The body additionally would work on Authority, especially for manufactur- existing executive regulations and initia-
securing diverse funding channels for ing MSMEs,� says Gamea. tives to benefit the MSME community
MSMEs. Neither drafts have been finalized and at large. �Only when we start hearing
From a legislative perspective, Aboul there is no confirmation on when either about how existing initiatives are suc-
Saad wants this new body to have more would be submitted to Parliament for ceeding from both businesses and gov-
clout to influence law and regulation review and approval. ernment should new laws be introduced
changes. �For now, the draft will align with to achieve further success,� says el
CBE definitions of MSMEs,� she says. Agamy. �Other than that, the new laws
Perhaps the biggest unanswered ques-
Looking Ahead will probably be as effective as the ones
Changes proposed for both laws are not
tion by the draft is whether the they replace.�
causing much excitement among
Cabinet�s MSME Development Agency According to Sarg, the government�s
would report to a newly created body. MSME owners and entrepreneurs. role should complement existing incen-
According to Aboul Saad the answer is Saleh, for example, while supporting an tives rather than introduce new ones.
yet to be known. easier taxation process, doesn�t have a Morshedy points out that all the ingre-
Meanwhile, the version coming serious problem with the current dients for MSMEs to thrive in Egypt
from the government is focused on administration of taxes. Additionally, he already exist. This includes increasing
ensuring more flexible tax process- doesn�t see any benefit to creating a economic growth, the government
ing as well as tax and non-tax incen- more powerful SME development wanting to reduce imports as they
tives for new MSMEs and those reg- authority. �There was never a need to become increasingly expensive, rising
istering in the formal economy. deal with the existing one,� he says. �I domestic demand due to population
Moreover, the draft would double don�t believe a different one would ben- growth, and the state acknowledging
the minimum capital VAT exemp- efit my work.� the importance of MSMEs via existing
tion to EGP 1 million. �The focus of El Agamy, the university professor, initiatives and policies. �We should not
our draft law is to facilitate dealings believes the new laws should not have add more ingredients or change them,�
and streamline processes with the been drafted. Instead, the state should says Morshedy. �The key, now, is to mix
Ministry of Finance and the Tax have focused more on modifying them right.� n
Business Monthly - APRIL 2019 •31Cover Story
Syrian Immigrants Spur
Economic Revival
Syrian entrepreneurs escaping conflict at home employ thousands of Egyptians in their
host country. However, their potential is limited by red tape causing many to remain out-
side the formal economy.
By Ola Noureldin
32• Business Monthly - APRIL 2019Cover Story
S
ipping zhourat shamia �a Syrian herbal tea blend� in his �They have poured money into the stock market and filled
dress rental shop off Abbas el Akkad, Mohamed important niches in the manufacturing sector, reducing
Yasser, 40, looks back six years ago to when he decid- reliance on imports and lowering the trade deficit,� Abu el
ed to leave Aleppo for Cairo along with his wife and Shamat says. His factory and his 50 Esla branches across
two daughters. Yasser owned a large dress factory, but almost Egypt employ well over 500 Egyptians, with plans to start
a year into the war he was forced to flee. exporting by next year. When he first arrived to Cairo in 2011,
Arriving in Egypt in early 2013, Yasser maintained his busi- he employed Syrians and intensively trained Egyptians to
ness by importing ready-made garments from his factory in work along.
Syria to sell locally. Soon thereafter, the Free Syrian Army There were 127,414 registered Syrian refugees in Egypt in
built a security fence that cut off access to needed raw mate- January, according to UNHCR data. Adding unregistered
rials. In 2015, he brought two sewing machines, two tailors, Syrians, the government estimates the actual number at
and his technical know-how to the Egyptian market. 500,000, mostly living in 6th of October City, Alexandria,
�The environment was perfectly suitable to continue my New Cairo, Qalyubia, and Damietta, the multi-agency report
work,� he says. �Raw material prices were good, rent and notes.
workforce wages were reasonable�all production costs were
close to those in Syria.�
Today, he runs three garment workshops in Nasr City and
Only Way Is Forward
In 6th of October City there is a street known as �Little
employs more than 50 Egyptians. In spite of diverse chal-
Damascus.� A few meters away, Rosto bustles with cooks slic-
lenges, Yasser and other Syrians have demonstrated they can
ing its trademark roasted chicken and preparing shawerma
succeed and contribute to their host nation�s economy.
Unlike other countries in the Middle East, Egypt does not sandwiches. Its founder, 40-year-old Hossam Mardini, owned
require Syrian arrivals to live in refugee camps, according to a a five-store chain with the same brand name back in
2018 UN High Commissioner for Refugees �UNHCR� Damascus. As the war in Syria intensified, he sold his business
report. All asylum seekers in Egypt are entitled access to pub- in 2012, moved to Egypt, and lived off his savings, hoping he
lic health services and primary education. Like all foreigners, could eventually return home.
they can obtain work only if an employer sponsors them by �During our stay here, we realized the Syrian crisis was
issuing a work permit. Only a small, educated elite with spe- growing day after day and we couldn�t go back,� explains
cialized skills can obtain formal employment, leading almost Rosto restaurant manager Mostafa Abdel Karim. The part-
all immigrants to work in the informal sector. ners then started from scratch in early 2013, building their
Despite the lack of employment data about Syrian immi- restaurant brand.
grants, Ehab Abu el Shamat, owner of the Esla clothing line Mardini and seven of his friends, including Abdel Karim,
and a member of the Syrian Business Association in Egypt, combined their savings and started a small restaurant in 6th
believes there are more than 3,300 Syrian-registered business- of October City. They were required to have an Egyptian
es, with 30,000-plus Syrian investors operating in Egypt since partner to register their business. Many Syrian refugees typi-
2011. Abu el Shamat notes that they are involved in food, cally either register small enterprises under Egyptian names
clothing, textiles, and furniture; manufacturing sponges, or do not register them at all. Businesses often establish part-
paper, and plastics; and services such as beauty salons and nerships with Egyptians to mitigate these challenges,
home repair. These businesses are mostly small and medium although using partnerships to attain legal status creates the
enterprises that employ tens of thousands of people. risk of fraud in a community where Syrians are not familiar
According to the Al Midan news, 818 companies were with regulations. �We had to take the risk �of having an
established in the first nine months of 2018 with investments Egyptian partner�. It is with God�s will and our dedication
exceeding EGP 1.25 billion, accounting for a quarter of the that we started growing,� says Abdel Karim. Today, Rosto�s six
number of companies founded by foreigners in 2018. branches employ more than 150 Egyptian and Syrian workers.
Furthermore, a 2017 multi-agency report by the United Similarly, Abu Ehab, a 47-year-old upholstery worker, came
Nations Development Program, the International Labor to Egypt in 2012 with his wife and four children after losing
Organization, and the World Food Program titled �Jobs his home and many personal belongings. In Cairo, he juggled
Make the Difference,� estimated Syrian investments in Egypt two shifts in several furniture factories, hoping to quickly
then at a total $800 million. No updated figures have been grasp the ins-and-outs of the Egyptian market. �I used to
published. work up to 14 hours a day and it was often not enough to pay
Business Monthly - APRIL 2019 • 33Cover Story
rent and the rest of my expenses,� he insecurity, bad work conditions and During her first few months in
recalls. In time, Abu Ehab was able to lower wages when compared with the Cairo, she was a freelance beauty con-
network with various suppliers and formal sector, as per the multi-agency sultant. A year later in 2014, she
establish his own workshop in Obour, a UN report. launched her own project, Nour Nails.
suburb northeast of Cairo. Along with However, to maneuver her inability to
his two sons, Abu Ehab�s team includes Tapping into meet the legal conditions to formally
six Egyptians. His workshop is one of operate she worked under already
about 500 small businesses operating Unexplored Niches well-established salon brands, such as
informally in Obour, where they have Egypt has proven to be an attractive des- Chez Richarde and Rabie Mourad.
rented turnkey spaces in an industrial tination for Syrians to launch businesses She still operates her project at the lat-
park. Other immigrant entrepreneurs due to the willingness of Egyptians to ter. During her first year, she and an
have similarly established enterprises in a allow them to flourish, notes the UNDP Egyptian assistant handled an average
variety of other cities like in Nasr City, report, citing the widespread perception of 12-15 clients per day. Her sister, a
New Damietta and 6th of October City. that Syrians are highly skilled and moti- nail specialist too, then moved to
By starting labor-intensive small and vated. Cairo to join her business.
medium enterprises, Syrian investors When Nour Shehade, 34, left A key success factor for Shehade
boost employment, says Khaldoun al Damascus in early 2013, she considered was her ability to spot an unmet niche
Mowaqaa, director of the Syrian both Tunisia and Egypt. �I did not hesi- in the Egyptian cosmetic market, nail
Businessmen�s Association. He further tate in choosing Egypt,� she recalls. gels, a service that had long existed
notes the value added of their experi- Shehade, a certified gel and acrylic nail worldwide but not in Egypt. Her
ence, technical education, and ability to care specialist, had traveled before the clientele quickly boomed reaching
network throughout Africa and Europe, war and saw the potential for her busi- today a registered total of 15,000.
tapping into new markets. ness to flourish. She earned her master�s Earlier this year, she opened her
Employment in the informal economy degree in cosmetology studies in the first fully owned 45-square-meter gel
is typically characterized by instability, Netherlands in 2007. nail salon in New Cairo and registered
34• Business Monthly - APRIL 2019You can also read
