and a wave of IPOs OurWorld - Home - United Worldpopular genre, the singer Oum Kalsoum is still...

EGYPT has beenfor centuries thecenter of the Arab

world, geographically, cultural-ly and economically. The mys-terious cradle of civilizations,home of the majestic Nile andthe 4,000-year-old pyramids,Egypt today is a bustling coun-try of over 78 million people –the most populous in the MENA(Middle East and North Africa)region. The first Arab nation tomake peace with Israel, in 1979,it has always played a major rolein the Middle Eastern politicalarena. It has been and remains astrong ally of the U.S., its largestforeign trade partner, and also aregional peace broker. “Our for-eign policy aims at creatingpeace,” says Minister of ForeignAffairs Abou El Gheit. “Stabili-ty emanates from an environmentof peace, and we have always as-sumed an influential role in theMiddle East.”

President Hosni Mubarak, wholast year won a fifth successiveterm in office, has taken AnwarSadat’s place as torchbearer for theMiddle Eastern peace movementever since Mr. Sadat’s assassina-tion in 1981. Mr. Mubarak nego-tiated the return of Egypt to thefold of the Arab League in 1989,and argued in 2003 that the warin Iraq should not divert attentionaway from the pressing matter ofthe Israel-Palestine conflict.

But Egypt’s influence goes farbeyond the complexities of Arab-Western relations. No other coun-try in the Middle East (and fewon earth, for that matter) can ri-val its brilliant cultural aura. To

■ SINCE its appointment in 2004, the gov-ernment of Prime Minister Ahmed Nazifhas surprised both the Egyptian society andthe international community by successful-ly and rapidly implementing an ambitiousset of economic reforms. Surrounding him-self with a team of brilliant economists andbusinesspeople, Mr. Nazif earmarked onemain objective: “open Egypt to business”.Since 2004, macroeconomic indicators have

become increasingly positive: GDP is ris-ing steadily and expected to reach 6.9 per-cent this year, and the general atmosphereis one of buoyancy and optimism, which isreflected in the growing levels of investorconfidence and a new influx of foreign di-rect investment (FDI).

To name but a few of the most remark-able reforms to date, the government low-ered duties and simplified customs

procedures, proposedincome and corporatetax reforms, reducedenergy subsidies andprivatized severalstate-owned enter-prises. Banking sec-tor reform was alsoreinforced, increasingthe sector’s ability tooffer credit and dealwith market risks. To-day, the new tax lawis in place, the priva-tization program is ac-celerating, and morereforms are in thepipeline, includingpossible additionalcustoms cuts. Also,

export taxes have been cut, and company,credit and property registries have beenstreamlined.

The results of this far-reaching reformprogram have been significant and have wonEgypt positive appraisals from the interna-tional community. The World Bank, for in-stance, has ranked the country as the numberone economy in terms of trade policy reforms.The International Monetary Fund recently

confirmed that eco-nomic growth is accel-erating and thatinflation remains low.The IMF also laudedEgypt’s strong balanceof payments and for-eign reserve positions,

and has estimated that the level of businessconfidence had reached an all-time high.The booming growth of activity at the Cairoand Alexandria Stock Exchanges is a clearindicator that Egypt is indeed more and more“open to business”.

“We have opened up the economy to in-ternational practices, not just in trade but ineverything. To do this, we had to revisit allpieces of legislation, rules, regulations, prac-

OurWorldThis supplement to USA TODAY was produced by United World LTD.: 4410 Massachusetts Ave NW, Washington - DC 20016 - Tel: 1-202.347.9022 - Fax: 1-202.347.9025 - www.unitedworld-usa.com

WEDNESDAY, NOVEMBER 22, 2006

Economic reformsand a wave of IPOsspur new growth inthe financial andbanking sectors

Finance Page 2

Egypt strengthens itsposition as atelecoms andinformationtechnology hub

Telecoms 7

A new generation ofleisure facilities nearEgypt’s most famoushistorical sites offerfirst-class appeal

Tourism Page6

● COUNTRY NAME:Arab Republic of Egypt● AREA: 386,662 square miles● POPULATION:78.8 million (July 2006 est.)● LANGUAGES: Arabic (official), Englishand French widelyunderstood● INDUSTRIES:Textiles, food processing,tourism, chemicals,pharmaceuticals,hydrocarbons, construction,cement, metals, lightmanufacturing● CURRENCY:Egyptian pound (EGP) ● EXCHANGE RATE:Egyptian pounds per U.S.dollar – 5.78 (2005)● GDP purchasing powerparity:$303.5 billion (2005 est.)● GDP real growth rate:4.9% (2005 est.) ● GDP per capita (PPP):$3,900 (2005 est.)● EXPORTS:$14.33 billion (2005 est.)● EXPORT PARTNERS:U.S. 13.4%, Italy 9.4%,Spain 7.7%, Syria 5.7%,Germany 4.9%, France4.9%, U.K. 4.1% (2005)● PROVEN OILRESERVES:2.7 billion bbl (2005 est.)● NATURAL GASPROVEN RESERVES:1.9 trillion m3 (2005)

THE COUNTRYIN FIGURES

‘Open for business’

An ambitious reforms agenda garners a soaring growth rate and increased business confidence

A bold leap into a 21st century economy

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

Source: CIA World Factbook

A more extensive version of this report is

available at www.unitedworld-usa.com

UNITED WORLDTEAM, EGYPT Project Director:

Alexandra BenardEditorial Director:

Grégoire d’Oultremont

‘All our actionsare set againstthe question: dothey meetinternationalpractices?’

Continued on page 2

name but a few examples, the AlAzhar University in Cairo hasbeen a renowned center of Islamicstudies since the Middle Ages.Nobel Prize winner Naguib Mah-fouz, who died last summer, isone of the most important novel-ists of the 20th century. In a morepopular genre, the singer OumKalsoum is still revered in the

streets of the entire Arab world,likened to an oriental Edith Piaf.

Faced with the double chal-lenge of fighting to keep its placein the fast-changing global econ-omy and creating at home a so-ciety capable of satisfying theaspirations of a predominantlyyoung and restless population,Egypt embarked two years ago

on a far-reaching program ofeconomic liberalization (see ar-ticle below). The results, in par-ticular a strong and continuousgrowth and a record level of for-eign investment, have been stun-ning. Egypt is once again leadingthe way among its regional coun-terparts and the government isdetermined to march ahead.

“There is always a price forchange and the mindset has beenand will continue to be a chal-lenge,” comments GamalMubarak, Secretary of Policiesfor the ruling NDP party and sonof Hosni Mubarak. “But the vi-brancy we are now experiencingis a clear sign that things aremoving in the right direction.”

President Bush and President Mubarak during a meeting atthe Red Sea Summit in Sharm El Sheikh in June 2003.

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largest public commercial bank,for which there have been noless than 13 bids. According toan HSBC report, net foreign in-vestments, particularly from theGulf region, in the tourism, fi-nancial services and mortgagesectors, have risen by five per-cent. Another study by StandardChartered Bank stresses that theincrease in FDI is also stem-ming from the new strategyadopted in the industrial sectorand the investment incentivesof the qualified industrial zones(QIZ). “When we started, netFDI reached $2 billion. In 2005,it reached $3.9 billion and for2006, the total should be rough-ly $5 billion, more than five per-

cent of the GDP, which is arecord,” comments Minister ofInvestment Mahmoud Mo-hieldin. “There are more in-vestments in the non-oil sectors,in particular in labor-intensiveactivities. Also, investment is

now coming from countries thatwere not up to now a source ofFDI, like China.”

The banking and financialsector is also proving to be astrong catalyst for developmentand contributes to raising in-

vestor confidence. Restructuredand consolidated over the pastyears, Egypt’s financial systemis now transparent and solidenough to provide the countrywith the credit it needs to grow.The sector has been experienc-ing asset growth of 11.5 per-cent per year, and a 2003 lawhas given way to a wave ofmergers and acquisitions. Thishas in turn attracted increasedlevels of FDI and consolidatedEgypt as a regionalfinancial hub.

Easing of investorrestrictions and thestreamlining of busi-ness procedures hasalso been a top pri-ority for Dr. Nazif’s govern-ment. Business licensing hasbeen reduced from a five-weekprocess to a simple three-dayaffair. Ziad Bahaa El Din, Chair-man of Egypt’s one-stop shopfor investor relations, the Gen-eral Authority for Investmentand Free Zones (GAFI), ex-plains, “It is true that Egypt isopen for business. There are not

many countries that offer few-er restrictions than we do nowon foreign investment. There isno sector of the economy that isnot open to foreign investment.There is complete expatriationof capital, of profits and of for-eign currency. It has become avery open economy.”

The government is eager towelcome U.S. investors and be-lieves that it has a considerablenumber of advantages over re-

gional competitors.Minister Boutros-Ghali says that someof Egypt’s attractionsinclude a good returnon investment, itsproximity to the Eu-

ropean, African and Arab mar-kets, low labor costs, stronginfrastructure and an abundanceof raw materials. “Our rela-tionship with the U.S. is goodand strong,” says Mr. Boutros-Ghali. “They are our main trad-ing partner and we want todeepen that relationship as wellas welcome a greater U.S. pres-ence in our economy.”

tices and traditions,” says Min-ister of Finance Youssef Boutros-Ghali. “Anything we do today isset against the question ‘Does itmeet international practices,norms and parameters?’”

The response of internation-al investors to the reforms andthe improved investment cli-mate has been overwhelminglypositive. A good example is theprivatization of the Bank ofAlexandria, the country’s fourth

index in Egypt in-creased from 2001 to2005 by almost 1,000percent,” says Dr.Sarie-El Din. “It in-creased from 2004 to2005 by almost 150percent, outperform-ing all the other mar-kets.”

Market activity inrecent years has beenfostered significantlyby privatizations,IPOs and new list-ings, and this year the

market is witnessing even moreactive trading. “As a result ofgood performance in the macro-economy, we have seen an in-flow of portfolio investmentsfrom three directions,” says theCMA chairman. “Firstly fromGulf investors as a result of liq-uidity from oil prices, and sec-ondly from European and U.S.mutual funds. The third areEgyptian individuals who hadnever invested in the market andentered as a result of the threesuccessful IPOs that took placein late 2005. For instance, theEgypt Telecom IPO attracted al-most 300,000 new individualsto the stock market.”

Allaying concerns that the pri-vatization processes may havebeen biased towards Egyptiancapital, Dr. Sarie-El Din affirms,“The Egyptian market is open.There are no restrictions, norwill there be any in the future.We accept tender offers regard-less of nationality; there is nopreferential treatment.”

Capitalizing on the confidencein the Egyptian economy, theCMA is establishing a reformplan to increase the efficiencyof the market, increase protec-tion, enhance market trans-parency and reduce risk. “Egypthas all the fundamentals to be-come the financial hub of the re-gion with the most sophisticatedregulatory framework.”

Wednesday, November 22, 2006 2Distributed by USA TODAY Our World


Continued from page 1

■ EGYPT’S central bank hasexpertly directed the nation’seconomic performance throughastute monetary policies andstrengthened foreign investorconfidence to attract substantiallevels of foreign direct invest-ment. Foreign investor partici-pation in the market has leaptfrom a daily average of 16 per-cent in 2001 to 35 percent in2005. Further boosted by theentry of new mutual funds tothe market and the increase of

institutional investors, last yearthe Egyptian stock market wasone of the best performing mar-kets in the world. The numberand volume of the initial capi-tal in the mutual funds estab-lished in the first five months of2006 was equivalent to whathad been initiated in 2004 and2005 combined.

The Capital Market Authori-ty (CMA) is responsible for se-curing a transparent and crediblemarket for investors in Egypt.

As the securities market regu-lator, the CMA reports to theminister of investment but iscompletely independent fromthe government and receives nopublic funding, which allowsfor genuine impartiality. “Weare an independent regulator,but we also do some work inpromoting the market,” saysCMA Chairman Hani Sarie-ElDin. “We ensure that the mar-ket is properly organized andthat it fulfils international legal

requirements. We al-so disseminate in-formation, so thateveryone knowswhat is going on andhow changes in leg-islation will affectthem.”

The CMA hasbroad administrativesanction powers andenforces the capitalmarket law to main-tain a strong macro-e c o n o m i cenvironment. In2005, GDPgrowth increased byalmost 5.5 percent and inflationdropped from 17.3 percent to5.2 percent. “The stock market

Ever since the peace agreement with Israel in 1979, Egypt’s capitalmarkets have been developing continuously to achieve significantconfidence, growth and foreign direct investment, resulting in one ofthe best performing stock markets in the world

‘Egypt has all the fundamentals to be a financial hub’CAPITAL MARKET AUTHORITY

P.M. Nazif hascalled for the

Middle East tointegrate into the

global economyand encourageregional trade

and investment.

‘We want todeepen oureconomic

relationship withthe U.S.’

Capital Market Authority 2Arab African InternationalBank 2Cairo and AlexandriaStock Exchanges 3Commercial International Bank 3Egyptian Insurance Supervisory Authority 4Naeem Holding 5Tourism 6Dreamland 6Orascom Hotels &Development 7Orascom Construction 10Suez Cement 10Water Resources 11SIDPEC 11Petroleum and Gas 12Suzanne Mubarak 14 Cairo University 14Arts and Culture 14Textile 15Arafa Holdings 15Arabia Cotton Ginning 15Amoun Pharmaceuticals 16Telecoms 17Telecom Egypt 17Egypt Post 18Orascom Telecom 19

CONTENTS

HANI SARIE-ELDIN

Chairman Capital Market

Authority

■ THE BANKING sector inEgypt is being redefined by fast-paced reforms as well as pow-erful acts that vigorously breathenew life into the industry. TheArab African International Bank(AAIB), for example, hasemerged as a leader with a port-folio of achievements and agrowth rate that challenge in-dustry norms. The bank’s 2005financials, which far outper-formed market standards, cameas bullet testimony that AAIB’sgrowth strategy is on a sustain-able and progressive track withpowerful momentum. The bankgrew in terms of size and prof-it by around 87 percent and 89percent respectively. Whilegrowth figures are commend-able, the pace and momentumof growth is a statement in it-self.

A few years earlier, AAIBhad little more than a rich her-itage, having been the first multi-national bank established inEgypt in 1964 by special de-

cree. Hassan Abdalla, ViceChairman and Managing Di-rector of AAIB was the one toleverage this heritage, power-fully shifting the fortunes of thebank from one with history toone with a breakthrough mo-mentum into the future asEgypt’s fastest growing bank.

Mr. Abdalla’s commitment faroutdates his five-year tenure asvice chairman and managingdirector. “It was here where Ilanded my first job over 20 yearsago. I always envisioned that thisbank was poised for more.AAIB has a substantial history,solid shareholders and a strong

dollar-based equity. When I as-sumed my post, I was present-ed with the challenge to deliveron this vision.” Mr. Abdallapoints out that the turnaroundin the bank’s performance wasthe result of its human resourcesand outstanding caliber of pro-fessionals, who had the deter-mination and the drive to deliver.

With the organicgrowth of the banksystematically pro-gressing, it was nat-ural for AAIB tomove ahead with theacquisition of MisrAmerica Interna-tional Bank – a subsidiary ofBank of America – which wasestablished in 1977. The merg-er was successfully concludedin 2005, marking the first acqui-sition among private banks inEgypt. “The synergies workedwell in our favor as our customerand branches network grew byaround 30 percent and 70 percentrespectively.” said Mr. Abdalla.

However, AAIB’s successstory goes beyond figures. AsMr. Abdalla always stresses,“Our role goes beyond profitmaking to include a moral mis-sion in the community.” Witha focus on education andhealth, the bank is revampinga public sector children’s hos-pital, renewing its facilities

and providing pro-fessional training toits nursing staff. Onanother note, thebank introduced anaward for universi-ty undergraduateswhich challenges

students to come up with anew banking product. AAIBhas reconceptualized corpo-rate social responsibility into“corporate patriotism” – a termthat reflects the amount of pas-sion and dedication the bankcombines with its materialcontribution. If anything,AAIB has its way of spellingits own success.

ARAB AFRICAN INTERNATIONAL BANK

An outstanding portfolio of achievements

The bank grewin terms of

size and profitby 87 percent

and 89 percentrespectively

Hassan Abdalla, left, in discussion with Egypt’s Ministerof Finance, Youssef Boutros-Ghali.

FFiinnaanncceeA bold leap into a 21stcentury economy


Distributed by USA TODAY3 Wednesday, November 22, 2006 Our World


Top Egyptianbank tochampion sector

A rising force in global investment

CIB (COMMERCIAL INTERNATIONAL BANK)

CAIRO AND ALEXANDRIA STOCK EXCHANGES

■ EGYPT’S most profitablefinancial institution and a primeexample of U.S. investor con-fidence is the Commercial In-ternational Bank (CIB).Transforming itself through-out the past five years from aniche corporatebank while contin-uing to dominate thesector, CIB has be-come Egypt’s lead-ing private financialservices groupcatering to retail,business and corporate cus-tomers through numerous in-ternal strategic units and fivestrategic subsidiaries. AlsoEgypt’s highest ranking bank,CIB has been the recipient ofnumerous international awardsand recognition, including the“Best Bank in Egypt” awardfrom Euromoney for the 13th

consecutive year, and fromGlobal Finance for the pastnine years. It has also receivedthe highest credit rating for anEgyptian firm from Standard& Poor’s.

Not surprisingly, in Febru-ary of this year, U.S.consortium Ripple-wood Holdings wasquick to scoop upthe 18.7 percent eq-uity stake of CIB be-longing to theNational Bank of

Egypt when the latter decidedto sell. At a cost of $230 mil-lion, the American decisionwas a sign of confidence in thebank’s continued prospects forsuccess as well as in the gen-eral health and transparency ofEgypt’s banking sector.

■ GLOBAL investors are keeping an eye onthe Cairo and Alexandria Stock Exchanges(CASE). The Egyptian capital market’s phe-nomenal growth in the last two years has notgone unnoticed and is sending out a strongsignal of Egypt’s economic strength. Nowdominating the top ranks of the fastestgrowing emerging markets, CASEreached record levels in 2005, record-ing a remarkable growth of 150 per-cent over 2003 thanks to a highliquidity base, while ranking as thebest performing market worldwidefor the second consecutive year, ac-cording to the Financial Times.

Surging ahead of all similar mar-kets in the Arab world, CASE’s boomis evidenced not only in its increaseof transactions and capital value butalso in the number of sectors it rep-resents. “Over the last two years, wehave seen a different type of market,”states CASE Chairman MagedShawky. “Formerly we were trading on av-erage 6,000 to 7,000 transactions per day forabout $9 million to $10 million. We had on-ly two or three companies that were active inthe market. Currently, we are seeing a com-pletely different picture. We are trading be-tween 25,000 and 30,000 transactions per dayfor an average of $175 million, and we havea well diversified market in terms of sectors.”

Today, CASE boasts financial, banking,telecom, textile, industrial and oil sectors,each with at least two or three actively trad-

ed companies, says Mr. Shawky, adding thatthe government’s economic reforms since2004 have been a major contributor to the mar-ket’s growth as well as smart currency ex-change management on the part of the centralbank. “When Dr. Nazif’s government arrivedin 2004, the mood of the market changedcompletely,” he explains. “Their announce-ment of reforming measures and their com-mitment to schedule them rapidly was reallyamazing and took everybody by surprise.”

The result of the government’s tax cuts and

reductions in customs tariffs improved com-panies’performance and increased revenuesfrom listed securities. Renewed efforts in pri-vatization led to the opening of several newand appealing sectors on the exchanges, suchas oil and telecoms. The Qualified IndustrialZones agreement between Egypt, Israel andthe U.S. energized the textile sector, and var-ious Egyptian textile companies made it to

the top traded list for the first time. Finally,the overhaul of the banking sector consoli-dated the position of the country’s financialinstitutions and has begun to attract substan-tial foreign interest in the market.

Added to these attractions, the market’sstringent new listing rules, which have re-duced the number of companies listed, and itsrecent membership of the World Federationof Exchanges, the first Arab market to join,are setting it apart from regional competition.Constantly monitored by financial power-

houses such as Morgan Stanley andStandard & Poor’s, CASE’s solid reg-ulatory framework and its liberaliza-tion are convincing more and moreinvestors worldwide that Egypt is theplace to invest. Foreign transactionsnow represent roughly 40 percent ofCASE’s total traded value.

“CASE offers a lot; it offers rulesfor corporate governance, disclo-sure and transparency that cannot becompared to any other in the re-gion,” comments Mr. Shawky. “Wehave already delisted around 50 per-cent of the companies on the mar-ket, and we are continuing thisprocess. It is not a matter of having

a big number of listed companies but ratherthe quality of the product we provide. Inaddition, we are the most open market inthe region with no restrictions whatsoeveron ownership or foreign trade.”

All of this is proving that Egypt has the fun-damentals to achieve its goal of becoming afinancial hub in the Middle East. “At the endof the day, being a financial center is not a de-cree than can be bestowed but is rather aboutregulations, environment, and the depth of themarket,” adds Mr. Shawky.

With a string of awards under its belt, andincreased foreign investment pouring in, CIBis raising standards in Egyptian banking

The best performing worldmarket over the last two years,CASE is staking its claim tothe top spot in share trading

The Ibn Tulun mosque, one of the oldest in Cairo, and CASE, a salient example of the juxtaposition of history and modernity in the city.

Continued on page 4

MAGED SHAWKYChairman of CASE

A view of one of the city’s many Nile promenades, offeringrespite from the hustle and bustle of downtown Cairo.

‘The nationalchampion will

implement thingsthat others will

not, and lead theforeign banks’


services for Egypt’s small andmedium-sized enterprises(SMEs), a key element in the sus-tainable economic growth of notonly Egypt but of the entire re-gion. CIB has been working onpilot projects for SMEs duringthe past two years, and Mr. EzzAl-Arab says the bank will first

choose select projectsfor financing, andeventually roll ser-vices out countrywideand then expand re-gionally. “One of thekey things we areworking on is medi-

um-sized finance. This is reallycrucial not only in Egypt, but inthe whole of the Middle East,” he

comments. “We at CIB are morepatriotic than anyone else. Welove our country and love ourbank. We think we can do a lotfor the region as well. We have tobe strong at home first but thereare a lot of countries that we cando business in and add a lot of val-ue to.”

Egypt’s third largest bank interms of net worth and fifth largest

in terms of assets, CIB was firstincorporated as Chase NationalBank Egypt in 1975. Today, thebank has more than 100 branch-es and 287 ATMs. Its subsidiariesoffer life insurance, stock bro-kerage, car loans, financial leas-ing, and asset and fundmanagement services. Register-ing a net income of $610 millionin 2005, CIB is the top earner

among the country’s private fi-nancial institutions, and Mr. EzzAl-Arab says the source of CIB’ssuccess lies in its human resources.He explains, “The key to our suc-cess is investing in people. Egyp-tians are very smart and in fact oursuccess can be replicated by hav-ing faith in the ability of the staff.You need to invest in them andallow them to make decisions andmake mistakes. You also have totrain them and pay them well.”

With consolidation and merg-ers as well as upcoming priva-tizations in the Egyptian sectorfurther strengthening its attrac-tion for foreign banks, CIB’sobjective is to consolidate gainsby continuing to pursue the corestrategy of maintaining its po-sition as Egypt's leading whole-sale corporate bank to the privatesector and by widening its rangeof activities to include a greaterand more advanced array of fi-nancial services for its retail sec-tor as well. Mr. Ezz Al-Arabadds, “We have a vision for 2020for CIB. Basically, we want tobe the best small bank in theworld. We are continuously finetuning our business plans andpolicies, and I think we are onthe right track.”



Citadel Capital3 El Yemen Street, 6th floor, Giza, EgyptTel: +202 762 3550/1/2Fax: +202 762 3554

THE STRONGEST VANTAGE POINT TO TURN BUSINESS AROUNDCIB Chairman and Managing

Director, Hirsham Ezz Al-Arab,whose efforts have been instru-mental in aligning the bank’s cor-porate governance withinternational standards, says theAmerican group was also attractedby the bank’s vision to becomeEgypt’s national champion. Heremarks, “Ripplewood was buy-ing into the idea that CIB is themost qualified bank in Egypt to

be a national champion – the na-tional champion who will imple-ment things that others will notdo, they will onlywatch and then theymight follow. Thismeans that we will beraising the standardsin the banking sector.And a national cham-pion is always neededto lead the foreign banks.”

For Mr. Ezz Al-Arab, this vi-sion translates into a widening of

CIB’s net incomewas $610

million in 2005,the highest ofEgypt’s private

institutions

Top Egyptian bank tochampion sectorContinued from page 3

A timely interventionbodes well for investors

EGYPTIAN INSURANCE SUPERVISORY AUTHORITY

■ DESCRIBED as a “sleepinggiant” by Minister of InvestmentsMahmoud Mohieldin, the Egypt-ian insurance market is showingsigns of new life in terms of totalassets, shareholders’ equity, in-vestments and premiums. The sec-tor is undergoing comprehensivegovernment reforms to whip it in-to shape that involve strengthen-ing regulations, implementing newlegislation, and the restructuringand eventual privatization of thefour national insurance compa-nies, which currently dominate 70percent of the life and propertymarkets.

The recent establishment of theInsurance Holding Company willfacilitate the technical and finan-cial restructuring, ownership andmanagement of the state-ownedinsurance companies. The newholding company includes MisrInsurance Co., El-Shark Insur-ance Co., Egyptian National In-surance Co., and EgyptianReinsurance Co., as well as thefour state-owned reinsurance com-panies. Management at the com-panies will continue as at presentand employees’rights will be pro-tected by the state – an essential

aim along with a focus on estab-lishing subsidiaries which are nec-essary for growth and to promoteperformance.

“We are growing, and comparedto other countries in the region, weare doing very well. We are imple-menting reforms at a fast pace andother countries are following ourlead,” states Adel Mounir, Chair-man of the Egyptian Insurance Su-pervisory Authority (EISA), whichwill see its supervisory role en-hanced by the new holding com-pany. “Our volume of business isstill low compared to other insur-ance markets, but we are creatingmomentum in order to awake thesleeping giant.”

New legislation proposes to in-crease third party liability premiumprices and license corporate inter-mediaries. The government intendsto expand the market, improvehealthcare insurance regulation, ex-pand the private pension plan mar-ket, and move the supervisorybodies towards more risk-basedregulation. Stamp duties have beenreduced on insurance policies, in-volving one percent for every lifeinsurance premium, illness insur-ance, body injuries or any related

liabilities, and also on any com-pulsory insurance premiums. Thereductions also entail ten percent forinland, river, marine and aviationinsurance and all other insurancepremiums including war insurance.

“Improvements we are wit-nessing in our legal and interme-diation systems, as well as changesin the regulatory bodies, will helpincrease the sector’s GDP contri-bution to 1.5 percent in the next fouror five years. EISA is also underreform with the support of USAIDand the technical assistance of theWorld Bank,” Dr. Mounir adds.

The potential of the market andthe efforts to improve the sectorhave not gone unnoticed by for-eign multinationals now movingin before the giant awakes. Majorinternational groups, such as AIG,Allianz, ACE, and Bupa have al-ready begun operations in the coun-try. The government is also in theprocess of licensing four new Taka-ful insurers to promote the growthof the Islamic insurance market.Dr. Mounir says, “EISA is re-sponsible for approving all typesof new policies and we have justapproved a new life insurance pol-icy drafted by American compa-ny Alico, one of the maincompanies active in that sector inEgypt. We try to help expand themarket not only as a supervisorybody but also as a partner.”

The Egyptian Insurance Supervisory Authorityhas been busy opening the market to foreigninvestment and pushing through vital reforms

The Citadel offers spectacular views across Cairo and is one of Egypt’s most popular non-pharaonicattractions, housing a number of museums, ancient mosques and medieval warfare monuments. MORE than

1,200 govern-ment, business

and civil society leaders from46 countries met this year inSharm El Sheikh to celebrate theWorld Economic Forum in theMiddle East. Under the work-ing theme of “The Promise ofa New Generation” the forumfocused on the pursuit of a moreprosperous and peaceful futurefor the Middle East. The im-portance of the private sector asan engine of job creation andthe need for leaders to work to-gether for lasting peace and sta-bility in the region wereunderlying themes.

The World Economic Forumis an independent internation-al organization founded in 1971that is committed to improvingthe world by engaging leadersin partnerships to shape glob-al, regional and industry agen-das. Its holding in Egypt thisyear underlines the country’simportance as a catalyst in thedevelopment of the Middle Eastas well as a leader in the eco-nomic development of Arabcountries.

“The Promise of a New Gen-eration” was chosen as thetheme of the forum in responseto an increasingly youthful Mid-dle East and the challenges andopportunities that this presentsfor regional leaders. Held withthe full support of PresidentMuhammad Hosni Mubarak,the forum echoed Egypt’s cur-rent motto of being open togrowth, opportunity, challengeand change. The venue was thenewly constructed and state-of-the-art congress center in SharmEl Sheikh, which is known na-

tionally as the City of Peace. Unemployment, a growing

young population, and the roleof women in society domi-nated the agenda. One third ofthe population of the MiddleEast and North Africa is nowunder 20 years old, while an-other significant majority isunder 30. This presents a ma-jor challenge for governmentsin countries whose economieshave historically been domi-nated by the public sector toproduce enough jobs to meet

this demand. The current efforts of the

Egyptian government to reformtheir economy and integrate itwithin the global system as wellas measures underway in thecountry to foster private sectorgrowth did not go unnoticed atthe forum, which was heavilyattended by Egyptian businessleaders. They participated in anumber of discussions on vitalissues including globalization,foreign direct investment, trade,

capital markets, branding, in-novation, information technol-ogy and social entrepreneurship.The forum demonstrated thatEgypt’s future is clearly in thehands of its private sector.

Gamal Mubarak, Secretaryof the Policy Planning Com-mittee of the Egyptian Nation-al Democratic Party said that theforum was extremely useful forregional leaders to compare re-form efforts. He states, “I par-ticipated in a session on the firstday, and it was clear to me thatthere were similarities in manyaspects, not only in the visionand the steps but also in theproblems and challenges thatare facing reform.”

Ensuring a productive rolefor Egypt’s and the region’syouth in their growingeconomies was also discussed.While it was agreed that im-mediate efforts to increase vo-cational training are essential forproviding the required skills, anecessary general overhaul ofthe educational system was al-so discussed at the forum. Tothis end, the Egyptian Educa-tional Initiative (EEI) was an-nounced on the first day of theforum. Launched with the back-ing of Suzanne Mubarak andPrime Minister Nazif, EEI willestablish public-private part-nerships that combine thestrengths of government, theprivate sector and civil societyin advancing education. Theinitiative rests on four piers –pre-university education, high-er education, lifelong learningand e-learning industry devel-opment, and will initially affect820,000 students in 2,000schools and 300 colleges.

WORLD ECONOMIC FORUM

Sharm El Sheikh forum gathers 1,200global leaders to focus on the future

GAMAL MUBARAKNational Democratic Party

Secretary

SOURCE:CIB



■ AS one of the fastest growinginvestment banking houses in theMiddle East, Naeem Holding is anEgyptian free zone company, whichallows it to benefit from a specialtax regime. As the largest bank ofits kind in the region, Naeem hasgreat potential. Set to grow 20-foldover the next fiveyears, its current cap-ital of 600 millioncould very well exceed15 billion during thesame time frame. Withoffices spread across the GCC andEgypt and services offered through-out Saudi Arabia and the UnitedArab Emirates, Naeem is a cruciallocal expert with an incomparableknowledge of markets.

The company’s services in

Egypt range from online facilitiesto brokerage, portfolio and fundmanagement, the latter which al-lows investors to access a diver-sified investment opportunitybase. Naeem looks to establish re-gional and specialized fundswhich cover the entire GCC, Mid-

dle East, North Africaand Asian regions, witha special focus on en-ergy and real estate in-vestment, which isexpected to total $850

million during 2006.In terms of private equity in

Egypt, Naeem offers its clientsexclusive access to innovativeproducts, also with a focus on theenergy sector. Meanwhile, cor-porate finance operations are cen-

tered on petrochemicals, fertilizerand real estate. The company’scorporate finance departmentclosed deals amounting to $2 bil-lion during the last quarter of2005, and its total market turnoverfor 2005 totaled $5.2 billion.

Although the firm is estab-lished in Egypt, the company isowned by Saudi Arabians, whichis a clear indication that Egypt’seconomy is attractive for foreigninvestors. The Naeem invest-

ment program, which specifi-cally branches out to Saudi Ara-bia, specializes in capitalpreservation, liquidity, and min-imizing risk. Through constantmonitoring and market analyses,investors can rest assured thattheir money is actively investedaccording to prevailing marketconditions.

The firm’s subsidiary inDubai, Naeem Shares & BondsLLC, is the brokerage arm of

the holding company. It providestop-notch service to its fast-growing client base, and recentlyopening its first Trading Loungein Dubai.

Naeem is known for its flexi-ble and tailored financial solu-tions, and their business is basedon the principles of transparency,performance, sustainable prof-itability and stability. For more in-formation about Naeem Holding,visit, www.naeemholding.com.

The new pillarfor globalinvestmentActing as a virtual gateway for Arab fundson both the regional and international fronts,Naeem Holding is growing exponentially

NAEEM HOLDING Egypt’s premierinvestment banking house

■ FOUNDED in 2005, NaeemHolding may be young but it ison the fast track for growth. Here,the company’s chairman, Dr.Abdulrahman Al-Husaini, shedslight on Naeem and its rapid de-velopment, the investment cli-mate in Egypt, and opportunitiesfor American investors.

Where do you see improve-ments happening withinNaeem’s activities?Naeem is active in many fieldsand there are lots of opportuni-ties and a fertile ground forgrowth. We are in the real es-tate business, IT, aviation, the fi-nancial sector and lots of otherindustries. Also, countries in theMiddle East have an influenceon one other. What happens inone country has positive or neg-ative effects on other countriesin the region. There are also ofexchanges of people, funds,ideas and investments.

What are the competitive ad-vantages of Egypt comparedto the rest of the region?Egypt has the greatest mo-mentum because of its popu-lation. We have skilled humanresources, raw materials, anda unique position in the sensethat we don’t import our en-

ergy, we export oil and gas.This will have a very positiveimpact on the economy. TheEgyptian market has great po-tential and there is room forgrowth. Alot of companies aregoing to be privatized and thiswill be positive for business,and the Egyptian stock markethas a lot of liquidity, which al-so adds to the attractiveness ofthe market. That’s why atNaeem we are not only con-centrating on investments re-lated to the stock market, butwe are also directing our peo-ple to other projects that havelong-range positive effects likethe oil sector, refinery projectsand the industry in general.

What have been the mile-stones since Naeem’s found-ing in 2005 and the visionbehind its creation? Naeem Holding started withcompanies in Egypt. We thenwent to Saudi Arabia, UAE,Dubai and Abu Dhabi at theright time. We believed thatthings were moving forwardbecause of increasing oil pricesand the recovery after the deeprecession. We diversified geo-graphically because we be-lieved that investors shouldlook for opportunities in other

countries and not rely solelyon one market. Naeem is nowthe largest private asset man-agement company in the wholeArab World. We also learnedthat associating ourselves withvery strong financial institu-tions would help us grow andthat’s exactly what we did. Wedon’t see any boundaries orlimits as long as we are pick-ing the best investments op-portunities for our investors.

You are ranked as one of theleading brokerage firms inEgypt with a $7 billionturnover. What are the se-crets of this success? We acquired an edge in the mar-ket by attracting the best peo-ple for investment, analysis andthe back office, and we have es-tablished a great rapport with thegovernment. We also investheavily in our employees andin the best systems when itcomes to electronic trading andmanagement.

The U.S.-Egypt political andeconomic ties are very strong.What is your assessment ofthe relationship and whatwould you tell American in-vestors?The relationship is important

for both sides, and it would bebeneficial to keep very goodties because there are a lot ofinvestments between us. I wouldtell them to come here, as thereare lots of opportunities. Egypthas great potential, and a pletho-ra of possibilities.

AN INTERVIEW WITH NAEEM HOLDING’S CHAIRMAN

Both Naeem Brokerage and the Egyptian market areexperiencing a period of rapid expansion.

‘We don’t see limits whenlooking for opportunities’

ABDULRAHMANAL-HUSAINI,

Chairman of Naeem Holding

Naeem currently has$5 billion in assets

under managementin the region.

Naeem is set to grow 20-fold

in the next five years



■ THE INITIALdilemma facingany visitor to Egypt is “where doI start?” Few places have as muchvariety and wonder on offer: theGreat Pyramids (the last surviv-ing wonder of the ancient world),the Valley of the Kings at Luxor,Abou Simbel, the majestic Nile,the fine beaches on the Mediter-ranean, the coral reefs of the RedSea coasts, St. Catherine’sMonastery of Mount Sinai, themadcap markets and mosques ofCairo, the Roman ruins of Alexan-dria (including the recently un-earthed Cleopatra’s Palace)… thelist is endless.

Egypt has not spurned the op-portunities offered by such a wealthof attractions. Tourism is big busi-

ness, possibly the biggest given itspotential to be the driving force ofthe economy. The sector accountsfor 22.1 percent of Egypt’s foreignexchange earnings, and it direct-ly or indirectly employs some 10percent of the labor force. Ac-cording to theWorld Travel andTourism Council,Egypt had 8.5million visitors in2005, its largestinflux ever, andexpects to top that figure this year,generating revenues of $7.2 bil-lion, up from $6.4 billion in 2005.

At the seventh edition of theMediterranean Travel Fair, held inSeptember 2006, the Egyptian

Tourism Minister Zoheir Garan-nah stated, “Arrivals as of July2006 reached 5.14 million. By theend of August 2006 we expect 6million, 5 percent up on the sameperiod last year. The objective isto increase the figure by 1 million

per year.”These figures are

highly encourag-ing given the cur-rent unsettledsituation in theMiddle East, and

reflect the importance placed ontourist security by the govern-ment. Mr. Garannah is emphaticon this issue, and states, “Anythreat is taken seriously by us. Se-curity has unfortunately been

threatened by events, not only inthis region but elsewhere in theworld today. However, we areready and able to provide the high-est level of security for our guests.Our alertness in all situations isimportant and constant.”

These extensive security poli-cies have served to reassure vis-itors, tour operators and investors,all of whom continue to be drawnto the promise of Egypt. Foreigninvestors in particular are lured byEgypt’s status as an all-year-rounddestination and by its ability to at-tract tourists from both Westernand Arab markets. A recent re-form of the foreign property own-ership law has also significantlyboosted private sector interest.

This has prompted inter-national operators to de-velop what the tourismminister has dubbed “megaprojects” in several primeareas of real estate [see ar-ticle on page 7.]

These projects are set to bringa new dimension to Egyptiantourism, which is conscious ofthe need to diversify from a pure-ly cultural destination into a des-tination with a more eclecticappeal, offering not just culture,but also leisure, luxury and con-vention opportunities. Mr. Garan-nah gives a couple of examplesof the market niches he is keen toexploit. “We have several in-vestors coming in who want to

build so-called apartment hotels,which are very popular amongScandinavians and Arabs andwhich are an unknown phenom-enon in Egypt,” he says. “We al-so have one German client whois looking to develop a 72-holegolf course here because you can-not play golf in Europe in winter,whereas Egypt has fine all-year-round weather.”

Another clear priority has beento recover the U.S. visitor numbersthat had dropped off since 2000due to the lingering effects of thegeopolitical situation. Many oth-er destinations continue to sufferbut 2006 has seen a turnaround inEgypt thanks in no small part toan aggressive marketing campaign,involving greater presence at tradefairs, TVand print advertising, thelaunch of the www.egypt.travelwebsite, and events such as theKing Tutankhamen exhibitionwhich has packed museumsthroughout the U.S. The result hasbeen an extraordinary rise of 20.9

percent so far this year, with pri-vate tour operators playing a ma-jor promotional role. “Privateoperators are our bread and but-ter in America,” says Mr. Garan-nah. “They continue to sell us, andeducational trips are increasinglyhigh on their agenda.”

With so many of the world’sgreatest, most mysterious trea-sures on offer, it appears that thelure of Egypt remains as strong andenduring as ever.



■ ON A PLATEAU overlooking the Gizapyramids in Cairo lies what is shaping up tobe Egypt’s most ambitious and exclusive re-al estate project: a family entertainment andresidential complex known as Dreamland.The first of its kind in Egypt, Dreamland isliterally a dream come true for the Chairmanand CEO of Bahgat Group, U.S.-educated Ahmed Bahgat, who hasshown himself to be one of Egypt’smost influential and visionarybusinessmen over the past twodecades. After completing his doctoral stud-ies in the U.S. in the early 1980s,Dr. Bahgat made his fortune with an electronicguiding device which showed Muslims whenand in which direction to pray. Building onthe success of this device, not to mention Dr.Bahgat’s awareness of emerging market trendsand his U.S.-learnt retail philosophy that thecustomer is always right, Bahgat Group soonbecame one of Egypt’s most diversified andsuccessful private companies, with interestsin electronics,household appli-ances, furniture,medicine, enter-tainment and realestate development.And it is in real es-tate that the Group’smost ambitious pro-ject is taking shape.Dreamland is one ofthe largest privateintegrated develop-ment projects in theworld, a 2,000-acresite to the west ofCairo that is set toaccommodate some40,000 residents up-on completion. AsDr. Bahgat proudly explains, “We have apart-ments, town houses, small and large villas,shopping malls, internationally-acclaimedschools, universities, a theme park, golf cours-es, hotels such as the Hilton, Swiss Inn, andSheraton, 25 swimming pools, the largestsports club and spa in Cairo, and Dream Stu-dio, probably the largest television studio inEgypt.” Fully aware that location is everything in re-

al estate, Dr. Bahgat bought land on the out-skirts of Cairo by Sixth of October City, thecapital’s most up-and-coming suburb. At-tracting a number of Cairo’s affluent who aredrawn by the tranquility of the new neigh-borhood, the city offers additional opportu-nities for investors. Its unique locations means

that Dreamland is just 20 minutesfrom the center of Cairo, and alsowell-connected by highway to allother destinations in Egypt. There was also another vital factorthat determined the choice of loca-tion: the pyramids. “I can see thepyramids from Dreamland,” says

Dr. Bahgat. “The resort is on a plateau, justsix miles from Giza. When they built theHilton I wanted every room to see the pyra-mids. I even lost my composure when at onepoint I visited the hotel and couldn’t see thesecond pyramid.”As befits a project created by one of the coun-try’s most technologically minded business-es, Dreamland is fitted with a pioneering

communicationsnetwork, built incooperation withMotorola, whichconnects all resi-dential units viafiber-optic cables.This advanced net-work allows resi-dents and guestsalike to accessbroadband Internet,60-channel satellitetelevision andvideo on demand,and meet all futurecommunicationsneeds.With such a high-tech infrastructure

already in place, Dreamland represents ahighly attractive opportunity for investorslooking to tap into Egypt’s thriving real es-tate sector. “When we first thought of Dreamland in1995, the vision was to create an integrat-ed city with no limits on quality,” says Dr.Bahgat. “Almost ten years later, our dreamfinally came true, and there is a lot moreto come.”

DREAMLAND (BAHGAT GROUP)

Dreamland: an Egyptian firstin leisure development

‘Our dream hasfinally come

true after tenyears, and

there is a lotmore to come’

The Dreamland Resort will comprise a range ofleisure activities, ample room for 40,000 residentsand commanding views of Giza.

Egypt’s unrivalled cultural and historical patrimonymake it a country that markets itself

TToouurriissmmRich legacy providesvisitor impetus

By the end of August,6 million tourists

had trodden Egypt’ssands, a five percent

rise from 2005

DR

EA

MLA

ND

Three of Egypt’s most famous sites: Luxor (left), Sharm El Sheikh on the Red Sea (seen here from the Four Seasons hotel) and Mount Sinai (right).

EGYPTusat 6-10 ok sergio.qxd 3/11/06 17:15 Página 2



■ EGYPT’S BEAUTY and ap-peal is wide-ranging and largelyunexplored beyond the well-trod-den paths to Sharm El Sheikh andthe pyramids at Giza. The RedSea harbors some of the finest div-ing sites in the world and the moun-tainous Sinai region is stillrelatively untouched.

Samih Sawiris, the pioneeringChairman of Orascom Hotels &Development, was among the firstto realize the potential of tourismdevelopments in Egypt and theGulf region, and he supports thegovernment’s plans to double thenumber of tourist arrivals in thenext 10 years.

"This objective is realistic con-sidering Egypt's advantages," saysMr. Sawiris. "Egypt has a lot ofroom for development. One mil-lion extra tourists a year is defi-nitely achievable."

Orascom Hotels & Develop-ment (OHD) is a fully diversifiedtown builder, specializing in theestablishment of fully self-sus-tainable developments completewith hospitality real estate, luxu-ry residences, retail centers, sport-ing facilities, and the entireinfrastructure required to make atown. There is a growing demandfor adventure tourism and nightlifethat OHD is meeting, and touristshave been quick on the uptake.With two completed projects, andthree more under development,OHD is changing the face ofleisure tourism in Egypt. Resortsunder the Orascom banner havea reputation for unparalleled qual-ity in products and services. Thisdistinction is reflected in an im-pressive 178 percent increase infirst half of 2006 net profits reach-ing EGP 127 million ($22 mil-lion) as opposed to LE 46 millionfirst half 2005. OHD currently hasslightly over 90 million squaremeters of land under development.

At the vanguard of OHD's ex-

pansion and worldwide prestige isthe El Gouna resort on Egypt'sRed Sea coast, widely acknowl-edged as the Red Sea's premierleisure destination. Developed al-most 15 years ago, El Gouna (TheLagoons) is larger than centralLondon and has attracted some ofthe world's finest hoteliers to aten-kilometer stretch of pristineshoreline, while the resort has beenfashioned around a patchwork ofglittering lakes set in a captivat-

ing landscape of golden desert.The spacious resort is also a ful-ly functional beachside town of10,000 residents complete withan international curriculum schooland a field station of the Ameri-can University in Cairo for the ed-ucation of El Gouna's 1,200resident children and youth. Some65 percent of villa owners are in-ternational expatriates who haveseized the opportunity underEgypt’s relaxed foreign owner-ship laws to invest in holiday andretirement homes that bask in 360annual days of sunshine in an airof genuine hospitality and en-hanced quality of life.

El Gouna is only a short flightaway from many European capi-tals, making weekend residencya tangible option for European

buyers. OHD now intends to dri-ve demand by resurrecting char-ter flights to Egypt and other Gulfstates on neglected routes fromGreece, Turkey and Lebanonthrough its joint ventures with thefamed Karthago airliner group of-fering Sun Air for domestic/re-gional routes and Koral BlueAirlines for international routes.

The trend has attracted most ofCairo’s elite in the past five years,including Oscar-winning actorOmar Sharif, who spends his sum-mers at the resort where his son’sfood service corporation boaststhree specialty restaurants. Egyp-tians seeking a North African an-swer to St. Tropez have been luredto El Gouna by the five-star leisurefacilities, water sports, golf courseand access to the stunning, unin-habited beaches and islands in thearea.

"At El Gouna we have built anintimate community where trav-elers from all over the world cancome and marvel at Egypt's time-less treasures, but we have re-mained true to the original essenceof the Red Sea coast,” says Mr.Sawiris.

In 2000, OHD began con-struction of TabaHeights, a newer re-sort on the northernSinai Peninsula. Themagnificent locationis situated just southof the Egypt-Israel-Jordan border. TabaHeights affords easy access tosome of the most famous histor-ical sites in Egypt - includingMount Sinai, and St. Catherine'sMonastery - while Petra in Jordanis only a short distance by boat viathe resort’s international marina.

This second resort was createdusing the successful blueprint ofEl Gouna, and offers a compara-ble level of comfort and luxury.In addition to more than 1,600 5-

star guest rooms at five differentluxury hotels, Taba Heights boastsa business center and meetingrooms for up to 200 guests as wellas private beaches, spas, tenniscourts, swimming pools, a casinoand an 18-hole championship golfcourse. Mr. Sawiris is confidentthat Taba Heights will achieve thesame levels of success enjoyed byEl Gouna.

"Taba Heights is in a perfectplace and a spectacular locationsurrounded by mountains. I amenthusiastic about its prospects,"says Mr. Sawiris.

Another project is underway atRas Benas, Bernice. The 25 mil-lion square meter developmentwill feature a unique semi-islandlocated on the unspoiled bordersof southern Egypt.

With a vision of increasing itsnumber of hotel rooms from thecurrent level of 4,600 rooms toaround 10,000 rooms by 2010,OHD has been expanding acrossthe Gulf region with projects suchas Tala Bay, Jordan's first inte-grated leisure destination, and TheCove at Ras Al Khaima in theUnited Arab Emirates, a resort of-fering elegant Nubian-style vil-

las. In Oman, OHD hasforged a partnershipwith the country's gov-ernment to developover 22 million squaremeters of land in Mus-cat, Seifa, Salalah andEl Soda Island.

OHD almost tripled its capitalfrom EGP 490 million ($85 mil-lion) in 2004 to EGP 1.46 billion($254 million) currently to financeits ambitions in Oman, of which70 percent is owned by OHD withthe Omani government holdingthe remaining 30 percent. "Wehave this charming island in theIndian Ocean where we are goingto develop a small 20 room top-of-the-range 7-star lodge," Mr.

Sawiris says of the El Soda Islandproject. "As the island is relative-ly large and has beautiful beach-es, the resort’s slogan will be ‘Abeach for every room.’"

On a global scale, OHD hassucceeded in acquiring 1 millionsquare meters of land at Andermattin Switzerland, with plans to cap-italize on the existing skiing in-frastructure by building a golfcourse, artificial lakes, 800 guestrooms, and residential real estateto create a year-round destination.In an unprecedented move, theSwiss government has grantedOHD permission to sell residen-tial property to non-Swiss na-tionals, enlarging the pot ofpotential buyers for the planned600 units and 100 villas. In addi-

tion the project will create 2,000new jobs for the town’s residents.

At Albion in Mauritius, a large-scale development will see 50 vil-las constructed on 120,000 squaremeters of land next to a five-starClub Mediterranee resort. Thispartnership will see Club Mediter-ranee undertake a 25 percent shareof the deal, with OHD holding theremaining 75 percent. Further re-sorts are planned worldwide un-der the joint agreement.

Says Mr. Sawiris, "We arebringing our development ex-pertise and world famous Egypt-ian hospitality to bear on someof the most breathtaking localesin the region, from the stunningSwiss Alps to the sweeping Ara-bian deserts.”

SAMIH SAWIRISChairman & CEO of OHD

ORASCOM HOTEL DEVELOPMENT

New Frontiers: OHD leads the wayin luxury developments

‘A million extratourists a year is

achievable,considering

Egypt’sadvantages’

The Red Sea is regarded as one of the world’s premier divingsites for its clarity and the abundance of marine life.

Egypt’s ‘Mediterranean Riviera’ continues to grow

■ SUCH is the untapped beautyand tourism potential of Egyptthat the race to develop the touristdestinations of the future has be-come a multi-billion dollar busi-ness in recent years.

Three of these prime areas, theMediterranean north coast, theRed Sea ‘Coral Coast’, and the cityof Sharm El Sheikh on the SinaiPeninsula are currently the object

of major development projectsthat are set to open up the tourismsector to yet greater numbers ofinvestors and holidaymakers.

The first of these areas, theEgyptian north coast, recentlysaw a keenly contested auctionfor 625 hectares of prime landalongside the town of Sidi AbdelRahman. The state company HO-TAC (Holding Company For

Tourism & Cinema) eventuallysold the seven-kilometer strip ofwhite-sand beach to the Dubai-based property giant Emaar Prop-erties for some $175 million.Emaar plans to convert the areainto the French Riviera of theMiddle East with two five-starhotels, a marina, luxury golfcourse, shopping centers, amosque, helipad and sports fa-cilities. Emaar will spend a fur-ther $1.74 billion to develop thesite, and estimates that the pro-ject will be completed five years

after the land is handed over.The development of the mul-

ti-billion dollar resort communi-ty of Port Ghalib on Egypt’s RedSea coast, meanwhile, is alreadywell underway. The project is be-ing masterminded by Kuwait’sM.A. Kharafi Group, which in-tends to convert Port Ghalib in-to the ultimate combinationdestination, offering tourists theworld-class diving and fishing ofthe south Red Sea combined withsightseeing opportunities offeredby the adjacent and treasure-rich

Nile Valley. The resort’s first ho-tel, the Millennium Coral BeachDiving Hotel, has already openedwith several more to come in2007. Next year will also see theport’s 500-berth international ma-rina doubling its capacity to 1,000berths. Other projects in thepipeline include a 3,000-delegatecapacity conference center and480 prime residential units in PortGhalib’s Old Port area.

Another diver’s paradise, theRed Sea resort of Sharm ElSheikh, has also seen a rapid

growth in tourism activity in thepast decade, which has attractedthe attentions of major hotelchains. The most spectacular ofthe many luxury hotels built re-cently is undoubtedly the SharmEl Sheikh Four Seasons Resort,partly owned by Saudi Arabia’sPrince Alwaleed bin Talal, whereno effort has been spared to lurethe sought-after well-heeledtourist. The 136-room hotelcomes complete with courtyardgardens landscaped into the hill-side and glittering Red Sea views.

A swell of developments and mega projects aretransforming the face of Egypt’s coastal resorts

The Taba Heights resort on the northern Sinai peninsula offers exceptional business andrecreation facilities, as well as spectacular vistas of the dramatic surrounding landscapes.


JOLIE VILLE EMPIREBringing wonders to Egypt

A myriadof projectspioneeringa new vision■ TOURISM is the leading source of income for Egyptand the fastest growing sector in the Egyptian economy.The government anticipates 8.5 million visitors this year,rising to 9.4 million next year, bringing $7 billion in rev-enue to the country. Sharm-El-Sheikh, on the southerntip of the Sinai Peninsula, is Egypt's premier tourist des-tination. Miles of beaches stretch along the coastline,flanked by the crystalline waters of the Red Sea and theimposing majesty of the Sinai Mountains. Sharm-El-Sheikh offers some of the finest diving sites on the plan-et, vibrant nightlife, and access to the Great Pyramid ofGiza, the last of the seven wonders of the ancient worldand a portal into the fascinating history of one of theworld's great civilizations.

A private sector Egyptian investment group that hasspearheaded transformation in the city with a long-termvision of how the area could evolve and develop is HKSGroup. During the past twenty-five years, the group hasbeen involved in a variety of large-scale projects. It is amajor player in the hospitality and tourism industries, aswell as in construction and infrastructure, including bring-ing water to the desert, and is currently constructing theRoyal Gardens hotel in Sharm-El-Sheikh.

Founded by Hussein Salem, the group is guided by his mot-to “When it comes to dreams, you may as well have big ones”.Mr. Salem is regarded as a visionary and pioneer of tourism

development in Sharm-El-Sheikh, and says, “There are fourspecial things about Sharm: the planning of the city is notspoiled, the people here are very environmentally conscious,we’ve been able to make water available in the desert, andlast but not least is the beautiful sunny weather.”

The group is behind several major tourism projects shap-ing the area through its company Jolie Ville, which includethe Jolie Ville Resort and Casino in Naama Bay, Jolie VilleGolf and Resort, and also the Jolie Ville Luxor Resort, lo-cated on a private island on the River Nile at Luxor. “JolieVille has created about three million jobs and has helped en-hance the economy because many activities depend on tourism.For example, the suppliers of vegetables, fruits, carpenters,plumbers, carpet makers, construction engineers, etc,” saysMr. Salem. “So tourism is no more the activity of leisurecountries, but as active and striking as activities in China,India, and all the upcoming economic stars.”

Jolie Ville has also constructed the Sharm-El-Sheikh In-ternational Congress Center (SHICC), the largest confer-ence center in the Middle East. Host of the World EconomicForum for the Middle East in 2006, the SHICC has placedSharm-El-Sheikh at the pinnacle of MICE destinations.


HUSSEIN SALEM, Founder of Jolie Ville Resorts


In fact, as Mr. Sawiris explains,the group’s geographical diversi-fication has been key to its suc-cess. “As a cement producer, weown and operate cement plantsnot only in Egypt, but also in Al-geria, Turkey, northern Iraq, Pak-istan and Spain, with more tocome in Nigeria and the UnitedArab Emirates. As a contractor, weprovide engineering procurementand construction services for pri-vate and public customers prin-cipally in the Middle East, Africaand Central Asia.”

This focus on emerging mar-kets has paid dividends, withOCI posting revenue increasesof more than 50 percent eachyear since its IPO. Its net in-come of $210.1 million for thefirst six months of 2006 was upfrom $134.8 million for the sameperiod last year. Impressive fig-ures, which reflect the corre-sponding increase in thecompany’s cement productioncapacity. After reaching the mile-stone of 10 million tons (mt) in2005, this year’s target of 20mtwas met and surpassed earlierthis summer when productioncapacity was increased to 21mtwith the addition of Pakistanand Northern Iraq in July. A fur-ther 10 mt of capacity is ex-pected in the next 15 months,which includes a new 2.5 mt per

year greenfield production linein northwest Algeria.

In the construction sector thecompany has an equally excep-tional track record, above all onlarge and complex projects rang-ing from water treatment plantsand power stations to five-starhotels and office skyscrapers.Through its 50 percent owner-ship of the Brussels-based Be-six Group, OCI has beeninvolved in numerous landmarkprojects in the Middle East, in-cluding the Emirates Palace Ho-tel in Abu Dhabi, the Al Khalifa

Sports Stadium in Doha (Qatar),and the Burj Dubai Tower, whichupon completion will be theworld’s tallest building at over700 meters high. OCI’s futureobjectives are no less ambitiousin scope, as Mr. Sawiris ex-plains: “We are currently re-viewing several strategicinvestment opportunities whichcould bolster our presence in theMediterranean rim. We are alsolooking to strengthen our posi-tion in cement distribution inthe developed world. Last year,we exported some 600,000 tonsof cement to Florida.”

Parallel to these projects is theoverall objective to become theone of the world’s top ten pro-ducers of cement, a goal whichMr. Sawiris believes will bereached “simply by deliveringthe capacity that is already in thepipeline. This doesn’t includeprojects that are under seriousconsideration.” Nevertheless, asMr. Sawiris concludes, “Our mostimportant target is to become theworld’s lowest-cost producer, atarget we can reach through in-creased productivity, which insome of our plants is alreadyamong the highest in the world.”Additionally, OCI acquired a 50percent stake in Spain’s largestaggregates and ready-mix con-crete producer last month.

Portland Cement and HelwanCement, Suez Cement has fiveproduction plants basedthroughout Egypt with a pro-duction capacity of 12 milliontons of clinker per year. In ad-dition, the company acquireda majority stake in Egypt’sASEC Cement Company lastyear, previously the country’sfifth largest producer and sec-ond largest exporter, whichadded an additional produc-tion capacity of four milliontons of clinker per year to itstotal.

Mr. Mohanna comments,“The domestic market is stillmore oriented towards buyingcement in bags. The worldtrend is shifting to ready-mix,which we have been investingin as well. We just concludedthe acquisition of an existingcompany, which is the marketleader in Egypt, and we willpursue investing in the area ofready-mix, additives and oth-er downstream cement-relat-ed products.”

Suez Cement represents thelargest injection of foreign di-rect investment and privatecapital in Egypt outside the oiland gas sectors, and Mr. Mo-hanna says that the cement in-dustry is a prime example ofa successful privatization. “The

cement industry is proof thatthe country is open for busi-ness,” he comments. “Today,most of the international play-ers are present. It is an indus-try that is growing fast andstate-of-the-art technology isbeing introduced.”

Mr. Mohanna also says thatthe general economic mood inEgypt is very positive and up-beat, and the government andthe private sector are nowspeaking the same language.As such, he is confident of thecountry’s future success.“Egypt is on the right track

with regards to economic re-forms, and has made substan-tial progress,” he states,pointing out that all Egypt’smacro economic indicators areextremely positive. “The coun-try has not yet obtained its fullpotential – it remains unex-ploited in many areas. But itis working on it and is creat-ing an attractive business en-vironment, in particular forforeign investors. Egypt’seconomy is making greatstrides and I believe it willsoon occupy the place it de-serves in the global arena.”

■ THE WORLD’S largest ex-porter of cement, Egypt pro-duces 1.2 percent of the globaltotal but its exports representeight percent of the total world-wide. Now flourishing due tolow production costs and thestrong demand linked to thecurrent construction boomthroughout the Middle East,the Egyptian cement sectorgrew by 20 percent in 2005and should reach a total of 36million tons this year. With anumber of large-scale projectsunderway in the country, thistrend looks set to continue.

Meanwhile, Egypt’s cementproducers have been experi-encing gross profit margins ex-ceeding 50 percent in somecases.

“Cement is a verygood thermometerof the overall eco-nomic situation.The main drivingforces are the grow-ing economy atlarge and the boomof the construction and tourismindustries. It reflects the healthof the economy,” says OmarMohanna, Chairman of Suez

Cement, Egypt’s largest ce-ment manufacturer.

The first company to be pri-vatized in the country, SuezCement is now majority owned

by Italcementi, theworld’s fifth-largestcement producer. InEgypt, Suez Ce-ment currentlyboasts a 50 percentshare of the whitecement market and

a 31 percent share of the graycement market.

Comprised of three othercompanies including Tourah



Egyptian CementCompany

Pakistan CementCompany

Algerian CementCompany

Ready Mix Egypt Cementos La Parilla Egyptian CementCompany

■ IT GOES without saying thatEgyptians know a thing or twoabout construction. If in doubtjust look at the Giza Pyramids,erected over 4,000 years ago witha durability and precision thateven today is the envy of buildersand engineers alike.

Building on that tradition, theEgyptian construction sector to thisday remains one of the country’seconomic cornerstones. The trueheavyweight in this sector is Oras-com Construction Industries (OCI),which ranks ninth globally in termsof cement production capacity andis among the world’s top 150 con-struction companies. OCI cementis used to build homes, privatebuildings and public infrastructurein over 30 countries.

The company’s CEO, NassefSawiris, has shown genuine visionin exploiting the opportunitiesprovided by emerging markets.

Egyptian construction giant cements itsheavyweight presence at home and abroad

IInndduussttrryyOCI quality producesexceptional track record

NASSEF SAWIRISCEO of OCI

‘This industry isgrowing fast and

is introducingmore and morestate-of-the-arttechnologies’

In terms of cement production capacity, OCI ranks amongthe top ten in the world.

CEMENT INDUSTRY

Suez Cement, a market leader and a benchmark for privatization



■ EGYPTis a largely desert coun-try; its population of around 73 mil-lion lives on just five percent ofthe total land mass. Most of thecountry’s water supply comes fromthe river Nile, but even this isshared with other African nations.Based on the mean annual flowof the river during the period 1900-1959, the NileWaters Agree-ment, signed in1959 with Su-dan, allocatesEgypt an annu-al share of the river’s flow of55.5km3. This amount has notbeen altered in the years since theagreement, although Egypt’s pop-ulation has more than tripled sincethen. According to Mahmoud Abu-Zeid, Minister of Water Resourcesand Irrigation, it could reach 140million by 2050. This, coupled

with the prospect of climatechange, necessitates an urgent re-view of water management struc-tures, which the ministry is in theprocess of enacting by means ofthe National Water Resources Plan(NWRP). The main objective ofthe plan, based on concepts of in-tegrated water resource manage-

ment, is todescribe howEgypt can safe-guard its watersupply in the fu-ture, and how

best to use its resources.“Our strategy has always been

the same, depending on three mainpillars. The first is to optimize theuse of every drop of water to themaximum. The second is to facethe pollution problem and carry outall necessary measures to stop this.The third is to work with the Nile

Basin countries to increase ourshare of water from the Nile,” saysDr. Abu-Zeid.

Under the first pillar come sev-eral programs for improving andexpanding irrigation systems,groundwater development, anddrainage. The renewal and re-placement of barrages on the AswanDam, some of which were builtnearly 100 years ago, is also vital.However, Egypt’s most ambitiousproject is the reclamation of 3.4million acres of desert land by 2017.

Of the various programs under

way, the most spectacular is theToshka project. Situated to the westof Lake Nasser, this will pump wa-ter out of the lake and feed it via asystem of pipelines and canals in-to the desert, creating a second NileValley. Since starting operations,Toshka has pumped more than 14million m3 a day, enabling the ir-rigation of over half a million acresof land.

Working with other concernedministries, such as agriculture andhousing, the Ministry of Water hasput together a LE10 billion ($1.78

billion) plan to tackle the issue ofpollution. This will focus on ex-panding drainage and sewage treat-ment in villages, and monitoringwater supply around the country.Currently only 45 percent of Egyptis covered by wastewater facilities.Dr. Abu Zeid is a firm believer inthe application of public-privatepartnerships; in recent years, the pri-vate sector has played an increas-ing role in water-related concerns,and the potential for private in-vestment in the country’s watersector remains high.

Water in the desert is more valuable than any other

commodity. Today, only 5% of Egypt is covered by

water facilities, and the Ministry of Water Resources

and Irrigation has a multi-billion-dollar vision to make that 25% by 2017.

Its Toshka venture is the most ambitious agricultural project ever undertaken,

creating 540,000 acres of arable land from desert soil.

A masterpiece of modern water-management engineering, it was named one of

the most outstanding achievements of 2005 by the American Society of Civil

Engineers. By pumping investment, skills and resources into generating fertile

agricultural land and a second Nile Valley, the government aims to advance the

development of Upper Egypt.

Ministry of Water Resources and IrrigationArab Republic of Egypt, Cornish El Nil, Imbaba, Gamal Abd El Naser Road, PO Box 12666, Giza

Tel: (202) 5449420 / 5449430 Fax: (202) 5449428 / 5449410www.mwri.gov.eg

Egypt’s hope for the 21st century

Arafa Holding is one of the most respected premier garment manufacturers and retailers specializing in producing outsourced designer

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With a population that has tripled in forty yearsand the onset of global climate change, eachprecious drop of Nile water has to be optimized

WWaatteerr && PPeettrroocchheemmiiccaallssManaging waterresources: acritical challenge


Most of Egypt’s cultivated land is situated on a narrow strip near the Nile river and delta.

The most spectacularproject to date, Toshka,

allows the irrigation of overhalf a million acres

● THE TOSHKA Project isundoubtedly the Ministry ofWater Resources’ crowningachievement. Envisaged as ameans of opening up newland for agriculture andhabitation, the project com-prises one of the world’slargest and most innovativepumping stations and a wa-ter transportation canal, builtrespectively with govern-ment and private funds.

● THE MUBARAK Pump-ing Station, named one ofthe five most outstandingcivil engineering achieve-ments of 2005 by the Ameri-can Society of CivilEngineers, has a dischargecapacity of 1.2 million m3 anhour from 24 individualpumps. Construction beganin January 1997, and the sta-tion was formally inaugurat-ed in March 2005. Theproject as a whole will becompleted in 2020.

● THE SHEIKH ZayedCanal, named in recognitionof the President of the Unit-ed Arab Emirates’ $100mdonation, is 50km long, withan additional 22km of sidecanals taking water to fourdifferent cultivation areas.The canal is 30m wide at thebottom, 54m wide from eachbank, and 8m deep.

● A THIRD aspect of theproject is private agriculturalbusiness development. Maininvestor to date is privatecompany KADCO, whichwas allocated 120,000 acresfor horticultural production.Already successfully export-ing cantaloupes and otherfruit, KADCO could be thefirst of many companies, in-cluding agribusiness, con-struction, transportation,materials handling and foodprocessing, that stand to ben-efit from Toshka.

Reserve discoveries fuel sectorial expansion SIDI KERIR PETROCHEMICALS CO (SIDPEC)

■ EGYPT’S petrochemical in-dustry is growing exponentially onthe back of new natural gas dis-coveries. The government intendsto make the sector one of the en-gines of growth for the country’seconomy through a master plan ofcontinued expansion, develop-ment and investment over 20 years.

Established in 1997 and opera-tional since 2000, Sidi Kerir Petro-chemicals Co. (Sidpec) is Egypt’ssole producer of ethylene and poly-ethylene; it too is looking at broad-er horizons. “We have new marketsin mind and we have added 12new countries to our client lists re-cently, to reach a total of 60 coun-tries around the world,” saysMohamed Nour Eldin, the firm’sChairman and CEO. The previ-ously state-owned company, whichsaw its IPO in June 2005 over-subscribed three times, reported$133 million in profits for that year.

Mr. Nour Eldin attributes much

of Sidpec’s success to the effortsmade by Minister of PetroleumSameh Fahmy to promote thepetrochemicals sector. For in-stance, one of the projects that theministry is working on, in coop-eration with national and interna-tional investors, is the production

of olefins from methane, whichEgypt has in abundance. This tech-nology would create more op-portunities for petrochemicalsproduction, and help to extract themaximum benefit from the coun-try’s resources.

In addition to plans to increaseproduction of ethylene by 50percent, Sidpec currently hastwo new projects on the go: a $30million plant that will produce40,000 tons per year of a new,high-density polyethylene suit-able for the manufacture of nat-ural gas pipes, needed to supplythe rapidly expanding naturalgas network; and a project for theproduction of butadiene, usedas an intermediate in the pro-duction of several petrochemi-cals products. Productioncapacity for this plant will be24,000 tons a year, and it will becompleted at an estimated costof $50 million.

At the moment, Sidpec supplies60 percent of the local market overand above its customers abroad.Once the projected expansion is

Egypt’s natural gas reserves are paving the wayfor a 20-year investment and development plan

under way, the company hopes tobuild this up to 80 percent. “Weenjoy good product quality, goodprices, good after-sales serviceand we are very proud to say thatour customers are always satis-fied,” says Mr. Nour Eldin.

The government is encourag-ing more partnerships between

the public and private sectors,and there is much scope for in-vestment. Sidpec already workswith a U.S. company, ABB Lum-mus, and much of the firm’sequipment is manufactured inAmerica. “U.S. investors in Egyptwill find all the support theyneed,” says Mr. Nour Eldin.

MOHAMED NOUR ELDINChairman and CEO of Sidpec

TOSHKAIN BRIEF




■ EGYPTIAN Minister of Pe-troleum and Mineral Resources,Sameh Fahmy, is justifiably proudof his country’s achievements inthe energy sector over the pasthalf-decade. Hydrocarbon re-serves are at their highest level todate, with oil and gas productionincreasing to more than 71 mil-lion tons equivalent, and exportsamounting to $10.6 billion overthe past year. “Crude oil prod-ucts, petrochemicals and gas ac-counted for 55 percent of Egypt’stotal exports in the last financialyear,” notes Mr. Fahmy.

The sector itself has been sub-jected to extensive restructuring,including the creation of special-ized holding companies. At thesame time, efforts are under wayto create new employment op-portunities for Egypt’s graduatesby encouraging new ventures withinternational and private sectorcompanies. Since 2000, the coun-try has signed 99 new concessionagreements and amendments forexploration and production. Ac-tivities in the sector are not con-fined to the national terrain;services exports are up as localcompanies have become involvedin projects outside Egypt to thetune of $2.5 billion.

Overall, the Egyptian govern-ment is moving towards a moreinvestment-oriented economicpolicy, and the country has man-aged to bring in more than $15.5billion in foreign direct invest-ment (FDI) over thepast seven years. Newcompanies are beingencouraged by reduc-tions in red tape and animproved business en-vironment.

However, as Mr.Fahmy points out, thereare still a number of challenges tobe faced. Local demand for oilproducts and gas continues to in-crease, with an adverse effect onexport opportunities and so on rev-enues, given that local prices aresubsidized. In July, the govern-ment raised gasoline prices for thefirst time since 1993 in an effortto reduce the subsidies budget.

Another issue is the decreasein oil production from the Gulfof Suez fields, where most wellshave been in operation since the

60s and 70s. Efforts are beingmade to invest in enhanced oilrecovery and increased explo-ration, although this in turn pre-sents a problem as the generalcosts of exploration and pro-duction have increased dramat-ically along with oil prices.“Nobody expected the price ofoil to go that high and to stay atthose levels. Consequently, the

prices of rigs havetripled in the last 18months, and the priceof equipment, fueland human resourceshave also risen,” saysthe minister.

Egypt needs to con-tinue to attract FDI

and maintain a keen competitiveedge on all sector activities. Thecountry has potential reserves inless accessible areas such as deepwater, creating a need for hugeinvestments, the latest technol-ogy and highly trained staff. Al-so, current infrastructure is inneed of a thorough upgrading toincrease efficiency.

Research and development ac-tivities must continue, as the ap-plication of technologicaladvances to the industry will

provide financial benefits. At thesame time, the work force re-quired to run the industry mustbe trained, so human resourcesis a major plank in the develop-ment strategy.

Over the next five years, Mr.Fahmy hopes that these challengeswill be overcome, while nation-al production continues to increaseup to 100 million tons equivalent.But production is not the minis-ter’s only priority and his inter-ests extend beyond the nationalterritory. “Global supply securi-ty is a very important concernright now. The availability of theresource is not the issue. Rather,the questions are: can we produceit? Can we transfer it? Can we re-fine it?” says Mr. Fahmy.

The world’s major oil and gasproducers and consumers havebeen invited to a roundtable in No-vember to discuss supply secu-rity. In addition to members of theOrganization of OPEC, non-members Russia, Mexico, Chinaand India have also been invited.Egypt wants to establish a frame-work agreement on price and sup-ply to be fixed for five-yearperiods to allow more visibilityto consumers and producers.

■ IN THE ANCIENT Egyptof the Pharaohs, gold was oneof the first metals to be ex-ploited. Indeed, the world’sreputedly oldest geologicalmap, dating from around1,200 BC, shows Egyptiangold mines in the country’sEastern Desert area. But therehas been no major mining inEgypt for millennia, whichmeans that the potential forsub-soil discoveries – gold inparticular – is substantial.

Centamin Egypt, an Aus-tralian-based company led byan Egyptian-born geologist,has revisited the EasternDesert and is soon to be re-warded for its efforts. Since1994, the company has beendeveloping the Sukari deposit,which after exploration of asmall part of the concession,holds proven resources of 6.7million ounces (Moz) of gold– so far. A $200 million pro-cessing plant to be built nextyear will allow production tocommence by 2008.

Aside from the logisticaldifficulties of mining indesert areas, the Egyptiangovernment’s existing prof-it-sharing requirements maywell have helped to keepmining companies away. Butthe current reform move-ment, initiated with the 2004Egyptian parliament, is like-ly to provide a new legalframework and mining codethat will encourage more ac-tivity in this sector, poten-tially bringing in massiveinvestment and providing ahuge source of employment.Indeed, mining companiesare already beginning to en-ter the lists; another Aus-tralian mining company,Gippsland Ltd., is alsodrilling in the Eastern desert,as is U.S.-based Cresset Pre-cious Metals, which has beenconceded development of amine thought to contain sub-stantial reserves of gold andassociated minerals.

Egypt’s mineral resourcedevelopment is co-ordinatedby the Egyptian Mineral Re-sources Authority (EMRA).Aside from the obvious at-traction of gold and other no-ble metals, the main nationalproducts in terms of volumeoutput are iron ore, phos-phates, and salt.

MINERALS & GOLD

The world’s fastest-growing energy source

A goldenreturn

■ WITH prices of crude oilreaching record highs, world en-ergy consumers are beginning tolook at other available sources.Natural gas is becoming theworld’s fastest-growing primaryenergy source, and for produc-ing countries, an important sourceof revenue as demand soars.

This is Egypt’s moment. Re-cent discoveries of natural gas de-posits have brought the country’sknown reserves to 1.8 billion cu-bic meters and have given its gassector an unprecedented boost.The national industry is goingfrom strength to strength, with es-timates for 2006 production upby 150 percent over 2004.

In 2003, Egypt joined the in-ternational export market of pipedgas with the inauguration of theArab pipeline to Jordan. This linkwill eventually extend to Syria,Lebanon and Turkey,potentially carryingthree billion cubicmeters of gas. In Jan-uary 2005, the coun-try began exportingliquefied natural gas(LNG). Egypt is nowthe world’s sixth-largest exporter of natural gas,and exports are forecast to ac-count for 30 percent of all nationalproduction by 2007.

The country currently has three

LNG trains (liquefaction units)and a fourth in the planningstages. The new train is a jointproject of Union Fenosa, Eni,and the Egyptian government.

It is expected to berunning at full capac-ity by 2011, doublingthe amount of LNGshipped from theMediterranean port ofDamietta.

Demand from theEuropean Union for

natural gas is expected to rise bymore than ten percent by 2009.However, because of nationaldemand and the need to mini-mize oil subsidies, the petrole-

um ministry is exercising cautionin its export strategy. “Consumersare hungry for gas at reasonableprices,” explains Mr. Fahmy. “Wehave decided to go with a poli-cy whereby we keep one third ofgas for the next generation, onethird goes to local consumption,and a third is exported,” he says.

Major foreign companies in-volved in natural gas explorationand production in Egypt includeBG, BP, Eni, and Shell. ApacheCorporation, the largest U.S. in-vestor in Egypt, also producesnatural gas from its concessionsin the Western Desert. “The U.S.currently imports one third of ourexported gas,” says Mr. Fahmy.

A number of futurechallenges face Egyptas the nation investsin maintaining theexploitation of its vastoil and gas potential

Likely legal reforms haveoverseas mining companiesalready seeking out deposits.

Egypt is currently the world’ssixth-largest exporter of LNG.

Crude oil products,petrochemicals and

gas accounted for 55 percent of Egypt’s

total exports in the last financial year.

President Mubarak (left) and Minister of Petroleum Sameh Fahmyhave designated production and supply security as top priorities.

One of the main players in the fast-growing petrochemicalsector, Sidpec was partially privatized last year.

‘The availabilityof the resourceis not the issue.Rather, can we

produce it,transfer it and

refine it?’

Production is upby 150 percentand EU demand

for LNG isexpected to riseby more than tenpercent by 2009

ENERGIZING NATIONAL DEVELOPMENT

■ HOMEto a thriving natural gasindustry and with much devel-opment potential still to be foundin the oil sector, Egypt is payingspecial attention to petrochemi-cals as an engine for national de-velopment. In 2002, thegovernment established theEgyptian Petrochemicals Hold-ing Company (ECHEM) andcharged it with developing andimplementing a master plan forthe sector.

The plan outlined so far envi-sions investment of more than

$10 billion over the next 20 years.This will go towards the com-pletion of 14 complexes, with anestimated output of up to 15 mil-lion tons per year and a value of$7 billion in a bid to maximizethe potential of the recent natur-al gas discoveries. This will aimto create value-added national in-dustries, provide feed stock forexisting concerns, and meet do-mestic needs, as well as earninga projected $3 billion from ex-ports. In addition, the plan willhelp tackle Egypt’s unemploy-

ment problem by the creation ofmore than 100,000 jobs.

“The petrochemical industry isof maximum importance toEgypt’s future,” says Minister ofPetroleum Sameh Fahmy. As hepoints out, practically all productsare somehow related to petro-chemicals; it is a matter of apply-ing the necessary investment, bothfinancial and technological, to givethe industry, which currently gen-erates $7 billion in annual rev-enues, a boost. For this, Mr. Fahmylooks to the U.S. among other na-tions. “I truly hope that more U.S.companies will come to Egypt;they are highly qualified, withgood experience and the latesttechnologies in the field, which is

very important,” he says. Thanks to the privatization of

two of the country’s biggest petro-chemical players, Sidpec andAmoc, the industry is doing verywell. Several of the planned pro-jects are already under way, in-cluding construction of the firstintegrated petrochemicals and re-finement complex at Kafr El-Sheikh. Built over five years, thislarge-scale project will contain arefinery factory and productionfacilities for ethylene, polyethyl-ene, propylene, polypropylene,astern, polyastern, polysetrin andglycol. It will also contain a com-bined steam producing and de-salination plant as well as facilitiesfor shipping and storage.

Mastering petrochemical potency

NATURAL GAS EXPANSION

A farsighted plan to maximise the potential ofthe nation’s petrochemical sector aims formassive investment and substantial job creation

Reserves at record levels fuelrising productivity and FDI


MINISTRY OF PETROLEUM

EGPCEgyptian General

Petroleum Cooperation

EGASEgyptian Natural Gas

Holding Company

ECHEMEgyptian Petrochemical

Holding Company

GANOPEGanoub El Wadi Petroleum

Holding CompanyPETROJET

Ministry of Petroleum and Mineral Resources




■ FULLY AWARE of theclose link between a pros-perous economy and an ed-ucated and literatepopulation, the Egyptian gov-ernment is pressing forwardwith an ambitious and much-needed process of reformaimed at improving the ed-ucation provided by its stateschool system, major uni-versities, and teacher trainingcolleges. By focusing on fourkey areas – increased accessto schools, sufficient tech-nology, teacher training, andprofessional development –the Ministry of Education hopesto increase literacy, ensure thatchildren and adults alike learn theskills to compete in a globalizedworld, and meet PresidentMubarak’s campaign promise tointroduce 3,500 new schools intothe system by 2011.

First Lady Suzanne Mubarakis also actively involved in pro-moting education and literacy inthe country, and recently launchedthe Egyptian Education Initiative(EEI) in collaboration with PrimeMinister Ahmed Nazif at the WorldEconomic Forum on the MiddleEast in Sharm El Sheikh earlier thisyear. The EEI will focus on fourmain areas: pre-university educa-tion, higher education, lifelonglearning and e-learning develop-ment. Ms. Mubarak has alreadyhad experience in e-learning forchildren, and recently received the“Making a Difference” award forher involvement with iEarn, a non-profit global network that uses theinternet and technology to bringyoung people together for collab-

orative educational projects. In other areas, Ms. Mubarak,

who herself holds a master’s de-gree in Sociology of Education,has led two national campaigns toincrease literacy levels among girlsand women, which are dismallylow in the country – more than 45percent of females over the age of15 are illiterate.

As well as championing edu-cation and women’s rights, Ms.Mubarak is also the Chairwomanof the Board for the SpecialOlympics, founded by EuniceKennedy Shriver and now cele-brated in 175 countries world-wide. Also active in this ventureis Magda Moussa, a long-timefriend and collaborator of the FirstLady and the founder of Misr Lan-guage Schools, forward thinkinginstitutions that nurture the uniquetalents of each individual and pre-pare students for the rigors of the21st-century career ladder. The

Special Olympics Programbegan in 1994, and now22,000 children benefit di-rectly from the scheme, withanother 10,000 due to enrollon the program this year.Children from the programand the schools are encour-aged to interact, and whenthey finish their studies, as-sistance in job seeking isprovided by VocationalWork, another program co-ordinated by Ms. Moussa.

Education, however, isnot the only area where theFirst Lady has acted as a

role model in Egypt. She is also astrong proponent of women’s is-sues in the country, includingwomen’s health, their economicstatus, and their political rights.Ms. Mubarak is the Chairpersonto the Advisory Board to the Na-tional Council on Childhood andMotherhood and also the Presidentof the Egyptian National WomenCommittee. In addition, she re-cently became President of theNational Council for Women.

One of her most remarkableprojects, however, is the SuzanneMubarak Women’s InternationalPeace Movement. Established in2003, the Peace Movement is aninternational non-governmentalassociation registered in Geneva,Switzerland, with a permanentsecretariat in Cairo. The first of itskind in the Middle East, the or-ganization is dedicated to em-powering all actors, but especiallywomen, to become successfulpeace builders and to support glob-al efforts for peace, reconciliationand reconstruction.

■ STEEPED in millennia of artis-tic heraldry and famed for its hi-eroglyphics, Egypt is enjoying arenaissance as an internationallyrenowned breeding ground formodern artists. After centuries offoreign influence over Egyptianaffairs, the emergence of modernart at the turn of the twentieth cen-

tury lent the clamor for a moderncountry based on a renewed senseof national identity a wide reach-ing focal point. The year 1939 her-alded a sea change in Egyptian artas European influences were the-matically incorporated into the na-tional identity, giving rise toincreasing individualism and a new

movement that blended Egyptianheritage with broader global con-cerns. Egypt’s leading artistic fig-ure of his generation, Husayn YusufAmin, gave his blessing to inter-nationalism as a non-politicalmeans of promoting national iden-tity. The global exposure to Egypt-ian art that arose as a result launchedmany of the country’s finest ex-ponents of modernism onto the in-ternational stage.

Farouq HosnyBorn in Alexandria in 1942, Farouk Hosnygraduated from the city’s Academy of Fine Artsin 1964. He currently resides in Cairo where heserves as the Egyptian Minister of Culture.

Ahmed NawarThe post-modernist Ahmed Nawar isrenowned throughout Egypt and Europefor over 35 years. He was a major figureat the 50th Venice Biennale Egypt.

MabroukWith no formal educa-tion to his name,Mabrouk produces self-explanatory casts that donot ‘require a written ex-planation.’ Worldwideacclaim followed his de-but at the Press Syndi-cate in Cairo.

Omar El NagdyThe founder ofthe GenerationMosaicAssociation andDirector of the‘Art and Life’program from1971-1974, OmarEl Nagdi is a

sculptor, film director, musicianand philosopher who graduatedfrom the Helwan UniversityFaculty of Fine Arts in 1953.

Omar El-MoutazOne of the upcoming generation famedfor his photography and painting work,El-Moutaz Bel’lah wrote and directed thecritically acclaimed AnnTakoun Adam Al-Hakim(Being Adam Al-Hakim)in 2003.

The First Lady is a champion of women’s rights in Egypt and abroad,and a driving force behind domestic education reform

Egypt’s modern artists have found their place,and their identity, on the international stage

EEdduuccaattiioonnA role model for twenty-first century Egypt

AArrttss && ccuullttuurreeA modern view of anancient country

■ JUST a couple of years shyof its centenary, few educa-tional institutions can haveplayed a vital role in the de-velopment of their countryand region as Cairo Universi-ty, the oldest university inEgypt. Founded as the Egypt-ian University on 21 Decem-ber, 1908, the institution soonbecame a center for liberalthought, with its Schools ofArt, Law, and Medicine, gain-ing well-deserved interna-tional prestige. The MedicalSchool, also known as Alka-sr Alaini, was in fact one ofthe first medical schools es-tablished in Africa and theMiddle East.

In the 98 years since it wasfounded, the university’ ex-pansion has been such that itnow has 23 faculties and over150,000 students, not countingits 60,000 distance learningstudents. Its illustrious ex-alumni include the Nobel-win-ning author Naguib Mahfouz,late Palestinianleader YasserArafat, the Interna-tional Atomic En-ergy DirectorGeneral and NobelPeace Prize winnerMohamed ElBa-radei, former UNSecretary-GeneralBoutrous BoutrousGhali, the currentSecretary Generalof the Arab LeagueAmr Moussa, andthe world-famousactor Omar El Sherif.

The university’s currentPresident, Ali Abdel El-Rah-man, is fully aware of the in-stitution’s position at the heartof Egyptian national and in-ternational development. “Itis clear that proper educationis needed for development inall fields,” he states. “The dis-

cipline for which we provideeducational programs aremany and are a must for thedevelopment and reforms thatare currently taking place inEgypt. No one can doubt thatskilled human resources arevery important for the imple-mentation of any reform ordevelopment program and weprovide the proper training re-quire to develop that human

resources base,” headds.

The governmentis finally waking upto the essential taskplayed by highereducation in thecountry’s future de-velopment and hasdrawn up a “Strate-gic Plan to Reformthe System ofHigher Education”.This includes twen-ty-five projects de-signed to improve

Egyptian university educationin general (see separate arti-cle on education.)

Top of the agenda for Dr. El-Rahman is to continue open-ing up the university tointernational students. “ Wealready have protocol agree-ments with U.S., European,Australian and various Asian

universities,” he explains.“ Infact we are working to haveour educational programs ac-credited in Europe so that ourstudents can compete in theEU market, announces Dr. El-Rahman.”

Indeed, Cairo University’sprestige and its track record asan intellectual leader in the Arabworld make it one of the mostattractive locations for learningArabic, especially for U.S. stu-dents. Dr. El-Rahman is em-phatic on this point:“Cairo University offers the besteducation in Egypt, and we wel-come all U.S. students to comehere and learn what influencesthe Gulf and what this regionstands for in terms of culturehow it is developing.”

Also undeniably attractiveis the university’s location inthe historic Egyptian capital,an environment which for-eign students clearly appre-ciate. As Dr. El-Rahmanremarks, “ A graduate fromCairo University leaves witha personality as well as an ed-ucation. Not only do we havethe highest standard of edu-cation, but we also providean extraordinary experiencefor any student who wants tolearn Arabic and discover theauthentic Cairo.”

CAIRO UNIVERSITY

A revered seat of learning that hasproduced generations of expertise

SUZANNE MUBARAKFirst Lady of Egypt

Contemporary, responsive educational programs advance theprestige and illustrious track record held by Cairo University.

ALI ABDELEL-RAHMAN

President of CairoUniversity

■ THE GRAND EgyptianMuseum (GEM), upon com-pletion in 2010, will beamong the largest museumcomplexes in the world. Setto be constructed on 50hectares, less than 2 milesfrom the legendary pyramidsat Giza and at an estimatedcost of $350 million, the com-pleted museum will have a totalarea of nearly 500,000 sq m. Thefoundation stone was laid in 2002by President Mubarak.

The Supreme Council of An-tiquities has approved the loan

of a large part of the icon-ic Tutankhamen collectionthe to GEM, which willprovide the foundation up-on which the museumaims to build a collectionof 100,000 artifacts overthe first five to ten yearsof operation. The presence

of the Tutankhamen collectionwill also go a long way towardhelping the museum attain itsinitial goal of 3 million visi-tors annually.

■ THE SEEDS of the ideafor building a new Biblio-theca Alexandrina werefirst sown in 1974, when acommittee from theAlexandria Universitywere seeking a location fortheir new library. Select-ing an area between thecampus and the seafront,it soon became apparentthat the proposed locationwas the site of the fabledLibrary of Alexandria, oneof the seven wonders of theancient world.

Enthusiasm for bringingthe library back to life soon snowballed with of-ficial support from President Mubarak. UN-ESCO saw the opportunity to bestow a center

of cultural and scientificlearning upon the regionand promptly invited ar-chitectural tenders, choos-ing a design by Norwegianfirm SNØHETTA. Fund-ing pledges started to pourin at the 1990 Aswan con-ference, and constructionbegan in 1995.

The library has the ca-pacity to hold a staggering8 million books, with a70,000 square meter mainreading room. There arespecialized libraries for theblind and for children,

three separate museums, four galleries and aplanetarium, as well as the scientific marvel ofthe manuscript restoration laboratory.

GRAND EGYPTIAN MUSEUM

BIBLIOTHECA ALEXANDRINA

Seven millennia of history, under one roof

Restoring one of the Seven Ancient Wonders

The reborn library is an architecturalwonder in the traditional Egyptian mold.

The GEM’s collection willrival musuems worldwide.

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well-known high street outlets.“The next stage in Arafa’s ex-pansion is comprised of a con-firmed joint venture with anItalian company and also includesthe progression of the acquisitionof a German brand name. Thisalone is set to increase the worthof our retail platform by an esti-mated €100m ($125.5m),” ex-plains the chairman.

Dr. Arafa sees the QIZ agree-ments, which openednew doors to the U.S.markets for Egypt-ian companies, as amilestone in MiddleEastern relations. “Iwas part of the initialimpetus behind theQIZ agreements, andthe creation of cooperation be-tween Egyptian and Israeli busi-ness people is a small but positivecontribution to building peace-ful relations as a whole,” he says.Sales in the American market areincreasing and, as well as mar-ket share, the QIZ agreementswill aid the increase of bilateralrelations. “A positive develop-ment,” he concludes, althoughhe hopes eventually to see dutiesdisappear completely.

The increase of Arafa’s mar-ket share in Europe and the U.S.

will in turn help to increase thecapacity of the apparel and tex-tile segments at home. One of theburning domestic issues is em-ployment – approximately onemillion jobs need to be createdeach year to support the ex-panding workforce. “The popu-lation is growing at a rate of 1.75percent, and 85 percent areyounger than 48 years old. Thereare many implications of being

such a young countryin terms of population;there is much futurehuman capital to sup-port growing Egyptianmarkets,” says Dr.Arafa.

The company willcontinue to base its op-

erations in Egypt due to the qual-ity and cost-efficiency of its workforce, which combines semi-skilled, skilled and highly qual-ified employees. The country hasbecome worldwide labor costcompetitive, expressing the low-est textile total cost of labor. Butover and above this, says thechairman, Arafa recognizes thebreadth of the Egyptian market.“An objective of ours is to in-crease production capabilities tofurther cater to this local mar-ket,” he adds.



Egypt's most renowned seat of learning

CAIRO UNIVERSITY Gamaa Street , Giza, Egypt, www.cu.edu.eg

TWO WINNERS OF THENOBEL PRIZE

ARE CAIRO UNIVERSITYGRADUATES,

DR NAGUIB MAHFOUZAND DR M. EL BARADHI.

TOP OF THE LINE COTTON FROM THE EGYPTIAN EXPERTS

ARABIA COTTON GINNING COMPANY28 Talaat Harb St ., Cairo-Egypt, 11511 Tel: 25758623 – 5756012, Fax: 7730024

■ THE MINISTRY of Tradeand Industry has, in cooperationwith the country’s business com-munity, outlined a strategy foroptimizing Egypt’s industry overthe next 25 years. The main ob-jective is to increase industrialgrowth rates from the 2 to 3 per-cent of two years ago to 8 per-cent by the end of 2007. Thestrategy of the government isclear: “Industry needs to beEgypt’s agent of growth.”

In order to achieve this, Egyptneeds to attract around LE150bn($26.1bn) by 2011. The countryalso needs to create 1.5 millionnew jobs, a challenging task giv-en that there is at present a mis-match between the skills of theworkforce and the skills requiredin the strongest industrial sec-tors, such as the textile industry.The ministry is targeting humanresources development by, amongother things, financing training

courses within individual com-panies linked to guaranteed jobs.

Two other main planks in theministry’s strategy are the de-velopment of infrastructure ca-pable of sustaining increasedindustrial activity, and optimiza-tion of the domestic marketthrough standardization and theimplementation of competitionand consumer protection laws.

Domestic consumption of cot-ton, for instance, has shown a re-cent downturn, due in part to thespinning industry, which is slow-ly being prepared for privatiza-tion. The government is engagedin a plan to rehabilitate 15 plantsnot currently in operation.

However, exports are also ofvital importance to the country.In a speech given at the 11thEgypt Euromoney conference,held in September in Cairo,Rachid Mohamed Rachid,Egypt’s Minister of Trade and

Industry, stated that the countryis determined to increase exportrates from LE18bn ($3.1bn) toLE42bn ($7.3bn) by the end ofthis year, and that so far it is wellon target. The textile sector, withan annual turnover of more than$3bn, accounts for more than 20percent of the country’s exports.

Industry, and the textile in-dustry in particular, has benefit-ed from the Qualifying IndustrialZones (QIZ) agreement with theU.S. and Israel, whereby indus-trial products originated in Egyptand satisfying agreed-upon Is-raeli content (minimum of 11.7percent) are granted free entryinto the U.S. customs territories.

The textile and apparel indus-try is an important one to Egypt,contributing 30 percent of in-dustrial production and 25 per-cent of total exports. Annualcotton production averagesaround 290,000 tons. Thanks tothe QIZ agreements, Egyptiangarment exports to the U.S. roseby 53 percent year-on-year in theperiod January to June 2006.

The textile industry is being revamped to aidthe government’s goal of 8% growth by 2011

TTeexxttiilleeTurning cotton intoeconomic gold

■ REFORMS being made bythe current government admin-istration are laying the founda-tions for a newly dynamic andefficient industrial sector: the im-plementation of free zones, newand more beneficial taxationlaws, a clean sweep of excessivebureaucracy in taxes and cus-toms, and a swath of new inter-national agreements conducive totrade. The impact of these re-forms, claims Alaa Arafa, Chair-man of Arafa Holdings, is nowbeginning to be felt even at thebottom of the pyramid – in jobsand salaries.

Arafa Holdings is the largestprivately-owned group in the tex-tile and garment field in Egypt.Its scope of companies dye, spinand weave fabrics, as well as pro-ducing high quality apparel fordomestic trade and export for topbrand names such as Valentinoand Jaeger. “I currently employ7,000 people and am looking for-ward to the economic effects thatwill allow salaries to increase,”says Dr. Arafa.

The Egyptian textile industryhas a complete vertically inte-grated functioning model, start-ing from the availability of qualityraw materials – Egyptian cottonis renowned throughout the world– through treatment of cloth byspinning, dyeing and weaving, tothe versatility of finished itemsin apparel and home textiles.

Arafa Holdings attributes itsmain strength to operating underthe same vertically integratedstructure as the country’s indus-try as a whole. “We have whatis termed a ‘telescopic vertical in-tegration’. This means that whileproducing our garments on a ‘justin time’basis, eliminating wast-ed produce, the Arafa value chainis further tightened via the inte-gration of our three productionstages, all having the capacity tobuy from one another,” says Dr.Arafa.

The largest of the three busi-ness segments is retail, current-ly worth $188 million. For ArafaHoldings, exports account for 93percent of production. The grouphas an established U.K. base,where one of its companies,BMB Group Ltd, is the U.K.’slargest men’s clothing conces-sionaire with a presence in many

Government reformsare set to boost thecotton industry inEgypt, with beneficialknock-on effects foremployees and firms

Putting a new spin onEgypt’s cotton wealth

■ ACCORDING to Helmy Abouleish, Exec-utive Director of the Industrial ModernisationCentre (IMC), Egypt’s economic developmentis dependent on the competitiveness and growthof the industrial sector. The IMC aims to cre-ate an enabling environment in which the pri-vate sector can lead growth andEgyptian industries can enter theglobal market on competitive terms.

“There are several advantages toinvesting in Egypt,” says Hani Ola-ma, Chairman of the Arabia Cot-ton Ginning Company (ACGC),listing cheap and clean energy, lowlabor costs, new labor laws, andcheap land. The Qualified IndustrialZone (QIZ) agreements, introducedin 2005, have also brought advan-tages, and ACGC intends to bene-fit from these.

“We have bought 52 percent ofa garment company, which, if we can re-structure and improve it to our satisfaction,could be one of our gateways into QIZ,” saysDr. Olama. Raising production at the plantand establishing a new factory nearby are

small measures, however, compared to thecompany’s large-scale plans. “We have en-tered into a strategic partnership with someSaudi and Gulf investors for the creation ofa holding company, which will be one of thelargest in the region for this sector. In the

second phase, we will acquire newcompanies in the market and investin green field spinning, dying andgarments,” says the chairman.

ACGC can trace its success tothe application of innovation andnew technologies since it went pri-vate in 1997. It replaced 13 anti-quated ginning plants, attractingmore cotton producers and ex-porters. The firm also introduced theidea of pressing cotton bales, thuslowering transport costs.

In the next three to five years, thenew ACGC holding company will in-

crease its paid capital from LE1 billion to reachthe authorized capital of LE10 billion ($1.7 bil-lion). “We still have a long way to go, but we areon the right track and have everything we needto proceed,” says Dr. Olama.

ARABIA COTTON GINNING

QIZ agreement brings economicadvantages to the textile sector

Egyptian cotton is renowned worldwide for its quality.

The textile sectoraccounts for 20% ofEgypt’s export revenue.

‘I am lookingforward to the

economic effectsthat will allowemployees’salaries toincrease’

HANI OLAMAChairman

ACGC



Amoun Pharmaceutical Co. was the first private company founded

in the Egyptian pharmaceuticals industry and for thirty years has ledthe way with a level of quality that

has established a prestigious reputation for the whole Egyptian

market worldwide. Its three state-of-the-art factories use the latest

technology to manufacture prescription and over-the-counter

products, as well as a variety of veterinary items and international

pharmaceuticals under license, to provide quality healthcare at

affordable prices. Along the way,Amoun has been accredited with a

number of international certificates in recognition of its high

standards, competitive edge and market-leading initiative.

AMOUN PHARMACEUTICAL COMPANYEl-Obour City, Cairo, Egypt Tel: +202 610 3388, Fax: +202 610 2323

www.amoun.com , [email protected]


■ THE EGYPTIANpharmaceutical in-dustry is considered one of the oldeststrategic industries in the country. Formore than thirty years, Amoun Phar-maceutical Co. has contributed to thequality of life of the Egyptian popula-tion by providing their quality health-care at affordable prices. At the same time,it has specialized in and contributed tothe development of the pharmaceu-tical industry in Egypt, spearheadingthe highest standardsin the industry togain it a solid repu-tation worldwide.

Amoun producesinternational productsunder license and ex-ports to countries insub-Saharan Africa,Central Asia, andthroughout the Mid-dle East, and is one ofthe leading and fastestgrowing private phar-maceutical compa-nies in Egypt. It has amarket share of 4.62percent and made anet profit of LE155million ($27.2 mil-lion) in 2005, a 190percent increase on the previous year.According to IMS (Information Med-ical Statistics) data, during the last fiveyears the company enjoyed the high-est growth rate among all pharmaceu-tical companies operating in Egypt.

In June this year, Chairman of AmounSarwat Bassily, who founded the com-pany in 1998, announced the agree-ment by his family to sell their 93 percentstake in Amoun for at least LE 2.6 bil-lion ($456 million) to a consortium of

American companies, which includesthe Capital International Private Equi-ty Fund, Citigroup Venture Capital In-ternational and Concord Internationalof New York. It is intended that the mi-nority shareholders, who own the freelyfloating seven percent of the company,will also have an option to sell at thesame price. Demonstrating confidencein the country and the sector, the dealwill be the largest private equity trans-

action in Egypt to dateoutside the privatiza-tion process, with on-ly Heineken'sacquisition of AlAhram beverages, andItalcementi's of Asec,the cement manufac-turer, coming close.

Economic reformscarried out by theNazif governmenthave made Egypt anattractive place for in-vestors. “Egypt is acountry that is openfor everything. Wefeel there is more free-dom and more appre-ciation of the privatesector, which now has

more opportunity to function proper-ly,” says Dr. Bassily. “For all types ofbusinesses, investors are allowed morefreedom and this current period is themost conducive yet to getting more in-vestments into Egypt.”

The U.S.-Egyptian partnership fur-ther strengthens the healthy relationsalready well established by the two na-tions. Up to now, Amoun has focusedits export operations on Africa, Asia,and the Middle East. However, it is al-

so licensed to export to the EU, Aus-tralia, Canada and Singapore, so the newshareholders will be able to bring theircontacts to Amoun’s business and cap-italize on its export capacities. The dealwill be the marriage of capabilities andcontacts that bring the future of Amounvery much in line with the positioningof Egypt as a manufacturing base andexport hub. Regarding the government’sobligatory pricing policy that had pre-viously restrained opportunities forpharmaceutical companies, Dr. Bass-ily comments, “When it was imple-mented, this policy handicappedpharmaceutical companies. Now it isbeing released bit by bit and will con-tinue to be further released in the fu-ture. This loosening of restrictions isnow yielding good profits.” Amemberof the American Chambers of Com-merce, the CEO also points out, “Thetrade relations between Egypt and theU.S. do not and never have satisfied ei-ther side, as we have always been am-bitious and wanting more. Theopportunity for American goods inEgypt is far more than what is beingtaken advantage of today, and vice ver-sa with Egyptian goods in the UnitedStates. Trade between both countriescould be doubled and tripled.” Amoun’ssale marks the third time the Bassilyfamily has founded and sold a majorpharmaceutical company.

Uniting U.S. contacts withEgyptian expertiseThe recent acquisition of Egypt’s foremostpharmaceutical company by a U.S. consortium willcapitalize on confidence and capacity

■ WORTH an estimated $1.6 billion in2005, Egypt’s booming pharmaceuticalmarket is the largest in the region. Thehealthcare sector across the Middle Eastand North Africa (MENA) area as awhole is experiencing significant growth.Privatization is a growing trend withinthe Egyptian healthcare industry, pro-ducing considerable changes and op-portunities in the market. Prior to the1990s, the sector was predominantlystate-controlled, with the private sectorhaving only a minimal presence in health-care provision. The private sector nowplays a much more important role, emerg-ing partly as a result of declining stan-dards of public sector provision,increasing health awareness, and risingout-of-pocket payments for drugs in re-cent years, all of which has pushed up

demand for over-the-counter products.Egypt is the largest producer and con-

sumer of pharmaceuticals in the MENAregion, with a thirty percent share of thesupply. The region also absorbs most ofthe country’s pharmaceuticals exports,as the nation is a major exporter to Arab,Asian and African regions. The MiddleEast market has performed impressive-ly to reach $8 billion worth in 2005.Likewise, the regional pharmaceuticalCombined Annual Growth Rate (CAGR)between 1999 and 2003 was second on-ly to Southeast Asia and China. An ad-ditional feature of the region’s market isthat a high acceptance of Western med-icines is present.

Catering to the needs of the Egyptianmarket for thirty years, Amoun Phar-maceuticals is considered one of themost productive and successful compa-nies in Africa. CEO Dr. Sarwat Bassilysays, “I would advise investors to lookclosely at Egypt.” Amoun’s state-of the-art technology and high standards ofsafety and security have made it the na-tion’s premier pharmaceutical companyat the forefront of the industry. It isrenowned for making quality productsaffordable and is directly responsible forthe good reputation of the Egyptian phar-maceutical sector in the eyes of the in-ternational community.

PHARMACEUTICAL BOOM

Ever-increasing demandboosts expandinghealthcare sector

SARWAT BASSILYCEO and Founder

Amoun Pharmaceuticals Co.

Amoun uses the latest technology to produce international human and veterinary products.

Amoun’s state-of-the-art factory isone of the largest in the industry.

PPhhaarrmmaacceeuuttiiccaallss




■ GEOGRAPHY means Egyptstands astride Africa and the Arabworld, as well as the easternMediterranean. Considering thatthere are 42 million people under25 and that Egypt is in the grip ofmobile mania, the opportunities forITinvestment are apparently end-less. Submarine cables underliethe region’s digital backbone andderegulation is on track through2008. In the meantime, public-private partnerships areturning Cairo into a por-tal for East-West talk andNorth-South dialogue.That generates a lot ofbuzz.

But stop by the intel-ligent buildings at theSmart Village and theloudest sound is likely tobe the soft hum of com-puter servers. Located 20minutes from the frenzyof downtown Cairo, thesetting is very 21st cen-tury: functional buildingsbuilt around green spaceswith running streams.What seems to mark on-ly a change in lifestyle ishaving a profound eco-nomic impact. This, af-

ter all, is home to giants like Mi-crosoft and Vodafone. Oracle hasjust opened a Global Product Sup-port Facility here. Smart Villageis the concept of Prime MinisterAhmed Nazif, the first officialanywhere to distribute Black-Berries to his staff. Ever since,business in Egypt has had a dif-ferent ring.

The number of ICTcompanieshas grown from 185 in 1998 to1,349 in 2004, a whopping in-crease of 629 percent. By mid-2006, bandwidth along the Nilehad doubled and authorities hadauctioned off the country’s thirdmobile license. Deployment of3G is now in the hands of a con-sortium led by commercial banks,an Emirati telecom and the na-

tional postal service. Mobile pen-etration, only 20 percent last year,is galloping toward 30 percent.For Naguib Sawiris, Chairmanand CEO of Orascom Telecom, theimage of a a pure-bred stallionracing for the global winner’s en-closure comes to mind.

Today, Egypt has the best tele-com infrastructure in the regionand it is vying for a role as the in-dustry’s hub. As a destination for

outsourcing tasks, it could soon ri-val India. Bill Gates visited Cairotwice in 2005 and deliveredkeynote addresses at the annualsoftware conference. For many, itwas a vote of con-fidence. IT firmsare using Egyptas a place tolaunch e-projects. Last February,Telecom Egypt, Ericsson, Siemensand Microsoft showcased new ap-

plications at the X Gen-eration fair. Minister ofICT Tarek Kamel usedthe occasion to announcethe new timetable for lib-eralization. Until 2008,all gateways will rely onthe satellite and cablelanding points of Tele-com Egypt. Beyond thatdate, they can extend theirown infrastructure. It isclear that deregulation hasenjoyed the right kind ofpolicy mix.

“Information is busi-ness and information isdemocracy, as well as hu-man rights,” says Hishamel Sherif, Chairman of ITInvestments. An MITgraduate in business and

engineering, Dr. El Sherif is anauthority on Egyptian telecoms.He is also one of the key playersin the current boom. IT Invest-ments owns stakes in more than

30 companies deal-ing with softwaredevelopment, sys-tems integration,

media and e-commerce. He at-tributes the current telecom bo-nanza to the capacity buildingpolicies of the new cabinet. Onlyfor him, ITshould be guiding eco-nomic reforms, and not vice-ver-sa. “It should be the other wayaround because economic ratio-nality and market economies arepremised on the availability of in-formation,” says Dr. El Sherif.

With its know-how, value-addedapplications and call centers, Egyptis no longer the staid business en-vironment of five years ago. In-stead, it is a racy experimentalground. Prime Minister Nazif hasdone the smart thing by empha-sizing the importance of educationand technology use. According toDr. El Sherif, it all depends on in-novation, science, brainpower andintegration. “It’s a lot of work andyou need all these ingredients tosucceed,” he says.

No longer a staidenvironment in whichto do business, Egypthas transformed into abooming ICT hotspotof hi-tech opportunity

Taking advantageof world-classcommunicationnetworks

Smart VillageProviding a conducive environ-ment for ITcompanies, the Egypt-ian government has created SmartVillage: 67 office plots for 30,000employees will be built around ar-tificial lakes, streams and green ar-eas only 20 minutes away fromdowntown Cairo and six milesfrom the pyramids. The Smart Vil-lage is illustrative of Egypt’s pushto become an IT hub. It is a keystep in turning the country into aninformation society, according toPrime Minister Ahmed Nazif.Companies like Microsoft, Alca-tel, Vodafone, HPand Exceed haverelocated here. Businesses canrent, lease or buy offices in an en-abling environment. U.S. Am-bassador Frances Richard Downeyvisited the site recently.

Microsoft EgyptBill Gates gave the keynote addressat Microsoft’s Middle East De-velopment Conference in Cairoin 2005. The four-day annual con-ference gives firms and individu-als an opportunity to discuss thelatest developments in program-ming. Mr. Gates also met PrimeMinister Ahmed Nazif and Min-ister of Communications and In-formation Technology TarekKamel. Microsoft designed theportal for the Ministry of Invest-ment, which allows bidders to in-teract with state authorities onissues like privatization. Based inEgypt since 1995, Microsoft playsan important role in IT educationand the development of an SME(Small and Medium Enterprises)sector. Recently, the software gi-ant supported an initiative, an-nounced at the Global Summit ofWomen in Cairo, to provide Arabwomen with IT skills as part of itsMiddle Eastern Partnership.

IN BRIEFTTeelleeccoommss

Prime Minister Nazif and Bill Gates at the World Economic Forum. Mr. Gates expects Egypt tobecome a major regional ICT hub, as demonstrated by his two business trips to the country last year.

■ LAST December, there was amedia flurry over the sale of 20percent of Telecom Egypt (TE).Regular Egyptians turned into in-vestment sharks in order to landstakes in the fixed-line giant. Upto LE11 billion ($1.93 billion)were withdrawn from bank de-posits ahead of the IPO launch. Thepublic offering of 10 percent, or170 million shares, was oversub-scribed ten times. Most of the re-maining tranche was sold asglobal depositary receipts(GDRs) at the London StockExchange. Chairman AkilBeshir says, “The success ofthe IPO was down to confi-dence and trust in TelecomEgypt and the Egyptian econ-omy.”

Submarine cables, whichunderlie the regional network,go through landing points inAlexandria and Suez, ex-tending east and west. Thisturns Egypt into a virtual tele-com hub. Telecom Egypt isthe largest landline operator inthe Middle East, with a staff of54,000 and net profits of LE1.1billion ($193 million) in the firsthalf of 2006. Furthermore, it ac-tually managed to raise the num-ber of fixed lines from 9.79million to 10.63 million in this pe-riod, bringing telephones to placesthat never had service, and com-pany EBITDAgrew 6 percent toLE2.46 billion ($433.4 million).

“Telecoms are the most impor-tant pillar of any economy. With-out voice, data, internet and privatenetworks, business would not beviable. In Egypt, technology incombination with economic re-forms has a direct impact ongrowth,” says Mr. Beshir, who

adds that his company not only en-joys a privileged geographic po-sition, but also a technologicaledge. Telecom Egypt, after all,was the first regional operator togo 100 percent digital four yearsago. The new cabinet in Cairo isalso IT-friendly. “One of the firstthings Prime Minister Nazif didupon taking office was to buyBlackBerries for his ministers,”says Mr. Beshir.

As part of the privatizationscheme last year, Telecom Egyptlost its monopoly on internationalcalls, which accounted for 25 per-cent of sales. For now, revenueis assured through earnings atmobile services like MobiNil andVodafone. The 150-year-old land-line operator generates addition-al revenue by leasing itsinfrastructure to mobile opera-tors, which use the fixed-line gi-ant as an international gateway.Mr. Beshir explains, “We will berenting the infrastructure and es-tablishing an interconnectionagreement that allows us to share

profits on calls made on their net-work.”

Beyond that, the chairman isdetermined to diversify the prod-uct line. Now that the paradigmhas shifted, he is looking to max-imize shareholder value. Tele-com Egypt’s double listing onthe Cairo and Alexandria StockExchanges (CASE) and in Lon-don means new standards of ac-countability and transparencypermeating local corporate cul-ture, as well as the creation of aninvestor relations department.

Productivity is the best indi-cator. Under Mr. Beshir’s lead-

ership, the figure hasdoubled in five years. “Thesimplest measure of pro-ductivity [at a telecom] isthe number of lines per em-ployee. This is a very broadmeasure, of course, but rightnow we have 10.75 millionsubscribers and 54,000 em-ployees. Based on that, wewould end up with a figureof about 200. The figure was90 five years ago. Our tar-get is to reach 300 by 2009,”says the chairman.

Recently, the company hasincreased its stake in VodafoneEgypt to 48.97 percent. “Our in-vestment in Vodafone Egypt hasagain delivered a strong finan-cial result for our company as themobile market continues to de-velop strongly,” comments Mr.Beshir. Consortium Algerien deTelecommunications (CAT) is aTE joint venture with OrascomTelecom to provide CDMA ser-vices across Algeria. TelecomEgypt is also present in Jordanthrough TE Data, and is showingavid interest in the landline mar-kets of Saudi Arabia too. “Weaim to position Telecom Egypt asa major regional player and even-tually an international operator,”says Mr. Beshir.

Egypt’s communications giant is furtherstrengthening Egypt’s position as a telecom andIT hub with an IPO and a technological edge

Diversification of internationaltelecommunications gateway

AKIL BESHIRChairman of Egypt Telecom

TELECOM EGYPT TARGETS GROWTH

Egypt could soon rivalIndia as a destinationfor outsourcing tasks

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authority. His main strategy hasbeen to mix re-training schemeswith technology. However, the re-al agent of change may be, ironi-cally, the handset. The newlyacquired 3G license is more thana large-scale transaction. For Mr.Fahmy, it is a way to lift workforcemorale; a kind of restructuring ofthe firm’s consciousness. Howcompetitive is a postal organiza-tion these days? Person-to-personmail is increasingly losing out tocell phones and SMS in Egypt’smarket of 74 million people, butnew services are grow-ing. “We need to makeemployees cope with to-tal quality services andwith new technologies tointerface with clients. Wealso need to upgrade theircommunication and mar-keting behavior,” says Mr.Fahmy. By 2009, thechairman hopes thatEgypt Post will be part ofthe globalized mail mar-ket. By then, the Post Au-thority will also becompeting international-ly. On a trip to the U.S.last June, Mr. Fahmy metwith the chairman of theUnited States Postal Ser-vice, as well as withFedEx officials. Bothtalks emphasized the im-portance of public-privatepartnerships, or PPPs. Themarriage of both can helpadd value to multilayeredorganizations like EgyptPost, whose chairman hasshown a special interestin expanding ties with theU.S. After all, some 6 per-cent of incoming mail and20 percent of parcels orig-inate in North America.“FedEx and USPS alsohave a cooperative agree-ment that we’d like totransfer to Egypt,” hesays.

In the era of IT, Mr.Fahmy is helping to out-fit Egypt Post with acomplete infrastructure.

It is implementing e-signatureprojects to ensure transactionsthroughout its distribution net-work. Financial products offeredby its Postal Savings, which ac-count for almost 60 percent ofrevenue, also benefit from ven-dor-supplier agreements withMicrosoft and Oracle. Intralot,a Greek

technology firm, is developingsoftware for utility bills, taxes,ticket booking and drivers’regis-tration. For other systems and ap-plications, Mr. Fahmy has turned

to IBM. All this will encourage pri-vate citizens to interact with theadministration through Egypt Post,an innovative way of ensuring ef-ficiency. On the banking side, hehas narrowed ties to Misr Bank andCIB, saying, “We can providewhat other banks cannot. That isa win-win situation for everyone.”



■ IN JULY 2006, an EgyptPost-led consortium won thebid for the third mobile license.For the $2.92 billion deal,Egypt Post joined forces withthe UAE-based Etisalat, theCommercial InternationalBank (CIB) and the NationalBank of Egypt (NBE). Themove is a way to capitalize onexisting assets. “We alreadyhave the brand and the repu-tation. After all, every Egypt-ian trusts the post,” ChairmanAlaa Fahmy says. With EgyptPost’s distribution network of3,600 branches being thebiggest in Egypt, not only will3rd license mobile subscribersbe able to get an array of ser-vices related to their subscrip-tion directly at their local postoffice, but branch locationswill also be retrofitted to servenetwork operations and facil-itate network deployment.

For Chairman Alaa Fahmy,it has been a paradigm shift.“We have decided to choosebig projects to transfer EgyptPost into the modern era; 3Gmobile services are the mostsophisticated technology rightnow,” he says.

By 2009, Mr. Fahmy thinks

the new mobile company willhave captured a 30 percent mar-ket share. Now, his marketingdepartment is working to builda subscriber base from amongEgypt Post’s customers and totailor special packages for them.New applications and gadgetswill appear before the end ofthe decade. But Egypt Post willenjoy a profitable footprint inthe telecommunication indus-try much earlier than that.

The National Telecom Reg-ulatory Authority (NTRA) hadstoked the competition byopening the door to a new op-erator, this time offering CD-MA, or 3G technology. As aresult, the mobile network willincrease its traffic capacity andtransmission rates. Althoughonly a select group of Egyp-tians will use 3G initially, in-troducing a third mobileoperator will have an impacton prices and quality of service.

The star acquisition is large-ly thanks to a deal with Etisalat,an aggressive firm with an im-pressive track record in im-plementing technology. Thefirm ranks sixth in terms ofrevenue and capitalization inthe Middle East.

THIRD MOBILE LICENSE

Joint forces capitalizeon network assets tolaunch 3G technology

Traffic capacity and transmission rates are about to increase.

■ EGYPT POST has been a na-tional institution for 141 years.With 3,500 offices and 50,000 em-ployees, many thought restruc-turing would be a heavy ordeal.However, re-branding has changedeverything at the once stodgy or-ganization. Since February 2006,when Alaa Fahmy was appointedchairman, the bid to modernizehas included public-private part-nerships with the likes of FedExand Microsoft, as well as a hostof deals with commercial banks.Egypt Post is also a strategic part-ner of the consortium forming thecountry’s third cell-phone net-work. Now it has to separate itsdual functions as operator and reg-ulator— and to rev up snail mailfor the age of e-commerce.

“We are now a commercial en-tity and no longer a social servicesprovider of generic mail, provid-ing state of the art e-mail and par-cel delivery along with full fledgednon-banking financial services, so-cietal services and e-governmentservices as well” says Mr. Fahmy.

The chairman was recruitedfrom a private telecom companyand also served as the executivepresident of Egypt’s National Tele-com Regulatory Authority(NTRA). He admits that re-brand-ing will take time, and so far hasnamed seven new vice presidentsand given them decision-making

Streamlined efficiencyand a focus on totalquality and technologywill encourage greaterpublic interaction in awide range of services

Major PPPs, cellphonelinks and e-banking ITdirect post to new era

The modernized Egypt Post is using the latest IT technology toencourage greater citizen-administration interaction.

ALAA FAHMYChairman of Egypt Post

EGYPT POST REGENERATION

■ EGYPT’S Minister of Communications andInformation Technology, Tarek Kamel, is con-vinced his country will emerge as a technologyhub. Public-private partnerships and a strongpool of talents are behind the new spirit of in-novation.

What are Egypt’s key competitive advantagesin telecommunications?

Egypt has potential simply because of its tal-ent set. Students graduating from theeducational system go further to en-hance their professional develop-ment with basic skills. It is a processthat requires investment and time,but we are willing to take that step.Once they gain the right skills, theyare ready to work exporting serviceswith the support of multinationals.In the future, this creates new jobopportunities and value-added fac-tors for the economy. ICT is thus a key driver ofeconomic growth.

How have economic reforms impacted on theICT sector?

The economic reforms are promoting socio-economic development. The ICT sector in par-ticular has contributed to these reforms and is adirect beneficiary. This is reflected in the growthof mobile subscribers, broadband penetrationand growth in Internet use. Mobile penetrationhas doubled from 7 million to 15 million sub-scribers since a year and a half ago. Internetbandwidth has also doubled over the last year.All this reflects growth potential and market elas-ticity.

Microsoft Egypt is one of the fastest-growingsubsidiaries in the world. Bill Gates visited the

country twice in 2005. What kind of messagedoes this send to foreign investors?

The new spirit of public-private partnershipsis something we need to look at in detail. It isone of the main reasons for the ICTsector’s suc-cess in Egypt. Today, you can see how careful-ly the government calibrates its policies. Privatesector companies are investing and civil societyparticipation has grown. This is a model thatneeds to be replicated in the region and in other

sectors of the Egyptian economy.

We visited the Smart Village out-side Cairo, an impressive LE 3billion ($530 million) investment.What is its main function?

The Smart Village is basically atechnology and business partner.It’s a place where companies canset up their physical infrastructure

in the form of technical support cen-ters, regional development agencies, trainingschools and call centers. The infrastructure isstate-of-the-art and the management offers a va-riety of value-added services.

What are some of the objectives at your min-istry in the long-run?

We are deregulating telecom services and arelooking into further measures to liberalize the sec-tor. In July we announced the results of techni-cal bids for a third mobile license. In addition,we will be deregulating our international tele-com service at the end of 2006. We are also fol-lowing the convergence of ICTwith broadcastingtechnology, which will no doubt free up moreopportunities for investment. At the World Eco-nomic Forum we were happy to hear about anEgypt-specific educational initiative that willplace ICT in every school’s curriculum.

INTERVIEW WITH MINISTER TAREK KAMEL

‘The new spirit of PPPs is one ofthe main reasons for ICT success’




■ IF TELECOMS are the har-bingers of globalization, Egyptis fast approaching the finishline. Orascom Telecom Holding(OTH), which recently shelledout $3.6 billion for Italy’s Windnetwork, is a favorite in the racefor global telecommunications.For Naguib Sawiris, the Chair-man and CEO of Orascom Tele-com, Egypt is like a horserunning for the world’s telecomcake, and when the race is over,only four or five contenders willbe left. His company offers mo-bile services from Algeria toBangladesh, but the empire willsoon include news channels andan entertainment network. Fornow, Mr. Sawiris heads thelargest non-oil company in theMiddle East—and Egypt’slargest employer.

“We’ve put Egypt on themap,” says Mr. Sawiris suc-cinctly. “You can consider usan Egyptian company exportingservices to the region.” Recentlyappointed to the Advisory Boardof the New York Stock Ex-change (NYSE), he is proud torepresent the Middle East onthe trading floors of Manhat-tan. The honorary positionmeans the CEO can providecritical insights into how busi-ness can flourish in markets likeEgypt. All too often, he is askedquestions by large institutionalinvestors that reveal a lack ofexposure to the emerging mar-kets of the Middle East. Ethicsand shrewdness are required,but Mr. Sawiris thinks trans-parency is a major asset. The ad-visory position at the NYSE isalso a chance to bridge bilater-al relations. For him, econom-ic growth and development arethe best ways to combat reli-gious fundamentalism in theMiddle East. Motivating liber-al thinkers to become more ac-tive politically will help. “Thethird way is to revolutionize ed-ucation. It’s an easy formula,”says Mr. Sawiris.

In 2005, OTH posted $3.22billion in revenue. In June 2006,total subscribers amounted to al-most 41 million, and the com-pany wants to break the targetof 50 million in the next fewmonths. That is the outcome ofa strategy based on targetingmarkets with high populationsand low penetration rates. Lastyear, Orascom selectively pur-chased minority equity stakes inAlgeria, Tunisia and Iraq. Mr.Sawiris raised the holding’s own-ership in Iraqna, the mobile ser-vice in Iraq, from 63 per cent to100 per cent, betting on the coun-try’s comeback. These incre-mental transactions allow OTH’sCEO to glean insights into mar-

ket trends and stay ahead of thecurve. “We have more growthand fewer headaches,” he says.

About the buyout of Wind,Mr. Sawiris says it was drivenby the idea of testing the new3G deployments. Italy, a vibrantmarket for cellular service, wasthe ideal testing ground fortrends in broadband, IPTV andvideo streaming. “We are sure

that we are going to increasethe value of Wind beyond be-lief. This is mainly because webelieve in the quality of globalmanagement as opposed to sin-gle-country management,” saysMr. Sawiris. Weather, the in-vestment vehicle used to ac-quire Wind, is tentativelyscheduled for an IPO in late2006. The listing will be a huge

milestone for Orascom becauseboth sides of the Mediterraneanshare similar synergies. It alsoopens the door for further ex-pansion in Europe.

“Right now we’re in a di-gesting mode. We want to sur-prise the market with theperformance of our current foot-prints and with an excellentIPO. And we want to take themarket by surprise by realizingour dream of becoming one ofthe top five players,” says Mr.Sawiris. In the meantime, build-ing the foundations of a mediacompany keeps him working

18-hour shifts. The acquisitionof Melody Music, a highly pop-ular channel in Egypt, is thefirst step in that direction. Oth-er television projects are un-derway in Iraq, where Orascom

is about to launch a 24-hournews channel. In Egypt, Sawirisis mobilizing talent to open anentertainment network. “Wewill call it the OT channel,”says Mr. Sawiris.

■ IN ITS bid to expand globally,the group headed by NaguibSawiris has gained market shareby leveraging size and scale. Dou-ble-digit growth has made Oras-com Telecom the best-performingemerging market cellphone oper-ator worldwide. In the first half of2006, net profits grew from$295.29 million to $331.14 mil-lion year-on-year. Analysts oftenunderestimate purchasing powerin emerging markets. Gray earn-ings and a cash economy meanpeople are willing to disburse oncellular services. Even in war-tornIraq, Orascom’s cell-phone oper-ator reported an 11 percent in-crease in sales in the first half of2006.

Total revenue for the OrascomTelecom Holding (OTH) hasgrown 36 percent between June2005 and June 2006 to $2.06 bil-llion. Much of it is the result of ro-

bust growth in regional sub-sidiaries. The company creates itsown non-GSM networks as a sup-port base for GSM operations ina select few countries. That way,internet solutions and procurementcosts can be managedmore efficiently. In-stead of absorbingsmall players, Mr.Sawiris targets thelarge demographicsegments.

As of June 2006,Orascom’s Algerianoperator (Djezzy) ac-counted for 35 per-cent of sales.Orascom was granted a GSM li-cense in Algeria in 2001. Marketshare has since grown to 65 per-cent, capturing over nine millionsubscribers. As for the Pakistanicase, it is now part of company lore.Mobilink, the OTH subsidiary in

Pakistan, has recently posted 50percent sales growth over June2005. When OTH took over Mo-bilink in 2001, market share wasonly 40 percent. By 2006, the sharehad grown to 56 percent, or 17

million people.Sawiris is now thelargest telecom in-vestor in Pakistan.

“Two months ofsales in Pakistanequals the total num-ber of subscribers inTunisia. What tookus four years toachieve in Tunisiawe can do in less

than two months in Pakistan,” saysMr. Sawiris. More emerging mar-ket opportunities will pan out ofthe deal with Hutchison Telecom,a leading international telecom anddata services provider specializedin developing economies from

Ghana to Macau. Mr. Sawiris plansto increase his stake in Hutchisonfrom 19.3 percent to 23 percent.All handsets, procurement outlaysand roaming agreements are cur-rently being harmonized.

Consolidation is a prime moverin the industry. Following thelaunch of its IPO for Weather In-vestments in Europe, more acqui-sitions are in store for OTH,including a possible move on TimHellas, the Greek operator. In themeantime, smaller takeovers aredoing most of the digestive home-work. MTN has absorbed Invest-com, and Melicom has just beensold – something Mr. Sawiris pre-dicted a year ago. “As you cansee, what I forecast a year ago hasalready happened,” he says. “In theend, the number of players willshrink. While they are busy con-solidating new assets, we will havemore of an edge.”

ORASCOM TELECOM HOLDING

Egypt’s most respected businessman Naguib Sawiris heads the nation’s num-ber one company. Over the past six years, Cairo-based Orascom Telecom hasbecome increasingly profitable with more than $2 billion in revenue in thefirst half of 2006 with approximately 41 million subscribers worldwide

● OPERATIONALPERFORMANCEIn the first half of 2006,Orascom Telecom Holding(OTH) expanded its subscriberbase to approximately 41 mil-lion customers. The holdingadded 20 million new sub-scribers to its ranks over thelast 12 months and 5.7 millionin the last quarter alone.Mobilink, its subsidiary inPakistan, registered 3 millionnew subscribers while its armin Bangladesh reached a sub-scriber base of 2.1 million.

● LICENSE EXTENSIONIN IRAQOTH announced in September2005 that it had become the100 percent owner of its GSMoperation in Iraq, known asIraqna. The company wasgranted a three-month exten-sion on its current license,which ends on December 31st.Iraqna is the leading telecomprovider in Iraq in terms ofrevenue, network coverageand total number of sub-scribers. Since its inception in2003, Iraqna has investedmore than $270 million intoGSM systems.

● INCREASED STAKE IN MOBINILOTH is in negotiations to buyup to 3.5 percent of the sharesin the Egyptian Company forMobile Services (ECMS). Thepotential acquisition, however,would depend on market con-ditions as they evolve in 2006.OTH currently owns 16.6 per-cent in ECMS and 28.75 per-cent of Mobinil Holding.

● DIVIDEND PAYMENTSOn June 1, the groupannounced it would beginpaying dividends of 3.75Egyptian pounds per share.For all trading transactionsperformed through June 11,2006, the dividends would bedisbursed as of June 14.Holders of Global DepositaryReceipts (GDRs) for OTHreceived their dividendsthrough the Bank of New York.

ORASCOMIN BRIEF

Leading the Middle East, taking on the world

NAGUIB SAWIRIS,Chairman and CEO Orascom Telecom

Entrepreneurial pathfinder NaguibSawiris steers OTH into new markets

GLOBAL EXPANSION

‘Our main missionis to become one

of the leading GSMnetwork operators

in the world’

OTH first half results reflect the strong operating performanceof its subsidiaries, Djezzy being the largest contributor.

333,988

197,995

158,388

71,432

10,067

6,916

21,039

1,317,520 1,849,833

517,695

24,3409,048

6,592

181,269

10,455

141,28947,24414,388

5,148

195,125

14,868

2,059,826 979,562 1,080,2641,509,244 36% 10%

128,34522,5606,301

2,167

104,260

7,045

73,23224,6848,087

2,981

90,865

7,823

55,1139%

28%

38%

(13%)

11%

na

(25%)94%59%

(22%)

8%

42%

na

(9%)

721,441

500,254

229,481

264,665

36,330

97,662

384,668

264,228

119,016

139,432

20,358

53,874

336,773

236,026

110,465

125,233

15,972

868,257 981,576

43,788

14%

12%

8%

11%

27%

na

na

13%

na

na

40%

23%

39%

50%

16%

67%

261%

37%

-

-

-

--

-

----

Djezzy (Algeria)

Mobilink (Pakistan)

Mobinil (Egypt)

Iraqna (Iraq)

Tunisiana (Tunisia)

Banglalink (Bangladesh)

Telecel (Africa)

Libertis (Congo Brazzaville)

Total GSM

Telecom Services

Ring 1

M-Link & MedCableOrasInvestOther 2

Total Telecom Services

Internet Services

OT Holding & Others

Total Consolidated

1. The restatement of Ring (announced in the YE Results), June 2005 revenues are dif-ferent than reported by (US $ 66, 298k), where revenues were reported as gross (e.g.handset price vs. handset commission).

2. Other Telecom Services Companies include ARPU+,C.A.T., Onward Technologies,and Pharoah

GSM

Subsidiary

US$ (000) US$ (000)(3 months)US$ (000)

30 June2005

Q2 - 2006 Inc/(dec)

30 June2006

Inc/(dec)

Q1 - 2006

(3 months)US$ (000)


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