In Focus – Daily News Egypt http://www.dailynewsegypt.com Egypt’s Only Daily Independent Newspaper In English Sat, 25 Mar 2017 10:39:08 +0000 en-US hourly 1 Fish markets in Egypt: challenges and obstacles that threaten the vital industry http://www.dailynewsegypt.com/2017/03/16/fish-markets-egypt-challenges-obstacles-threaten-vital-industry/ http://www.dailynewsegypt.com/2017/03/16/fish-markets-egypt-challenges-obstacles-threaten-vital-industry/#respond Thu, 16 Mar 2017 06:00:54 +0000 http://www.dailynewsegypt.com/?p=618671 Egypt’s total fish production reached 1.53m tonnes in 2015, according to CAPMAS, yet the numbers are not quite accurate

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In its report about fish production in Egypt, which was issued on 20 February, the Central Agency for Public Mobilization and Statistics (CAPMAS) published the “2017 Annual Bulletin of Fish Production Statistics for 2015.”

The study showed that Egypt’s total fish production reached 1.53m tonnes in 2015, compared to 1.48m tonnes in 2014—an increase of 2.5%—due to a greater output of fish farms and rice fields.

According to CAPMAS, the total production of fish farms and rice fields ranked first, with 1.5m tonnes, followed by lake production with 171,500 tonnes, marine waters with 102,900 tonnes, and finally fresh water production with 69,700 tonnes.

The report added that the production of bony fish held the first place of total fish production at 1.5m tonnes (97.0%), crustaceans amounted to 18,600 tonnes (1.2%), other varieties of fish totalled 17,700 tonnes (1.2%), lung fish production recorded 5,900 tonnes (0.4%), and cartilaginous fish and molluscs reached 3,000 tonnes (0.2%).

Ahmed El-Said, who runs fish production farms, said that the governmental production of fish is not satisfying at all, adding that the new state-owned farms might increase the production of fish in Egypt if the government knows how to run it in a better way.

Ahmed El-Said, who runs fish production farms, said that the governmental production of fish is not satisfying at all, adding that the new state-owned farms might increase the production of fish in Egypt if the government knows how to run it in a better way. (Photo Handout to DNE)
Ahmed El-Said, who runs fish production farms, said that the governmental production of fish is not satisfying at all, adding that the new state-owned farms might increase the production of fish in Egypt if the government knows how to run it in a better way.
(Photo Handout to DNE)

The government’s role

He believes that if the government wants to increase fish outputs from the sea, it should provide more boats with refrigerators that preserve the fish while the boat is at sea, adding that if it wants to increase production from fish farms, it must establish good places for farms and provide cheaper feed that would increase the amount of produced fish at the end of the process, while reducing its price at the same time.

Regarding fish output from Egypt’s lakes, he stated that the government has to implement more cleaning processes and impose rules that prevent overfishing in order to raise Egypt’s production from lakes, adding that in past periods, the government did not make any effort to properly organise fishing from lakes.

He explained that the governmental production of fish is not good, because they are run by government employees, who—at the end of the day—do not care about the amount of production since their figures are not being controlled.

El-Said furthermore mentioned that the feed prices are currently high due to the flotation, which raised the price by almost 50%, which made it reach an average of EGP 8,000 per tonne of feed, which is enough to produce around 500-700kg of fish.

He stated that the government needs to help farmers to grow more feeding locally, including soy beans and corn, in order to reduce the amount of imports, hoping that would lead to cheaper prices of feed.

He explained that the imported components of the fish industry are the main determinant for the Egyptian market, since even the local suppliers raised their prices after flotation, taking advantage of the increase of prices of imported components.

On a different note, Koudijs Kapo Feed Company, which specialises in locally producing fish and animal feed, established a new feed factory in February, according to Alaa Kamar, a member of the company’s board of directors.

Kamar told Daily News Egypt that the cost of the company’s new factory in Borg El-Arab City is EGP 120m. Most of the costs was self-financed, while EGP 30m was financed by the Commercial International Bank (CIB), he noted.

He added that the new factory’s maximum production capacity is 150,000 tonnes annually, which is destined for the local market.

Kamar said that 15% of the components were local, while 85% were imported.

He believes that fish feed sales will grow by 10-12% during 2017, because of the current expansion in fish farming.

It is worth noting that Koudijs Kapo Feed was originally established by an Egyptian-Dutch partnership, with a 15,000sqm factory.

Kamar added that the poultry sector is being negatively affected by the spread of infections and diseases, which has become a problem due to the farms’ standard procedure of waste disposal.

He furthermore believes that the size of the Egyptian fish market will increase in the coming months.

The Egyptian market and the fishermen

Additionally, El-Said also believes that the market will get better in 2018, adding that the demand of fish is increasing due to the hikes in other protein sources’ prices, namely meat and chicken. Investors are also expanding their farms to increase the production in order to meet the demand, he noted.

However, the former Minister of Agriculture, Essam Fayed, announced in 2016 that total fish production stands at 1,481,882 tonnes annually, pointing out that the ministry has a plan to develop fisheries in Egypt by increasing fish production, as to meet the domestic consumption and compensate for the shortage of meat.

Fayed added in a press statement that this plan relies on the expansion of intensive aquaculture and marine hatchery, noting that the ministry has already established a fish hatchery at kilometre 21 of the Cairo-Alexandria-Matrouh road, financed by an Italian grant.

He continued, stating that another fish hatchery was created on the coast of Bardawil Lake for high-value fish at a cost of EGP 31m—in addition to 140 sea cages in Mariout Valley to produce 700 tonnes of fish.

Moreover, in order to increase the production, a fish farm was established in the New Valley governorate on an area of ​​25 feddans (25.95 acres)—using fresh water from wells—while another fish farm in South Sinai was built on an area of ​​three feddans (3.114 acres) for the production of tilapia. According to Fayed, Egypt ranks first in Africa and the Middle East in aquaculture for the production of tilapia.

El-Said believes that the government has no real account of the total production in Egypt, explaining that it is not possible for the government to count the true amount of production for many reasons.

He explained that the government cannot usually reach the right amounts of fish with fishers in order to know the accurate production of Egypt.

“95% of the fish farms are not legalized, and the government does not know anything about them,” El-Said noted.

The fishermen seem to be having a hard time under the current circumstances as well, due to the high prices of spare parts and the lower amounts of fish they catch.

A fisher in Port Said, Mohamed Sallam, said that his outdated boat is not enabling him to fish the same amounts that he used to get before.

He explained that the tools he uses in trawling have doubled in price, so he cannot afford to fix them currently.

He also stated that the government does not help the fishermen with anything, adding that if one of the fishers was injured, he would not have the money to afford treatment at the hospital; and the syndicate also does not provide enough aid to them either.

He stated that the government and the syndicate must understand how important the fishermen are, adding that they both have to cooperate to provide health insurance for the fishermen and for the people who provide cheap food to Egyptians. Also he called upon them to provide cheaper spare parts to help fishermen fix their boats and keep them working.

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FX is not only indicator for assessing economy: Arqam Capital http://www.dailynewsegypt.com/2017/03/13/618163/ http://www.dailynewsegypt.com/2017/03/13/618163/#respond Mon, 13 Mar 2017 06:30:01 +0000 http://www.dailynewsegypt.com/?p=618163 Most of the foreign exchange (FX) flows to banks are being directed to alleviating longstanding pressure on the corporate and household sectors to spur economic activity and reduce inflationary pressures, while meeting the demands of foreign companies and investors for repatriation. According to Arqam Capital’s report “The Devil in the FX” published in February, the …

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Most of the foreign exchange (FX) flows to banks are being directed to alleviating longstanding pressure on the corporate and household sectors to spur economic activity and reduce inflationary pressures, while meeting the demands of foreign companies and investors for repatriation.

According to Arqam Capital’s report “The Devil in the FX” published in February, the backlog of corporate dividends of around USD 200m is expected to be cleared, and caps on individuals’ transfers and importers’ deposits are to be lifted by June 2017, along with restrictions on individuals’ access to the FX by the year’s end—according to FX availability in banks.

The report indicates that the system is not fully funded yet. Since there are still some companies that report some unmet FX needs, individuals still need to provide documents for their FX needs and a corporate backlog still exists, although it is diminishing. However, three months after the Central Bank of Egypt’s (CBE) decision to free float the currency, a rise in FX flows, better repatriation, and a focus on getting the real economy working can be observed. Therefore it is time to focus on real flows and the economy, instead of just the FX.

The government will need to improve the restructuring to protect the less privileged from the negative impact of the reforms, especially future ones, while improving the investment climate to pave the way for the bigger,  longer term local and foreign direct investment, the report states.

Historically, Egyptians have treated the FX rate as the indicator of choice when evaluating the economy. The FX rate appreciated 16% from EGP 18.91 per USD on 19 January to EGP 15.84 per USD on 20 February. The report forecast that the uptick in the rate—which occurred on 22 February—to EGP 15.86 per USD could be a plateau before the rate reverses its direction as imports pick up towards Q2 due to seasonal factors (a prediction which came true with the FX rate of EGP 17.8 on 10 March).

devil official vs parallelThe report further examined the facts and indicators post flotation. First the CBE has reportedly cleared the pending FX financing for imported “essential goods” held up at different ports before flotation. The amount is undisclosed, along with what is left to finance imports of “non-essential goods,” although there is evidence that the latter has either been cleared as well, or is minimal at this point. Public statements had indicated $5bn was the commodities’ backlog at ports before November 2015 and which was cleared when the current CBE governor came to office at that time.

Secondly, the backlog of FX, which is estimated at about $ 400m, owed to investors attempting to exit the fixed income and equity markets in the past few months was cleared in early February, as confirmed by the CBE, some banks, and, more importantly, some major investors operating in the Egyptian market. Dividends of foreign companies operating in Egypt have shrunk in size as well, from around $400-500m to $150-200m and are expected to be processed by the banking sector by June.

Moreover, funds which multinational companies need to clear, arising from the intercompany transactions between the overseas headquarters and the company in Egypt, represent a significant bulk of the outstanding FX needs that are yet to be entirely covered by the banks, which is estimated to be between $1bn and $1.5bn.

The financing initiative—agreed on between the CBE and investors in February—will allow a significant bulk of outstanding FX loans by the corporate sector to be paid off by the CBE to banks to cover clients owing $5m or less, with the EGP equivalent being paid at an interest rate of 12%. The total outstanding corporate driven FX loans are estimated to be around USD 1.5bn.

On the other hand, FX flows to the banking sector from all sources have risen to $13.5bn since 3 November, which reflects the acceleration of FX inflows from fundamental sources, including remittances, tourism, and portfolio and equity investors. The banking sector has been able to provide $15bn for commercial transactions since the flotation on 3 November, compared to $71bn secured by the banking sector in the entire period from November 2015 to February 2017.

While the caps on individuals’ FX withdrawal and purchase limits have been raised, documentation still needs to be presented to prove the need for FX purchases. Upon submission of documents proving travel, medical billing, or tuition expenses, banks mostly fulfil clients’ FX needs—indicating an improvement in availability. Arqam Capital forecasts that once banks’ FX coffers are replenished and the remaining pending FX needs are fulfilled, the self-imposed FX limits by banks will be abolished. Sometime in late 2017, individuals will be able to request FX from their banks without the documentation restriction. According to the IMF report on the staff agreement with Egypt, the restriction on the documented transfer of $100,000 or above and the deposit cap of $ 50,000 by importers of non-essential products should also be lifted by June 2017.

In depth review of the real economy

The report continues to examine the economic indicators, such as the difference between the official and parallel FX, which has finally converged. However, the report indicated that the recent appreciation of the EGP was the result of increased FX inflows and a temporary drop in imports in January and February. A bounce back is forecast, followed by a slight depreciation in the coming month or two, as pressure builds up again with the rise in seasonal imports ahead of Easter and Ramadan, as well as for Umrah, which officially resumed recently.

Regarding the tourism sector, tourist arrivals bottomed in June 2016 in the absence of European tourists and Arab tourists from countries with banned flights, as well as the fasting month of Ramadan taking place. Prior to the downing of the Russian plane in October 2015 and the subsequent banning of flights from Russia and the UK, tourist arrivals registered at 909, 000, very close to the one million plus benchmark levels prior to the 2011 revolution. Russian tourists represented around 30-35% of total arrivals in Egypt, while UK tourists represented 8-10% of total tourism.

Afterwards, arrivals dropped to 364,000 in January 2016 and then started rising again thereafter with more tourism inflows from the Ukraine, Czech Republic, Arab and Asian countries, and some European countries, such as Germany and Italy. Recent data indicates a rise in tourists from 473,000 in September 2016 to 551,000 in December 2016, with evidence of higher spending averages per night, resulting in a rise in revenues from $510mn in Q4 FY16 to $826mn in Q2 FY17.

The 25.4% rise in December 2016 arrivals represented the highest witnessed rise in tourism inflows since November 2014, confirming the positive effect of the flotation on pricing. With the expected lifting of the Russian and UK flight bans sometime in 2017, tourist arrivals and revenues will continue to increase as pent up demand will trigger higher arrivals once the ban is lifted.

Moreover, remittances from Egyptians abroad have also been on the rise, from $3.9bn in Q2 of FY 2016 to $4.6bn in Q2 FY 2017, as a result of the restored confidence in the official FX market and the ceasing of illicit offshore activities due to the convergence of the official and parallel FX rates.

On the other hand, the manufacturing indices are reflecting an improvement in the production of food, textiles, chemicals, glass, bricks, and electrical appliances. In 2015, the FX crisis, inflation, and uncertainty took their toll on Egypt’s industrial sector, but that gradually started to change in 2016 following the economic events that took place. The overall manufacturing index reflects over 50% of total activity in each sector in Egypt.

devil tourismEgypt’s PMI index remained below the 50 point benchmark since September 2015, which implies a contraction in economic activities included in the index, the PMI bottomed out in November 2016 at 41.8 points, as businesses were in dire straits. However, it started to slowly improve in December and January 2017, registering 42.8 and 43.3 points respectively. Although prices and costs have been reportedly rising in recent months, exports of non-oil products were on the rise as well, reacting quickly to the more competitive pricing.

Moreover, while exports have not historically been very responsive to competitive pricing, that started to change following the flotation, when exports started inching up—rising from $1.6bn in September 2016 to $2.0bn in December.

On the other hand, imports registered negative annual growths of 30% and 11% in November and December 2016, respectively, following the spike in import costs. Imports dropped from $6.2bn in August 2016 to $4.4bn in December.

However, not all indicators reflect positive aspects of the flotation. High inflation and the ensuing higher poverty level—at least 30%—is unfortunately the harsh cost of the economic reforms. The lengthy delay in the implementation of major economic reforms magnified their impact on inflation, raising inflation to a 30 year high of 33% in February.

The report forecast that the annual headline inflation will remain at these elevated levels throughout 2017, as seasonal and one-off shocks (higher VAT, energy prices), coupled with a negative base effect, maintain high headline numbers.  An overall average of 28% in 2017 is expected, compared to 15% in 2016. Monthly inflation will be more indicative of inflationary pressures going forward, until headline figures start declining slowly in 2018.

The way forward

While the abovementioned indicators show some improvement in the real economy, Arqam believes that the environment in which corporations and consumers alike are operating is deeply challenging. Both sectors are recalibrating their behaviour to better suit the short term volatility and a new more flexible system overall in different economic systems (taxes, customs, etc.).

Therefore the greater burden now falls on the government to pick up the pace as well to cope with the structural change that has occurred in Egypt. Consumption growth will decline in the short term until wage growth and savings/transfer flows pick up and inflationary pressures decline. Corporations will attempt to squeeze costs and secure their rising working capital needs, and both sectors need a revamped playing field to support their morphing exercise.

The report concludes that the government needs to restructure subsidies to better target the poor, while increasing efficient spending on public services and goods for the less privileged. The government also needs to finalise essential regulations, like the investment law and changes to tax laws, industrial laws, and their likes in order to create a better environment for the private sector to overcome the shock therapy it experienced in 2016. Targeted sectoral changes with an improved regulatory environment will attract more investment going forward.

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Egypt’s new “restructuring, pre-insolvency conciliation, and bankruptcy” bill http://www.dailynewsegypt.com/2017/03/12/617998/ http://www.dailynewsegypt.com/2017/03/12/617998/#respond Sun, 12 Mar 2017 09:30:06 +0000 http://www.dailynewsegypt.com/?p=617998 Federation of Egyptian Banks prepares a note of its remarks on the bill, which will be sent to the CBE and the legislative committee of the Ministry of Justice

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The Federation of Egyptian Banks (FEB) prepared a note of its remarks on the new “restructuring, pre-insolvency conciliation, and bankruptcy” bill. This will be sent to the Central Bank of Egypt (CBE), which, in turn, will send it to the legislative committee of the Ministry of Justice, a senior official told Daily News Egypt.

The source explained that the Ministry of Justice had already sent a copy of the bill to the CBE in February, before it was sent to the FEB for review.

The FEB called for banks’ officials to hold extensive meetings to study the bill. Several meetings have been held already by banks’ legal affairs officials under the umbrella of Egypt’s legal technical committee, most recently on Monday.

According to the source, this law is very important for the economic life in Egypt, as well as for both Egyptian and foreign investors.

The bill, of which Daily News Egypt obtained a copy, has 264 articles regulating restructuring, pre-insolvency conciliation, and bankruptcy procedures.

The provisions of this bill shall be imposed on all traders—whether on an individual or a corporate level—except for joint ventures, public sector companies, and public business sector companies. This is in accordance with the definition provided in law No. 17 of 1999 on commerce.

Regarding the bankruptcy procedures, the bill stipulates that each economic court shall establish a bankruptcy department to manage mediation procedures in the restructuring, pre-insolvency conciliation, and bankruptcy requests.

The bill stipulates that if a settlement of the dispute was reached, the parties in question shall sign a settlement agreement that shows details of the agreement and the mediation procedures. The bankruptcy judge shall approve the agreement and end the request. This agreement shall have executive power. If the disputed parties could not reach an agreement, the judge shall refer the request to the specialised court. If the applicant did not attend before the bankruptcy judge for two consecutive sessions, the judge shall save the request.

According to the bill, the bankruptcy verdicts are final and could not be challenged, unless the law mentions something else.

The economic courts are obliged by the bill to use bankruptcy management experts—among others—who assist the judges. Those experts should include members of restructuring and asset management companies. Additionally, there will be representatives from the ministries of finance, manpower, investment, trade, and industry, as well as representatives from the CBE, the General Authority for Investment and Free Zones (GAFI), the Egyptian Financial Supervisory Authority (EFSA), the Egyptian Exchange, the Federation of Egyptian Industries (FEI), and the Federation of Egyptian Chambers of Commerce (FEDCOC).

The bill regulates the restructuring operations, where each trader with a minimum capital of EGP 1m who did not commit fraud is entitled to request the restructuring of the company. It also prohibits the restructuring of companies in liquidation. It is also not permissible for companies to request restructuring if the court announced the company’s bankruptcy or during the beginning of the pre-insolvency conciliation.

According to the bill, the restructuring aims to develop a plan to reorganise the financial and administrative affairs of the trader. It also includes the procedures of ending the company’s financial turmoil and paying its debts, as well as suggesting funding sources, including re-evaluating assets, restructuring debts, increasing capital, increasing internal cash flows, reducing external flows, and restructuring administration.

The company owner shall provide the restructuring request in which they state the reasons for and the date of financial turmoil, as well as the previous measures taken to avoid it or treat its effects. They must also provide suggestion to solve the crisis at hand.

The restructuring commission shall provide its report to the judge specialised in bankruptcy cases within three months, stating its opinion about the reason for the business disruption and the feasibility of restructuring as well as the proposed plan. The preparation of the plan can be extended for more than three months with the permission of the judge, on the condition of implementing it in a period of no more than five years.

The bill allows traders or company owners to continue their management of the assets throughout the restructuring period. They would also be responsible for the company’s obligation and previous or future contracts since the date of adoption of the restructuring plan. However, owners should not engage in any conduct that affects the interests of their creditors.

According to this bill, traders or companies that did not commit fraud are entitled to request a pre-insolvency conciliation, in case the business experienced any trouble that prevents it from paying its debts. However, the pre-insolvency conciliation request is not allowed in case the company was in liquidation.

The bill obliges creditors to provide documents of the debts of the court on certain dates; otherwise, they will not be allowed to engage in the conciliation proceedings. The same case applies to creditors whose debts have been rejected.

According to the bill, the conciliation requires the approval of the majority of creditors whose debts were accepted, on the condition that they seize two-thirds of the value of these debts.

If the company requesting conciliation has issued bonds or financing instruments worth more than one-third of its total debt, the conciliation would not be allowed unless the general assembly of the owners of these bonds approved this step.

The bill allows for the pre-insolvency conciliation to give debtors deadlines to pay their debt or interest, and also allows debtors to be exempted from a part of the debt or interest.

According to the bill, the pre-insolvency conciliation will be invalid should the debtor be convicted of fraud after the ratification of the conciliation. It includes hiding money or debt or deliberately exaggerating the value of the debt. The creditors must request the cancellation of the pre-insolvency conciliation within six months since the day they discover the fraud, or else their demand will be unacceptable.

According to the bill, the bankruptcy may be declared upon the request of the same trader or the request of a creditor or the prosecution. It also may be declared after the trader’s death or retirement from trade or when they stopped paying their debts. The bankruptcy request must be submitted within a year after the death of the trader or the date of removing their name from the commercial record.

According to the bill, traders must request their bankruptcy within 15 days from the date they stopped payment, through presenting an application to the bankruptcy department in economic courts. They must also state the reasons for stopping the payment. The bankruptcy request shall be rejected in case the trader stopped paying criminal fines, taxes, fees, or social insurance.

In the case of bankruptcy, the specialised court has the right to take the necessary steps to preserve the debtor’s funds or manage them for a renewable period of three months, until the lawsuit is closed. It also has the right to take any necessary measures to identify the financial situation of the debtor and the reasons for stopping payment.

Any interested party, except those who have been convicted, can object the declaration of bankruptcy from the court that issued it within 30 days from the date of its publication in newspapers—unless they have it challenged in the appeal court, where they can present their objection to the court trying the appeal.

The bill allows the specialised court to ban the trader who is bankrupt from leaving the country for a renewable period of up to six months, if they harm the rights of creditors. The trader can then challenge the travel ban; however, this challenge will not stop it from being implemented. The court can decide to cancel the travel ban at any time.

According to this law, whoever is convicted of criminal bankruptcy shall be banned from exercising political rights or running for parliament or local council for a period of six years since the date of the sentence. This ban shall be nullified if the trader was rehabilitated or the court suspended the execution of the sentence.

Traders that have gone bankrupt and have not been rehabilitated shall be banned from joining commercial or industrial chambers, unions, or professional associations. They are also not allowed to become managers or board of director members of any company nor engage in banking, business agencies, export or import, securities brokering, or auctions (whether buying or selling).

Those who are bankrupt shall be banned from the management of their own assets, including funds gained on the same day of bankruptcy or after that.

The bill obliges creditors to hand over the original documents of their debts, accompanied by a statement of these debts and their value in the local currency at the exchange rate declared by the CBE—according to the sale, closure, remittance, or banknote prices—if there was no price on remittances on the day of declaring bankruptcy.

With respect to the bankruptcy of a company, the bill stipulates that any company established based on the Companies Law that has stopped paying its debt due to financial disruption shall be considered bankrupt. The court must then declare the company’s bankruptcy, even if it was during liquidation.

The legal representative of the company is not allowed to request bankruptcy only after obtaining permission from a majority of the partners or of the general assembly.

The bill permits the court to order on its own, or at the company’s request, the delay of declaring bankruptcy for a maximum period of three months, if the company is likely to support its financial position or if the delay serves the interest of the national economy. The court may accordingly take the necessary measures to preserve the assets of the company.

If the court declares the bankruptcy of a company, it shall also declare the bankruptcy of all its partners. The court may also declare the bankruptcy of every person who used the company for their own interest and made use of the company’s money as if it were their own. The declaration of the company and its partners’ bankruptcy shall be issued in one judgment, even if the court was not competent in trying the bankruptcy of these partners.

If the company’s assets were not sufficient to pay at least 20% of the debt, the court would oblige the members of the board of directors or managers of the company to pay its debts or part of them, unless they prove that they were keen in the management of the affairs of the company.

According to this bill, the legal representative of the company can submit proposals to reconcile with creditors. If the company requesting conciliation has issued bonds or financing instruments worth more than one-third of its total debt, the conciliation would not be allowed unless the general assembly of the owners of these bonds approved this step.

With regard to rehabilitation of those sentenced to bankruptcy, they shall restore all their rights after three years of the end of bankruptcy, except in the case of fraud.

The court is obliged to rehabilitate those sentenced to bankruptcy, even before the end of the three-year period, if they paid all their debts including the expenses and revenues for a period of up to two years. If the person in question has gone bankrupt and was a partner in the governance of another company that has also been bankrupt, that person would not be rehabilitated unless they paid all the company’s debts, including the expenses and revenues for a maximum period of two years.

The court is obliged to rehabilitate those sentenced to bankruptcy, even before the end of the three-year period, if the person has reconciled with their creditors and implemented its conditions; if they proved that the creditors have discharged them from all debts; or if they unanimously agreed to approve the rehabilitation.

According to the bill, those in bankruptcy who have not been convicted in one of the bankruptcy crimes of negligence shall not be rehabilitated, unless they implemented the punishment or have been exempted. According to the bill, those who are bankrupt, who were convicted in one of the bankruptcy crimes of fraud, shall be rehabilitated only after five years from the date of implementing the punishment or since the date of exemption.

According to the provisions of this bill, any trader who stops paying their debts is considered in bankruptcy fraud if they concealed or destroyed their company’s documents or hid part of their money to harm creditors.

The trader is charged of bankruptcy negligence if they contributed to the loss of their creditors because of negligence in their personal or home expenses, if they spent large sums of money in gambling or any fake work, if they bought goods and deliberately sold them for less to delay their bankruptcy and improve their financial situation, or if they borrowed funds or issued securities or used other ways which led to severe losses only to delay his bankruptcy.

Those convicted of bankruptcy fraud and those who have participated in the issue shall be sentenced to 3-5 years in prison and shall be fined between EGP 50,000 and EGP 500,000, while those convicted of bankruptcy negligence, shall be fined EGP 50,000 to EGP 200,000.

According to this bill, the members of the board of directors and managers of a company that has gone bankrupt shall face the penalties prescribed for bankruptcy fraud, in case it was proven that they contributed to the company’s bankruptcy by fraud, or caused the halt of the company through hiding the truth about the subscribed or paid capital, or through distributing fake profits or fraudulently taking sums of money for themselves more than authorised by the company’s contract.

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The future of product prices is unpredictable http://www.dailynewsegypt.com/2017/03/09/617727/ http://www.dailynewsegypt.com/2017/03/09/617727/#respond Thu, 09 Mar 2017 06:00:45 +0000 http://www.dailynewsegypt.com/?p=617727 Experts, businesspeople, and investors remain unsure about whether the prices will be hiking or dropping in the future

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Since the pound floatation, which was implemented last November, the price of almost every product, component, or service has increased because of the low price of the Egyptian pound alongside many other factors.

The price of the Egyptian pound has sharply decreased against foreign currencies, as it reached more than EGP 19 per US dollar immediately after the flotation.

However—continuing its volatility—the value of the pound increased again, which led the government to set the customs price of the US dollar to EGP15.75.

The decision made some manufacturing companies, importers, and dealers reduce the prices of their products, while others chose to raise their prices in spite of the new value of the pound.

The price of poultry has increased EGP 2 for the kilogram, which reached EGP 20, mainly due to the higher input costs of feeding as well as lower production rates because of widespread diseases in the winter.

Poultry feed has reached EGP 4,000 per tonne of corn and EGP 8,100 per tonne of soy beans.

Concerning building materials, the price of steel has also increased to record EGP 9,150-10,000 per tonne, which affects the price of housing units.

In the smart phone sector, Samsung reduced the prices of its mobile phones for the second consecutive time, at a ratio between 3% and 5.6% at the beginning of March. The price of the Piton declined from EGP 420 to EGP 400, a reduction of 4.8%, according to a price list obtained by Daily News Egypt. Moreover, the price of iPhones declined by 3% in February according to the new price list of Apple products.

The prices of Samsung televisions also saw drops in February by 3.9-8.1% as part of a plan to expand in the Egyptian market and acquire a larger share.

Regarding the automotive market, car prices have witnessed hikes that made them unaffordable for many Egyptians.

And since the value of the pound is likely to witness drops again in the next few days after it reached more than EGP 17 per US dollar, economic experts and businesspeople are left guessing about what is going to happen about the prices next; yet they believe that the informal market for foreign currencies is rising again.

Aliaa El-Mahdy, the dean of the College of Economics and Political Science at Cairo University, stated that the current situations of ups and downs for the US dollar would go on for a while.

She added that the exchange rate’s instability in the next period will continue because of the natural mechanism of supply and demand, explaining that this in itself is not worrying and a normal thing in any free market.

Regarding the product prices, El-Mahdy said that prices would soon drop, because the government reduced the customs dollar rate for importers. She furthermore stated that this is a good thing and that it would be wise if the government kept it stable at its current price of EGP 15.75.

“I was talking to a banking official (not the governor of the Central Bank of Egypt), and he stated that the banks are providing foreign currency to any investor who asks for it,” El-Mahdy noted regarding the possibility of another rise of the informal market—something which is not going to happen in her opinion.

The managing director at Multiples Group, Omar El-Shinity, believes that the price of the US dollar will remain unstable in the near future, stating it could reach EGP 18.5 before it drops back again to EGP15.75.

He said that after the flotation, companies expected the dollar price to hike to EGP 25 and adjusted their prices accordingly, again reducing them after it started dropping—assuming that the fair price for the pound would be between EGP 16 and 18.5.

“I believe that local companies will not easily reduce their prices, because the US dollar is one of many factors that affect the price, including factors such as customs restrictions, the value added tax, and inflation,” El-Shinity noted.

Regarding the informal foreign currencies market, he stated that the informal market is coming back to life due to a lack of supply by the Central Bank of Egypt (CBE) and the banking sector that occurred after the customs US dollar rate was lowered.

El-Shinity believes that the government might raise the customs dollar rate again because they reduced it rather sharply, but he thinks that the government must keep it stable for the next three months in order to stabilise the market.

From another view point, head of Middle East for Clothes company, Abdel Ghany El-Abasiry, estimated that the prices of products will reduce, but that this would take time, explaining that manufacturers and investors bought their components at high prices when the dollar stood at EGP 19. He explained that it takes time for them to import new components at the new lower prices.

He added that the price of textile products would decrease by around 8-10%, probably within the next 15 days.

“The government has to provide US dollars, because the return of the informal market is a negative sign,” he noted.

Furthermore, the head of the Investors Association for 15th of May City, Fouad Amin, said that prices are unlikely to decline soon.

He believes that the exchange rate could rise again, which would affect the price due to the state of instability that the exchange rate is witnessing.

He added that the return of the informal market is the natural result of banks being ignorant regarding investors’ needs for foreign currency.

He believes that the lower price of the US dollar is not going to remain this low for a long time, explaining that there is a lack of sources for foreign currency in Egypt. However, prices might reduce if the exchange rate stays at EGP 16 for some time, he noted.

Moreover, the head of Badr City’s Businessmen Association, Bahaa El-Adly, said that prices of products may remain at their current level until the prices of foreign currencies stabilise.

He added that producers would not reduce prices immediately, because there still is demand, adding that once the market is sated, prices would decrease too.

El-Adly stated that no investor will reduce the price, unless he is certain about the stability of the exchange rate.

From another direction, a source at the Arabian Food Industries Company (Domty) said that his company will move its prices in accordance with drops in the exchange rate and a certain amount of stability. The source, who preferred to remain anonymous, added that the company will lower its prices only if the exchange rate remains low and does not hike once again. He noted that the company will reconsider its price lists in the two coming months.

The source explained that the company did not raise its prices significantly during the dollar exchange rate hike following the flotation.

He said that a lower exchange rate will not impact prices immediately, as distributors and traders have a stock of high-cost products, noting that prices may go down in a few months when the official price of the greenback at customs stays low or drops further.

Moreover, the deputy chairperson of Obour Land, Ashraf Hamed, told Daily News Egypt that his company does not intend to raise prices again since the pound strengthened to EGP 16 against the USD, adding that it will cut the prices by 15% if the exchange rate stabilises at EGP 15.

Hamed pointed out that the strong competition, both at the level of distributors and companies, will push the prices down if costs decline, also saying that “it is naïve to expect lower prices according to a lower intraday exchange rate,” he stressed.

He explained that the company did not raise prices at the same level as their own costs have risen.

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The chances and opportunities of the chancellor’s visit to Egypt http://www.dailynewsegypt.com/2017/03/02/616880/ http://www.dailynewsegypt.com/2017/03/02/616880/#respond Thu, 02 Mar 2017 06:00:09 +0000 http://www.dailynewsegypt.com/?p=616880 The chancellor of Germany, Angela Merkel, is paying a two-day visit to Egypt on Thursday, to discuss several political and economic issues between Egypt and the most powerful industrial country in the European Union. Throughout the visit, it is scheduled for Merkal to meet Egyptian President Abdel Fattah Al-Sisi, the Grand Imam of al-Azhar, Ahmed …

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The chancellor of Germany, Angela Merkel, is paying a two-day visit to Egypt on Thursday, to discuss several political and economic issues between Egypt and the most powerful industrial country in the European Union.

Throughout the visit, it is scheduled for Merkal to meet Egyptian President Abdel Fattah Al-Sisi, the Grand Imam of al-Azhar, Ahmed Al-Tayeb, and the Coptic patriarch, Pope Tawadros II. Meetings between German and Egyptian businesspeople will also take place during the visit, according to a press statement issued by the German embassy in Egypt.

However, the relationship between Egypt and Germany witnessed ups and downs since the 25 January revolution, especially after the ouster of former president Mohamed Morsi in 2013.

Egypt expects many things from the visit, such as attracting further investments from the industrial stronghold of Europe
Egypt expects many things from the visit, such as attracting further investments from the industrial stronghold of Europe

Under Al-Sisi, Egypt relied on German energy company Siemens to establish three power plants with a turnkey system in Beni Suef, Borollos, and the New Administrative Capital with a capacity of 14,400 MW, worth €8bn for both gas and wind plants.

It’s worth to mention that Al-Sisi paid a visit to Germany in June 2015, with the scheduled visit of Merkel to Egypt being her third to the country but her first one since 2009.

Egypt expects many things from the visit, such as attracting further investments from the industrial stronghold of Europe. The German chancellor is planning to discuss regional and national problems concerning refugees, the crisis in Libya, and the situation of German institutions in Egypt.

Daily News Egypt asked experts about how Egypt could benefit from the visit, and how it might affect the bilateral relationship.

The head of risk management at the Egyptian Exchange, Medhat Nafei, stated that Egypt has many fields that need reimbursement from Germany to attract more investments.

He explained that the value of German investments in Egypt is fair if compared to any other non-petroleum related investment by any other country.

The value of German investments in Egypt reached $619.3m, with a total number of 1029 companies. This ranks Germany as the 20th largest investor in Egypt.

President Abdel Fattah Al-Sisi and Merkel will witness the inauguration of the first phase of the three Siemens power plants in Beni Suef, Borollos, and the New Administrative Capital, to add 4,800MW
President Abdel Fattah Al-Sisi and Merkel will witness the inauguration of the first phase of the three Siemens power plants in Beni Suef, Borollos, and the New Administrative Capital, to add 4,800MW

Nafei stated that the United Kingdom for example has a lot of petroleum-related investments that have a high value, which makes it the biggest investor in Egypt.

He said that “Egypt has the opportunity to attract great investments in renewable energy—mainly in the solar energy sector—which could raise German investments and create many job opportunities.”

“Egypt and Germany have also cooperated in the field of training Egyptian workers for many years until now,” he noted.

Egypt also could provide Germany the opportunity to establish a German economic area in the Suez Canal Economic Zone, which might increase German exports to all nearby countries.

He emphasised that Merkel would hold meetings that would boost investments in both countries, adding that leaders such as Merkel do not waste time in ineffective meetings.

“Unfortunately, Egypt has a huge trade deficit with Germany,” he mentioned. “Egypt has the opportunity to export many products and raw material to Germany, which could reduce the trade deficit between both countries.“

As for political support, Nafei claimed that Egypt does not need political support anymore since the recent security issues have come to an end.

The European castle

The business and investment website Investopedia.com published an article about Germany on 15 April 2015, saying that over the last 15 years Germany has been widely viewed as the economic catalyst and stabiliser for its fellow European Union states.

The article stated that even after the 2008 financial crisis, the German economy was able to bounce back more quickly than neighbouring euro zone states.

“Despite a number of post-crisis reforms, EU countries continue to suffer due to lack of global competitiveness. Greece, in particular, is in dire straits and continues to leverage the support of the European Central Bank and fellow euro zone states to avoid financial collapse”, the article read.

Investopedia wrote that until the date of publishing, Germany had borrowed Greece €56bn.

About the possibility of getting economic aid, Nafei believes that Egypt is not like Greece, adding that Germany protects it due to its membership in the European Union—fundamentally different to Egypt.

He believes that Germany has also provided aid to Egypt in the field of establishing power plants by allowing easier ways of payment.

 

Egyptian-German economic relations

The website of the German ministry of foreign affairs, auswaertiges-amt.de, says that Germany and Egypt enjoy close economic relations, especially in the area of trade.

It stated that in 2015, bilateral trade grew by approximately 20% compared to the previous year, now worth EUR 5.2bn.

However, it added that Egypt’s economic and investment climate has developed positively since mid-2013 but is still not favourable, especially for small and medium-sized enterprises (SMEs) due to the existence of a wide range of bureaucratic hurdles.

“The Egyptian government’s economic policy currently focuses on extensive infrastructure projects, such as developing the Suez Canal area, road and housing construction, increasing electricity production, and land reclamation. Positive impetus is also evident in the property sector, manufacturing, and the food industry,” the ministry’s website noted.

Managing director at Multiples Group, Omar El-Shinity, believes that this visit will be beneficial for both countries regarding both, economics and politics.

He believes that one of the top priorities for Germany is to make sure that the important deal between the government and Siemens would follow through.

He said that after the International Monetary Fund’s loan of $12bn, it made Egypt review the deal and tried to stop it, due to its high value.

El- Shinity stated that the Siemens deal is very important to Germany.

As for attracting investments, he believes that German investments are very modest due to their low value. However, he added, what’s beneficial for Egypt is the positive picture of the relationship with the European Union that would become even better after this visit, which could allow the country to attract more European investments in the future.

He explained that German investors are not willing to risk entering a market that is currently recovering, adding that German companies are specialising in industrial endeavours, therefore the visit might not increase the German investments in Egypt.

From another perspective, El-Shinity believes that Germany views Egypt as a main consumer of  German products, especially in the current period that is already witnessing slow growth for a lot of European countries.

Germany would simply focus on exporting many industrial products to Egypt instead of investing in it.

He believes that the deal with Siemens is designed to open a new path towards the EU, rather than just a deal to increase Egypt’s capacity of energy.

 

 

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Currency flotation is paying off as foreign flows drive foreign-exchange stabilisation: EFG Hermes http://www.dailynewsegypt.com/2017/03/01/616703/ http://www.dailynewsegypt.com/2017/03/01/616703/#respond Wed, 01 Mar 2017 06:00:50 +0000 http://www.dailynewsegypt.com/?p=616703 Squeezed by turbulence and uncertainty since 2011, Egypt’s economy encountered numerous challenges, such as the prolonged political transition that led to the build-up of macroeconomic imbalances. The government decided to adopt an economic reform programme—backed by the International Monetary Fund (IMF)—which included the introduction of the value-added tax (VAT) law, the reduction of fuel subsidies, …

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Squeezed by turbulence and uncertainty since 2011, Egypt’s economy encountered numerous challenges, such as the prolonged political transition that led to the build-up of macroeconomic imbalances. The government decided to adopt an economic reform programme—backed by the International Monetary Fund (IMF)—which included the introduction of the value-added tax (VAT) law, the reduction of fuel subsidies, and the liberalisation of the foreign exchange market, which took place in November.

Three months after the Central Bank of Egypt’s (CBE) decision to free-float the Egyptian pound in November, improving external flows are driving stabilisation in the foreign exchange (FX) market, spearheaded by the successful Eurobond issuance, which has encouraged carry trade investors, who have now invested more than $2bn in T-bills since the float, according to the CBE. The ensuing USD-EGP appreciation over the past couple of weeks that came after the currency stabilised at a trading range of EGP 18-19 for nearly two months, in addition to narrowing bid-ask spreads, all point to a more healthy and efficient market, according to EFG Hermes’ “Egypt Economic Update” report published in February.

EFG Hermes forecasts limited risks of the Egyptian pound weakening beyond this range in the medium term and expected a trading range of EGP 16-17 by the end of 2017. The report mentions that the magnitude of the appreciation could have been larger had it not been for the fact that most portfolio flows were neutralised by flowing through the CBE repatriation mechanism. The report added that the recent EGP appreciation is likely to be counterbalanced in the short term by remaining backlogs, pent up demand for FX, and removing remaining capital control in June. Key risks for further appreciation are mainly more portfolio inflows outside of the repatriation mechanism and tourism recovery.

In regards to receiving the second tranche of the IMF loan, the report explains that authorities have largely met the various monetary, fiscal, and reserves targets to receive the second tranche of the IMF loan. They believe this will further boost confidence. However, longer-term fiscal targets remain to be challenging, given the larger than expected devaluation. As such, it is forecasted that such targets would be subjected to some revision when the IMF visits Cairo for a first review.

EFG 1Economy still absorbing shock

According to the report, interim data point to a typical post-float oscillation between slowing domestic demand and improved external ones. For instance, automobile sales collapsed to a more than three-year low in November, which highlights the shock to consumer spending. Yet, a small export base is likely to limit the immediate spillover of improved exports on the broader economy, especially as tourism continues to suffer as a result of the Russian travel ban.

Economy is on the path to stability

Three months following the CBE’s decision to liberalise the foreign exchange market, the Egyptian pound slowly moved in its stabilisation path as inflows improved and backlogs gradually cleared. The currency is finding a stable trading range between EGP 17-19 against the US dollar, with spreads between bid ask prices narrowing, which signals improvements of market conditions. While the banking sector was successful in attracting strong inflows within the same period, driven by de-dollarisation and migration of liquidity into official channels. According to a previous CBE statement, total inflows into the banking sector stood at $9bn in the three months leading up to January, with a normalised running rate of $2bn a month.

On the other hand, with regard to private capital inflows, the carry trade is showing remarkable signs of recovery, with foreign holdings of government debt reportedly crossing the $2bn mark by mid-Feburary from nearly zero for the past few years. The main driver for further inflows was the successful Eurobond issuance in late January as it reinsured investors on the outlook of the Egyptian pound. Consequently, the test-trades with small tickets in November and December have shifted into bigger ones in the past couple of weeks, according to the report.

Furthermore, a similar trend is witnessed in foreign flows into the equity market, with net purchases by foreign investors reaching $491m since the flotation. More sizable flows are challenged by the market’s dwindling size and liquidity over the past few years. The government’s planned pipeline of initial public offerings (IPOs), largely comprising a couple of banks and some companies in the petroleum sector, remains a catalyst for further inflows.

Moreover, the witnessed recovery in remittances provided an additional source of inflows, in line with EFG Hermes’ previous expectations. Remittances jumped by 37% quarter–to-quarter, and 17% year-to–year, to reach $4.6bn in Q4 2016, following five consecutive quarters of continuous decline. The liberalisation of the FX market was the main driver behind encouraging Egyptian expatriates to send money back home, which ended the phenomenon of an off-shore parallel market, which, together with challenging macro conditions in the countries of the Gulf Cooperation Council (GCC), dealt heavy blows to such transfers.

EFG 2EGP appreciation in 2017

EFG Hermes forecast that the Egyptian pound will be on an appreciation path in 2017, which is reinforced by the recent strengthening in the local currency as flows continue to improve. The report noted that appreciation would have been potentially stronger had it not been for most portfolio flows hitting the market through a repatriation mechanism that leads dollars to flow into the CBE’s accounts rather than the market.

According to the report, the cornerstone of the recent Egyptian pound appreciation was the Eurobond issuance, as it completely covered the funding gap of fiscal year (FY) 2016/2017, leaving investors at ease with taking the currency risk. With some of the bigger tickets into the fixed-income market flowing outside the mechanism, the interbank has seen decent improvement in volumes with the repatriation backlog cleared.

EFG 3The report forecast the currency to remain within the EGP 17-18 range through the end of 2017, as the recent appreciation is likely to be balanced with higher demand as the currency becomes relatively more affordable. Additionally, seasonality associated with Ramadan may also yield some short-term pressure on the Egyptian pound.

Moreover, remaining backlogs, in addition to the lifting of the last-standing capital controls, namely deposit limits on importers of non-essential goods and caps on personal transfers by June 2017—in contrast with the IMF agreement—may also yield some short-term pressure on the Egyptian pound. Outstanding payments to international oil companies are excluded from the backlog estimate, as they are to be cleared directly through reserves.

One additional key upside risk to EFG Hermes’s Egyptian pound forecasts is the recovery of the tourism sector, with revenues currently running at nearly a two-decade low. This would be mainly through lifting the travel ban imposed by Russia, Egypt’s largest tourist market. With estimated potential revenues of around $2-3bn, it will represent a major boost for the current account balance.

According to the report, leading macro indicators suggest that Egypt’s economy remains in a shock absorption period as a result to a second wave of the inflationary pressures—which emerged following the float—with the currency dashing any hopes of short-term appreciation. Businesses went on an aggressive and immediate path of price increases to accommodate their new cost structures.

EFG 4Thus, a clear divergence can be seen between domestic and external demand, as Purchasing Manager Index (PMI) data show. Domestic demand is still showing signs of weakness due to the fact that consumers are largely showing a typical knee-jerk reaction to the rising inflationary pressures. Automobile sales, a proxy for consumer sentiments, fell by 38% month-to-month in November, reaching a three-year low, with no signs of recovery in December.

In regards to inflation, the stability of the USD-EGP exchange rate in the last couple of months is likely to tame inflation expectations for both consumers and businesses. EFG Hermes argues that inflation is approaching its peak, which they forecast to be reached in March/April before starting to stabilise.

However, EFG Hermes has adjusted their inflation forecasts for FY 2016/2017 to 23.5% from 19.8%, and to 13.9% in FY17/18 from 11.2%, as a result of their expectation of a slower pace of the Egyptian pound’s appreciation. The report explains that a key upside risk to the inflation forecasts is the rally in global food prices, in addition to the recent pick-up in global oil prices following the Organization of the Petroleum Exporting Countries’ (OPEC) deal, leaving the balance of risks mostly to the upside.

On the other hand, EFG Hermes growth forecasts for FY 2016/2017 remained at 3.8%, while forecasts of FY 2017/2018 were decreased slightly to 4.4% from 4.8%, yet the report cites that the economic growth outlook remains largely intact.

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Challenges that new ministers face http://www.dailynewsegypt.com/2017/02/21/challenges-new-ministers-face/ http://www.dailynewsegypt.com/2017/02/21/challenges-new-ministers-face/#respond Tue, 21 Feb 2017 06:00:42 +0000 http://www.dailynewsegypt.com/?p=615847 On 16 February, Prime Minister Sherif Ismail got parliamentary approval for the new ministers that he had chosen for the cabinet reshuffle. The reshuffle comes during a time that is seeing extreme instability of the economy. The new ministers will also have to deal with the heavy burdens that citizens face after the implementation of …

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On 16 February, Prime Minister Sherif Ismail got parliamentary approval for the new ministers that he had chosen for the cabinet reshuffle.

The reshuffle comes during a time that is seeing extreme instability of the economy. The new ministers will also have to deal with the heavy burdens that citizens face after the implementation of major economic reforms that include subsidy cuts, inflation, and price hikes.

Therefore, the current time is a very sensitive one for the new ministers, who will face a lot of challenges if they are to improve the currently bad situation.

Daily News Egypt asked experts about the most pressing challenges that they are facing and about possible solutions for these issues.

Minister of International Cooperation Sahar Nasr
Minister of International Cooperation Sahar Nasr

Civil Service Law and Investment Law, main challenges for ministries of investment, planning 

Since Dalia Khorshid came to office as minister of investment in March 2016, she said that the ministry will issue the new Investment Law, which it didn’t actually do. She also worked on solving the problems between investors and the government.

The Investment Law is one of the main problems that Egypt has been facing since the revolution of 25 January 2011, after the outflows of foreign capitals from the Egyptian market.

On 16 February, the cabinet asked Minister of International Cooperation Sahar Nasr to take over the Ministry of Investment, becoming the first minister in Sherif Ismail’s cabinet to head two ministries.

Nasr said that Khorshid did what she could with the ministry, and it’s now the time for her to work on the challenges that face it.

Daily News Egypt asked experts about Khorshid’s performance and about what they expect to see from Nasr as the new Minister of Investment.

Aliaa El-Mahdy, the former dean of the Economics and Political Science College at Cairo University, said that Khorshid didn’t change anything worth mentioning during her tenure, explaining that she didn’t finish the Investment Law, which was supposed to have been issued.

She added that the investments in Egypt didn’t noticeably change, especially the foreign investments, because investors are waiting for the new law.

“The only thing that she made was the Supreme Council of Investment, which also didn’t make a noticeable change in the investment climate.”

Regarding Nasr, El-Mahdy believes that there is a difference between the two ministries, and Nasr shouldn’t have taken over the ministry, adding that the Ministry of International Cooperation deals with international institutions and donors, unlike the Ministry of Investment, which has a different scope of work.

“The minister of investment needs to work on attracting investments as the main job,” El-Mahdy noted.

Moreover, Abubakr Emam, the head of the research department at Prime Holding, said that the performance of Khorshid was extremely unsatisfying, adding that she wasted a lot of time and didn’t propose the Investment Law.

However, he believes that Nasr achieved great progress with the loans and grants that she received, but if she faces the same milestones, then it could not achieve anything with the Ministry of Investment.

“Khorshid achieved great success with Orascom Company,” says Emam, explaining that the problem is with the minister’s team, who could prevent any progress rather than enhancing it.

The minister should focus on choosing the right team, while all of the ministry should be reformed, including employee restructuring, Emam noted, adding that the government must fight bureaucracy.

Hala El Saied , the minister of planning
Hala El Saied , the minister of planning

Challenges of Ministry of Planning

Since he took over the Ministry of Planning in 2012, Ashraf El-Araby hasn’t left his office until the cabinet reshuffle under Prime Minister Sherif Ismail, who replaced him with Hala El-Saied, who left her position as dean of Economics and Political Science at Cairo University.

El-Araby, who struggled to get the parliament’s approval for the Civil Service Law, has left the ministry that will face a lot of challenges in the next period under El-Saied.

El-Mahdy said that the Ministry of Planning does not have a tangible structure. She believes that it does study the different classes of society, from the grass-roots level up until the middle class, in order to know the requirements of society and hence plan accordingly.

She stated that El-Araby was completely doing his job in the part of planning.

She added that he also has done his job with issuing the Civil Service Law, which was approved by the parliament. “It’s her job to implement the law on all of the country’s employees,” she noted about El-Saied.

And about administrative reform, El-Mahdy stated that what Egypt needs is to fix a lot of its governmental institutions, adding that if the new minister did solve the problems of the administrative structure, Egyptians will feel a lot better.

From another view point, Emam said that El-Araby was doing a great job, although there’s no problem with El-Saied.

He stated that he wants to see an effective role for the ministry, as well as for there to be a real plan regarding everything to the country, in order to predict how the country is going to grow.

Emam believes that the government must plan for the future in order to know how and what types of investments it should attract, along with what type of education it should provide its people to ready them for the targeted future investments. This, Emam said, is the role of the Ministry of Planning.

“I hope that El-Saied will keep the same good performance of the previous minister and will work to improve the administrative structure of the government,” Emam noted.

 

The new Minister of Transportation Hesham Arafat
The new Minister of Transportation Hesham Arafat

More reforms needed, smaller budget available: new challenges for a new minister

The new Minister of Transportation Hesham Arafat took office on 16 February. When Arafat started his job as a minister, he promised to look for ways to keep the price of metro tickets as cheap as it currently is, and he also called for the authorities responsible about conducting the research about the train system’s level-crossings that have caused a lot of accidents in previous years.

He stated that he is not satisfied with the current railway situation, stating that it needs reform.

Moreover, Omar El-Shenety, managing director at Multiples Group, said that the government needs to understand that it must depend more heavily on the private sector by giving it more space to expand in the economy or by privatising some of the current projects, which is one of the challenges the ministry faces and the new minister will have to take on.

Another challenge is to implement reforms with a small budget, he added, explaining that the government has to cut the budget because of the economic crisis it faces. El-Shenety stated that the minister has to find solutions to improve the efficiency and the quality of services on a smaller budget, which is not an easy challenge to overcome.

Regarding the metro, he believes that the price of the tickets is going to go up sooner or later. He stated that increasing the price would not change everything, so the minister has to find a solution to the core of the problem, claiming that increasing prices would not turn losses into gains.

The Ministry of Supply and Internal Trading has witnessed a reshuffle, making Ali Meselhy head of the ministry
The Ministry of Supply and Internal Trading has witnessed a reshuffle, making Ali Meselhy head of the ministry

Subsidies are the main challenge for the new Minister of Supply

The Ministry of Supply and Internal Trading has witnessed a reshuffle, making Ali Meselhy head of the ministry.

Meselhy held a meeting—after he assumed office on 16 February—with the directors of the ministry, in order to talk about food reserves, especially wheat and other grain supplies.

It seems like the new minister has to find solutions for a lot of problems that might take great efforts to be resolved.

Daily News Egypt asked Sherien El-Shawarby, professor of economy at Cairo University, about the challenges that might face the new minister.

She said that it will take a lot of effort in order for the new minister to succeed, stating that the subsidy system is transforming from food subsidies to cash subsidies, which is one of the main challenges. The ministry needs to work around the advantages of both systems in order to make the poorest segments of society benefit from it.

She also believes that the prices of products are increasing and that the people are not satisfied with that.

Concerning the aspect of internal trading, she believes that the minister must understand the supply and value chain in order to draw up plans for a new infrastructure, to revise the available reserves, and to stabilise the market.

Furthermore, a professor of economy at the American University in Cairo, who preferred to remain anonymous, stated that the change in leadership does not make a difference at all, as long as the system remains the same.

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Dabaa prepares to receive nuclear power plant http://www.dailynewsegypt.com/2017/02/20/615776/ http://www.dailynewsegypt.com/2017/02/20/615776/#respond Mon, 20 Feb 2017 06:00:08 +0000 http://www.dailynewsegypt.com/?p=615776 40% of construction of the nuclear school to be completed in May at cost of EGP 70m

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Dabaa City in Matrouh governorate is currently witnessing a cultural shift after the announcement of the start of implementation of the nuclear power plant project on a part of its territory. A number of development projects are currently being inaugurated for the advancement of the city and the providence of service for the power plant project.

Daily News Egypt conducted a field tour to highlight the development projects established in Dabaa.

 

Investing in Dabaa

Governor of Matrouh Alaa Abu Zeid said that Dabaa entered into the strategic development of the governorate in order to keep pace with the nuclear power plant project, through development projects that include a new residential city, Dabaa-Rod El-Farag axis, a sewage project, the nuclear school, El Alamein-Natrun Valley axis, and Dabaa hospital. It is also planned to conduct urbanisation projects in the South Dabaa area.

Mohamed Gaber, managing director of investment in Matrouh, said that the governorate consistently receives requests for investment in Dabaa. He added that Dabaa includes about 28 tourism projects with investments between EGP 50m and about EGP 800m, and these projects provide between 100 and 250 opportunities.

Daily News Egypt interviewed former head of Dabaa City Al-Husseini Ahmed Sanusi two days before Minister of Local Development Ahmed Zaki Badr issued on 27 January decision No. 52 of 2017 to appoint 91 general managers to work in leadership positions including six heads of cities in Matrouh governorate.

Ahmed Mohamed Abdou El-Eskandarani was appointed head of Dabaa to follow Sanusi.

 

The school will accommodate 375 students and includes 15 classes on three floors with a total built-up area of 3,260sqm.
The school will accommodate 375 students and includes 15 classes on three floors with a total built-up area of 3,260sqm.

The nuclear school

Sanusi said that 40% of the construction work on the nuclear school was completed. Governor of Matrouh had issued a decision No. 374 for 2015 to allocate land on an area of 33,600sqm (equivalent to 8 acres) in west Dabaa to establish the advanced technical secondary school for energy technology in Dabaa. The Authority for Educational Building offered the school project.

The total cost of the school amounts to about EGP 70m, divided between the establishment of the school buildings at a cost of EGP 43.5m, school furniture worth EGP 7.8m, and workshop and laboratory equipment worth EGP 1.5m. The cost of radiation protection workshops and laboratories amounts to EGP 12.75m.

 

The school will accommodate 375 students and includes 15 classes on three floors with a total built-up area of 3,260sqm. This is in addition to two dormitories with 436 beds on an area of 11,580sqm. Each building consists of a ground floor and four upper floors.

The school also has workshop buildings, which include mechanical and electricity workshops, electronics workshops, stores, and a radiation protection laboratory, as well as a football stadium, volleyball court, basketball arena, green areas, and a Roman theatre.

The establishment of a station using 130KW solar cells is planned for the roofs of the buildings, using an on-grid network, as well as using solar light columns in the school’s internal streets and walkways.

 

Sanusi explained that the implementation of works at the school started in June 2016, and is planned to be ready for delivery in May, to start operating in the new academic year in September.

The period of study extends to five years, and lecturers are supposed to be graduates from the College of Engineering. It is planned that school graduates work in the nuclear plant. There will be training courses for applicants before their enrolment in the school.

In terms of curriculum, it will review the courses of technical and industrial education, besides forming working groups of representatives of the nuclear sector and representatives of technical education to prepare and review the curriculum—electronics, electricity, and mechanics—and materials for the nuclear field—nuclear technology, radiation protection, and maintenance of components and systems of nuclear plants.

He added that the school is one of the first schools specialising in teaching energy technology in the Middle East and will provide students with a number of skills, including the identification of concepts related to nuclear technology; programmes for radiation protection; the diagnosis, repair, and maintenance of electronic devices and mechanical equipment; and the identification of the systems and components of nuclear plants.

He pointed out that the land has been allocated for the public benefit of the Egyptian Nuclear and Radiological Regulatory Authority, on an area of 1,000sqm east of Dabaa, to oversee the nuclear plant project.

 

The total cost to develop the Central Hospital of Dabaa is worth about EGP 84m.
The total cost to develop the Central Hospital of Dabaa is worth about EGP 84m.

Developing Dabaa Hospital

The total cost to develop the Central Hospital of Dabaa is worth about EGP 84m.

Mahmoud Al-Halawani, director of the Central Hospital of Dabaa, said that the development work included the construction of buildings and departments of internal fittings, and it increased the hospital’s capacity to 50 beds. It also added a number of new sections and units, including the inner section, CT scans, clinics departments, an emergency reception, laboratories, and pharmacies.

He added that a unit for dialysis that includes five machines was established, as well as six premature babies nurseries. The work included developing and processing an operations department that receives a variety of surgeries, including for bones surgeries, obstetrics, and women’s diseases.

He added that the hospital is being developed in stages to keep work going in the hospital as usual. The area of the hospital after the development work amounts to about 1,500sqm.

He pointed out that the Health Affairs Directorate of the governorate is considering adding a radiation treatment department at the hospital or the establishment of an independent centre.

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Freedom of expression in Egypt in 2016: an overview  http://www.dailynewsegypt.com/2017/02/18/freedom-expression-egypt-2016-overview/ http://www.dailynewsegypt.com/2017/02/18/freedom-expression-egypt-2016-overview/#respond Sat, 18 Feb 2017 21:00:15 +0000 http://www.dailynewsegypt.com/?p=615723 AFTE highlights freedom challenges, experts provide their evaluation

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The Association for Freedom of Thought and Expression (AFTE) issued Tuesday its annual report titled “More Than One Authority to Oppress” in which it monitored the situation of freedom of expression and speech in Egypt in 2016.

The report tackled the problems facing different types of freedom of expression within the legislative circumstances organising freedom of speech, information, academic work, and creativity.

Daily News Egypt further obtained experts’ observations on the same points.

Press and media freedom

Press and media freedom came on top of the problematic issues in Egypt, reaching new levels in 2016 with the assault on the Press Syndicate and the sentencing of its leaders to prison.

According to AFTE, “this might not be the worst year of violations against the press in numbers, but certainly a historical turning point.”

The case is still open before an appeals court—while, at the same time, the syndicate is hosting new elections for the position of head and board members.

This comes as AFTE traced 438 incidents of assault against press and media workers. Those varied between a judicial action taken against them, detention, physical assault, dismissal from work, censorship, security raids, closure, and travel bans.

As for entities responsible for the violations, they included security apparatuses with 191 incidents, newspapers and media entities with 17, judicial authorities with 69, the parliament with 30, and government officials with 35, with 86 incidents attributed to civilians and 8 to private security guards.

This comes as a new legal environment is being shaped for the press and media, which AFTE doesn’t see promising, given that a law was recently issued organising press and media institutions under national councils partly formed by the president and other state institutions, in comparison to lesser representation of members designated by the Press Syndicate.

AFTE argued that while the point of new legislations was to protect the independence of press and media, the laws that are actually issued push for more control.

Media expert Yasser Abdel Aziz told Daily News Egypt that, in general, the status of press freedom in Egypt isn’t well, despite the ambitions for openness and independence after the revolutions of 25 January and 30 June. “However, challenges of terrorism, economic crisis, and political and security pressure led to a retreat in reform plans,” he explained.

Abdel Aziz argued that the current constitution set the basics to build an independent media but that they are not effectively translated into legislations.

However, he stated that the new legislations, particularly the law organising media institutions and forming national press and media councils, pave the way for an improving environment.

“For the first time in a hundred years of broadcast, Egypt will have a media syndicate,” he said. Moreover, he argued that there was a variety of members forming the upcoming national press and media councils. “Some state institutions will appoint members, but also independent organisations—such as syndicates, the Supreme Council of Universities, and the State Council—will appoint members,” he said.

While Abdel Aziz admitted that new legislations might not completely eliminate suspicions of state control of the media, he claimed they provide a more independent atmosphere for the media and press.

“Because before the revolution, the media and press were controlled by the legislative and executive powers, including the former ruling National Democratic Party,” he stated.

Abdel Aziz further commented on the trial of the press syndicate leader and two of his deputies by saying that “the incidents that led to the trial were unfortunate and miscalculated on both sides,” referring to the syndicate and the Ministry of Interior.

To him, the ideal solution, on one hand, would be for the court to acquit the three of charges and for the state to acknowledge the special position of the syndicate, and for the syndicate to focus, on the other hand, on its professional and services roles rather than to be involved in politics.

Despite that he would not blame the judiciary in case of a verdict being issued, Abdel Aziz said the sentencing of the trio would negatively impact the image of Egypt worldwide, and that the executive power would have little gains in comparison to the damages.

Freedom of artwork creativity

AFTE argued that the “year 2016 was the harshest in ten years in terms of the number of violations committed against the freedom of artwork creativity.”

The NGO reported a total of 78 violations in 2016, compared to 46 in 2015 and 21 in 2014. The reasons were mainly related to censoring or banning artworks and restricting artists.

Besides the three taboos of politics, religion, and sexuality, AFTE reported that artwork is also being banned on grounds of breaching public morale, stating the example of the recently released novelist Ahmed Nagy, whose novel was judged “publicly immoral” because of writing about “drugs, sex, and offensive words.”

Political satire art is generally oppressed such as in the case of “Street Children”, a musical band whose members were imprisoned over a video mocking the controversial Red Sea islands’ maritime deal, and the arrest of the administrator of the satirical Facebook page titled “Translated.”

This comes as Magdy El-Afifi, writer and former editor-in-chief of Akhbar El-Adab, a literary publication where Nagy’s chapter was published, provided a different approach to evaluating the status of freedom of creativity.

In comments to Daily News Egypt, El-Afifi first pointed out his rejection of restrictions on creative artwork, saying that “a society that doesn’t breathe creativity is like a patient in an ER unit at a hospital.”

“A real creator is one who clashes with society; writers and intellectuals are always ahead of society in their visions, and without them it’s just a silent society,” El-Afifi said, explaining that “real creativity is that reaching to humans before authorities.”

El-Afifi discussed the three traditional taboos, assuring that real creators are those who can break taboos. According to him, religion is supposed to be a positive factor helping society move forward; and even in current unfortunate times where those who claim to represent religion are fostering negative images, it is not among artwork creativity to insult divinity and prophets.

As for the taboo of sexuality, El-Afifi highlighted that the topic itself is the essence of humanity. “Great writers like Ihsan Abdel Qouddous, Youssef Edris, Naguib Mahfouz, and Nizar Kabbani tackled the topic but from a humanistic approach that went beyond sensuality,” El-Afifi said.

On the other hand, he opposed the “grotesque” depiction of sexual scenes in written and visual artwork—which would have been accepted in the past—because they would never be accepted in today’s society.

As for the political taboo, El-Afifi argued that intellectuals should rather tackle ideologies instead of wasting time and energy on the politics of daily life, which eventually die, while their artwork will remain.

He concluded that the evaluation of artwork creativity in Egypt should be based on actual art and creative work, by looking at the great intellectuals and artists rather than work aimed at commercialising these concepts.

Meanwhile, AFTE highlighted that the new VAT law has affected the costs of TV, cinema, broadcasting, and theatre production. This is in addition to an increase decided by the Supreme Antiquities Council to increase fees for filming in historical and monumental places.

As for the entities responsible for the violations, AFTE listed monitoring bodies, security and military institutions, religious institutions, judicial bodies, professional syndicates and ministries, and governmental institutions.

Furthermore, AFTE criticised the pursuit of the syndicates of actors and musicians of the right to arrest members breaking the law in a legal case. “As so, syndicate officials have the right to search, arrest, receive complaints from citizens, file reports against artists, and refer them to prosecution authorities so that they can be penalised by jail and fines,” a statement read.

However, actor and senior member of the syndicate’s board of directors Sameh El-Sereity denied in statements to Daily News Egypt that this would be the point of having that legal authority.

“There are legal violations happening that cause damages to the syndicate’s members and public funds. The legal authority doesn’t make me arrest people but allows me to monitor violations which, if found, my job is to report it to the police who can take legal action,” El-Sereity said, giving as an example of violation the unlicensed media production companies or actors that are not licensed by the syndicate, as required by the law.

Legal environment for freedoms

In 2016, the parliament approved several legislations that were supposed to represent the needs of the transitional phase the country faced after the revolution. But according to AFTE, most laws were passed without social dialogue or the inclusion of different communities and social groups concerned with the topics, resulting in mounting criticism to the parliament.

Examples of law that was approved without these dialogues, was the Non-Governmental Organisations (NGOs) Law related to civil society work, which legal experts and civil groups have criticised, urging that it includes an article restricting civil work and could completely eliminate it.

Moreover, in bills related to freedom of expression, AFTE noted that the parliament’s Legislative Committee issued contradicting bills and decisions. For instance, the committee approved a law submitted by memeber of parliament (MP) Alaa Abdel Moneim and 60 other MPs that required removing the region section from the national ID and all official papers, which was seen as a positive step against discrimination.

Meanwhile, the same committee rejected a draft law calling for the abolition of Article 98 from the penal code related to imprisonment in cases of contempt of religions, which have significantly increased in the past years.

AFTE further pointed out to laws restricting citizens’ freedoms in terms of pre-trial detention, arguing that “throughout the past years, the prosecution has been continuously using pre-trial detention in all types of crimes, especially after 30 June,” and that more forms of so-called precautionary measures are being implemented.

The NGO referred to a new amendment for law No. 145 of 2006, adding alternatives to pre-trial detention, such as releasing prisoners on precautionary conditions, which includes banning them from leaving home or the country or requiring them to check in at police stations at scheduled times, along with not visiting certain places in the country. The prosecution continued using the aforementioned punishments despite lawyers’ calls for other alternatives, such as medical reasons, AFTE stated.

On the other hand, experts and officials commented to Daily News Egypt on some of the above mentioned examples.

Regarding the parliament, member Ahmed Sherif, the deputy head of the Legislative Committee, denied to Daily News Egypt the claims of his committee passing any law without community dialogue, adding that they made community discussions for all the bills that required it. “Such claims would be only for the sake of media propaganda,” he said.

But MP Ihab Ramzy told Daily News Egypt that not all laws were properly open for social dialogue with concerned groups. “There should have been more inclusion of different groups for discussions, and the outcomes of such meetings with MPs should have also been published in the media to give more transparency to the public opinion,” Ramzy said.

He concluded saying that every MP should also be aware of the topic of a law, prior to his participation in the discussion, for the sake of issuing fruitful laws.

As for detentions and conditioned releases, former head deputy of State Council, Mahmoud Fahmy, told Daily News Egypt that renewal detention punishment in Egypt is regulated, and that the prosecutions are practicing in accordance to law.

Famhy explained that the aforementioned measures are required to prohibit any defendants from changing any legal document or commiting any illegal act, or cause any action that would hinder the justice work.

Major General Hamdy Bakhit told Daily News Egypt that this legal method is required to serve requirements of current security conditions in Egypt. “No one can deny the difficulty of security conditions in Egypt, and such claims are for shaping people’s opinions, as it neglects the state situation,” he added.

Freedom of information flow, academic work  

AFTE’s report stated that there was a media blackout, non-transparency, and gags in certain issues in the country, such as the Red Sea islands issue and the dismissal and trial of former head of the Central Auditing Organization (CAO) Hisham Genena over corruption statements. The report depicted this situation as a violation of freedom and people’s rights to information.

According to Yasser Abdel Aziz, restrictions on circulation of information on sensitive issues could stem from the state’s concern of maintaining national security in face of terrorism challenges, where a balance of media is difficult to achieve.

On a different note, AFTE further mentioned some restrictions facing academics in their work as university professors and researchers, including the control of travel under the supervision of security authorities.

At the end of the report, AFTE advised against the control of social media channels as the latest means to restrict freedom of expression.

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Egyptian economy is gaining momentum: Bank of America Merrill Lynch http://www.dailynewsegypt.com/2017/02/15/615499/ http://www.dailynewsegypt.com/2017/02/15/615499/#respond Wed, 15 Feb 2017 07:30:57 +0000 http://www.dailynewsegypt.com/?p=615499 With the trade in Egyptian Treasury bills (T-bills) gaining ground, the witnessed drop in T-bill yields at auctions is an indication of the increasing foreign investor participation and is providing support to the USD/EGP trade with a better tone, according to Bank of America Merrill Lynch’s February insight report. The report cites the unofficial announcement …

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With the trade in Egyptian Treasury bills (T-bills) gaining ground, the witnessed drop in T-bill yields at auctions is an indication of the increasing foreign investor participation and is providing support to the USD/EGP trade with a better tone, according to Bank of America Merrill Lynch’s February insight report.

The report cites the unofficial announcement that the Central Bank of Egypt (CBE) cleared the backlog of investors seeking to repatriate funds, which was the main driver behind abolishing a source of downside risk near term, adding that the CBE continues to accumulate foreign currency reserves, and the 2003 devaluation episode suggests the non-oil trade deficit could narrow because of increased competitiveness.

The CBE said, in a press statement last week, that foreign investments in T-Bills amounted to almost EGP 11.5bn in January, excluding the value of the consumed bills.

Furthermore, the completion of the International Monetary Fund’s (IMF) first review in February/March could act as an incentive, dependent on whether the fiscal targets within the economic reform programme would be reviewed, which could ease fiscal reform, in addition to the slippage risk in light of the increasing inflation and in run-up to the presidential election mid-2018, according to the report.

reportThe Central Agency for Public Mobilization and Statistics (CAPMAS) has announced earlier this week the annual rate of inflation hiked to 29.6% in January compared to January 2016. While the month to month inflation rate registered at 4.3%.

The relatively flat T-bill curve shape and the external funding profile implied by the IMF programme—fully funded for the first year but much tighter afterwards—argue for short-dated T-bill exposure.

Moreover, the report states that CBE data suggest that foreign holdings of T-bills increased to $1.2bn in January, from $0.1bn prior to the November devaluation. Previously the recorded peak in foreign holdings was $11.9bn in October 2010, before the 2011 revolution, which represented 23% of the total T-bill stock.

Average T-bill yields for the 6-month and 12-month maturities in recent auctions have decreased by 240 basis points (bps) and 280bps to reach a flat 17.7%. The value of the USD to the EGP has gone down, reaching 17.7, after nearly breaching EGP 20 per US dollar in December, said the report.

“We suspect the clearing of the backlog of investors relates to portfolio investors in the equity and bond market, and not to corporate flows,” said the report, adding that the backlog of corporate foreign exchange (FX) demand is more difficult to assess and depends on corporate operations and the prevailing exchange rate. Thus, timing of such a demand could be drawn out.

Consequently this would add to Egypt’s external funding needs. If the assumed backlog stands at $8bn, at least 40 days will be needed with the pre-2011 $0.2bn FX interbank market volume. The report adds that the use of the CBE repatriation fund mechanism by foreign investors could indirectly hold back volume in the FX interbank market.

The CBE guards these foreign currency inflows in order to prevent them from being used for balance of payments (BOP) purposes and help guarantee convertibility at exit. CBE deposits not included in official reserve assets registered at $1.3bn in January. However, these deposits are partially injected into the domestic banking sector, which may support the FX liquidity of domestic banks.

The continued accumulation of CBE reserve assets will act as a buffer, since past reversals in T-bill flows have been pronounced and sharp in response to shocks. Net international reserves (NIRs) stood at $26.3bn in January, from $17.5bn in June 2016, and after repaying $0.75bn to the Paris Club, $0.25bn to Libya, and outstanding obligations to Italian oil company Eni and other foreign oil and gas companies operating in Egypt.

However, while T-bill exposure appears to be a consensus trade—as during the second and third year of the IMF programme Egypt will face difficulties in external funding and a financing gap of about $35bn during the three years of the IMF programme—the margin for error or room to withstand major portfolio outflows is small, according to an IMF Egypt report.

The launch of the initial public offering privatisation programme, with a target of $10bn over the next 3-5 years, will have a positive impact.

The report mentioned that according to the 2003 devaluation, it is suggested that the trade deficit could narrow on increased competitiveness. After the 2003 devaluation, non-oil exports sustained a growth of 15% year over year in 2004. It was led by exports of finished commodities, which represented about 50% of total exports in the fiscal year (FY) 2016. However, overall import contraction was relatively short-lived in 2004, but it has a prominent effect on durable goods. Consumer goods, investment goods, and intermediate goods represented 25% of total imports in FY 2016.

The report states that the completion of the first IMF review in February/March could act as a positive catalyst. “We expect a positive review based on end-of-December targets, which should unlock US$1.25bn in IMF financing. The key aspect of the review is whether fiscal targets would be reviewed in light of the weaker-than-anticipated USD/EGP exchange rate—EGP 12-14 per US dollar is implicitly assumed in the program. This could, in our view, ease reform slippage risk,” said the report.

Furthermore, Egypt has no major reforms to implement until June 2017, and the next IMF review would be completed in November. Yet, Egypt faces a presidential election in mid-2018, and it is expected that President Al-Sisi is set to run for a second term. In case inflation has not significantly reduced, or there is a rising of social tensions, the Egyptian reform programme slippage risk will increase, according to the report.

This is particularly the case on the fiscal front, as the next round of reforms from July 2017 onwards is likely to be inflationary and includes an increase in the value added tax (VAT) rate by 1% to 14% and a further hike in administered energy prices as a result of reduction in subsides.

The report concludes that the relatively flat T-bill curve shape and the external funding profile implied by the IMF programme argue for short-dated T-bill exposure. Furthermore, the CBE is unlikely to tighten monetary policy further after its pre-emptive tightening. Disinflation is likely to be gradually helped by the reduction in CBE deficit monetisation operations, but negative real interest rates are likely to be needed to put government debt in a downward path.

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Sales of pharmaceutical companies increase by EGP 10bn, growing by 31% http://www.dailynewsegypt.com/2017/02/13/sales-pharmaceutical-companies-increase-egp-10bn-growing-31/ http://www.dailynewsegypt.com/2017/02/13/sales-pharmaceutical-companies-increase-egp-10bn-growing-31/#respond Mon, 13 Feb 2017 09:30:34 +0000 http://www.dailynewsegypt.com/?p=615316 Factories’ revenues amounted to EGP 5bn in November, despite calls for raising prices

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Sales of pharmaceutical companies operating in the Egyptian market rose by EGP 10bn at the end of 2016, registering EGP 41.6bn, up from EGP 31.7bn in 2015—an increase of 31%.

A report issued by IMS Health, an information technology company, stated that pharmaceutical companies’ sales—excluding tenders—exceeded EGP 13bn in the fourth quarter of 2016, which saw many calls from companies to raise prices to counter the hike in production costs, following the Central Bank of Egypt’s (CBE) decision to float the pound, leading to the national currency’s depreciation from EGP8.88 against the US dollar to EGP18.

The report pointed out that when the flotation decision was introduced in November, companies achieved sales of EGP 5bn—equivalent to 12% of 2015 total sales—up from EGP 3.8bn in October 2016, while December saw sales of EGP 4.3bn.

The growth rates achieved by the pharmaceutical sector in 2016 are considered to be the highest in 10 years, with growth exceeding 30%, compared to rates between 12% and 15% in previous years.

The year 2016 also saw the biggest debates so far between the Ministry of Health and Population and pharmaceutical companies about prices. Many factories called for price hikes, while the minister refused these calls. However, eventually, the ministry gave in and agreed to raise prices twice, in May 2016 and February 2017.

A source at the Pharmaceuticals, Cosmetics, and Appliances Chamber of the Federation of Egyptian Industries (FEI) said that the cabinet decision to increase the prices of medications that are below EGP 30 up by 20% in May drove the sales surge in 2016.

He told Daily News Egypt that the growth rates achieved in sales do not signal a significant increase in companies’ profits, which have been suffering losses for years due to selling at lower prices compared to their costs.

He added that the first decision to move the prices saved the companies from making huge losses, which could have driven some of them to shut down following the difficulties they faced in 2016, starting with a major shortage in US dollars, depreciation in the value of the pound on the black market due to the flotation of exchange rate, exchange rates surging to EGP 18 against the US dollar, and the rising cost of production input.

The sources pointed out that the decision in May helped companies to continue their business with lower losses. “But the flotation in November eliminated the positive effects, which meant it was necessary to raise prices again,” the source said.

Moreover, he added that an increase in sales in November and December do not mean that companies were not impacted by the flotation. “Fourth quarter financial results are usually higher compared to other quarters,” he said, noting that the impact of flotation will appear in the first quarter of 2017, as companies do not rely on immediate production and sales, but on the inventory they have in stock.

The source expected the sector sales to rise to EGP 50bn in 2017, following an increase of 15% of local medication and foreign medications by 30-50%.

The sources suggested that if only ten major companies continue dominating 43% of sales, foreign companies will achieve higher profits and public companies will suffer more losses.

According to a report by IMS, 20 companies—local and foreign—account for 62% of the sector sales, with a volume of EGP 26.1bn.

The top ten companies, Novartis, Global NAPI Pharmaceuticals (GNP), Pfizer, Evapharma, Amoun Pharmaceutical, Egyptian International Pharmaceutical Industries (EIPICO), Sanofi, Glaxo Smith Kline, Pharco Pharmaceutical, and Hikma Pharmaceuticals, achieved 43% of market sales, while only four of these companies accounted for a quarter of all sales.

Swiss company Novartis reached the top of the listed companies in 2016, with sales amounting to EGP 3.4bn, up from EGP 2.6bn in 2015—a growth of 30%.

Glaxo Smith Kline followed in second place with sales closing in on EGP 3bn, while Sanofi kept its third spot—with sales of EGP 2.3bn.

Pharco Pharmaceutical came in fourth—leading the local companies—with sales of over EGP 2bn, followed by EIPICO with sales of EGP 1.8bn, and Amoun Pharmaceutical with sales of EGP 1.79bn.

For the first time, Evapharma took over Pfizer’s seventh spot, with sales exceeding EGP 1.4bn, more than Pfizer sales of EGP 1.37bn.

GNP and Hikma Pharmaceuticals maintained their rankings with sales of EGP 870m and EGP 847m respectively. Medical Union Pharmaceuticals and Marcyrl Pharmaceutical Industries are likely to compete in 2017, especially as sales of the four companies are very close to each other.

The report showed that foreign companies are still holding the largest market share compared to local private companies and public sector companies, with a share of 41% and sales of EGP 17.1bn.

Sources at foreign companies stated that sales of multinational companies are usually higher than those of their domestic counterparts as their prices are higher due to the fact that they provide mostly innovative products and treatment of incurable diseases.

The sources added that foreign companies have not achieved high profits last year despite the increase in sales volume, due to the exchange rate and the large increase in production costs.

The sources said that a number of multinational companies have achieved high sales in Egyptian pounds, but actually made losses due to currency differences between the Egyptian pound and the US dollar.

They noted that some companies made over EGP 1bn in 2015. With a US dollar price of less than EGP 8, this indicates that they made around $125m. Sales of these companies increased by 30% to reach EGP 1.3bn; but with the greenback changing hands at EGP 18, their sales in dollars fell to $72m. “Companies, in fact, lost sales worth $53m in 2016,” the sources said, adding that the growth in sales of Egyptian pounds not equaling a growth in the sales of US dollar is something that needs to be addressed.

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New “Shared Development” HR model may be the answer to the challenges in the wake of economic downturn http://www.dailynewsegypt.com/2017/02/13/new-shared-development-hr-model-may-answer-challenges-wake-economic-downturn/ http://www.dailynewsegypt.com/2017/02/13/new-shared-development-hr-model-may-answer-challenges-wake-economic-downturn/#respond Mon, 13 Feb 2017 06:00:44 +0000 http://www.dailynewsegypt.com/?p=615254 Throughout history, despite the evolution of society, the foundations of the economy remained unchanged. In the era of agriculture, the economy was based on fertile lands. During the industrial era, it was based on production; and, now, in what we can call the era of informatics, the foundation consists of communications, information, and computer technology. …

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Throughout history, despite the evolution of society, the foundations of the economy remained unchanged. In the era of agriculture, the economy was based on fertile lands. During the industrial era, it was based on production; and, now, in what we can call the era of informatics, the foundation consists of communications, information, and computer technology.

The beginning of the 2000’s marked a new era of talents, mostly because their success on the market created more skilled workers. The new millennium is driven by globalisation, liberalisation, and technological development.

Developments of information and communication technologies (ICT) made the world one single connected system. A new era brings new challenges. These raised new questions regarding the nature of current practices, and the role of specialists in the field of human resources (HR); finding new approaches in functioning and the delivery of their “goods and services.”

Human resources management (HRM) is now faced with a new challenge, creating new models for achievement of global mobility, efficiency, and competitiveness, in order to deal with a severe economic downturn, which has brought many challenges and opportunities to the forefront. The HR department can play a remarkable role, concerning its revised HR strategies, consistent with adverse economic circumstances.

HR 1What is the Shared Development model?

To tackle challenges such as creating new models for achievement of global mobility, efficiency, and competitiveness, Mahmoud Mansi, founder of HR Revolution Middle East and four times TEDx speaker, has founded a new “Shared Development” HR model, which applies strengths, weaknesses, opportunities, and threats analysis (SWOT) on the individual level, since all HR approaches now are human capital focused.

According to Mansi’s model, the HR department will introduce the ideas to the employees of different departments, which will reflect how each employee is distinctive and how the organisation is willing to fully utilise the talents and knowledge of each employee. Consequently, each employee will list their own strengths and weaknesses, which include their professional and personal talents.

Moreover, the criteria for choosing the strengths and weaknesses will be inclusive, comprised of every talent, even those that might not be directly related to the job. For example, for an office job, one can list personal talents like these: photography, drawing, painting, cooking, knitting, handwork, etc. They could also include talents directly related to the department and to the organisation.

This data will then be submitted to the Human Resource Information System (HRIS) department, where the employees will be matched, depending on their learning preferences and their teaching capabilities.

The Learning and Development department will take it from there, where they can actually match the suitable employees to “mentor and coach” one another in matters related to work and personal skills. This means that each employee will be both—a mentor and a learner—and, after each coaching session, the learner will grade the mentor and the other way around. This data will reflect in the “performance appraisal sheet,” where learning and mentoring will be added as two new categories. Hence, by the end of the year, there will be a “mentor of the year” and a “learner of the year,” with bonuses being issued upon that.

The Shared Development model can be divided into two sides: One side of it is responsible for increasing the loyalty and engagement between employees from different departments all over the organisation, in order to strengthen trust between them when it comes to work. According to the model these connections, which will be built between employees, can also encourage the emerging of new ideas and projects that would empower the mission and overall strategy. Meanwhile, the other side of the model focuses on increasing the loyalty and engagement towards the organisation itself.

The next step is to encourage “employee branding” and the social responsibility of employees towards their environment. The employees will be also graded upon their civil work activities, using the new skills they have learned from each other to show how employees should have an impact on the society.

Mahmoud Mansi receives honorary award from AHRA (Alexandria Human Resources Association) after sharing his model “Shared Development”
Mahmoud Mansi receives honorary award from AHRA (Alexandria Human Resources Association) after sharing his model “Shared Development”

How will the model benefit both the organisation and the employee?

As a result of the contemporary global economic crisis, cost control became the organisations’ top priority, so they started to cut down on expenses that do not seem necessary. One of these expenses is the training budget. This leads employees to suffer from a lack of development and HR management.

The severe economic downturn has brought to the forefront many challenges and opportunities. The HR department can play a remarkable role with its revised HR strategies, adopting the Shared Development model, which will allow employees to provide training to one another, in exchange for learning from others. This, in turn, will save the organisation some of its training budget and allow them to completely utilise its human capital.

The cornerstone of the new model is the psychological fact that humans tend to feel happy and greatly enjoy learning a new skill. The same applies to teaching as well, which leads the person to feel their importance and capability to add value to others. Employee happiness is one of the important HR trends nowadays, so through this model, HR management will encourage leadership across all employees and each will witness the two types of achievements: continuously learning and continuously teaching at the same time, all year-round.

Moreover, employees will learn countless skills that are both related and not related to their career. This, in turn, will provide assistance to both the HR department and the employee himself, in cases of career shifts or job rotations, also assisting the employee to be prepared for a manager position while assisting any manager to understand the employee’s interests all over the organisation.

The lesson to be learned from previous recessions, and financial crises, is the erosion of employee commitment to organisations. Cost-cutting measures and other effects from the economic downturn have taken their toll on the employees’ level of trust and loyalty. As a result, many of them are feeling stressed and nervous. The upturn will see some of an organisation’s best and brightest workers leaving, in order to join competitors if their employers do not take immediate steps to motivate and retain them.

Consequently, HR professionals face the problem of employees finding jobs in other organisations, despite their own organisation having invested a lot of money and time into training them. These can be viewed by the organisation as lost assets, and this is part of the problem itself, according to Mansi. He explained in his model that when the employees realise that they are treated as assets, not as human beings, they tend to lose loyalty. “In the Shared Development model, we treat employees as human beings when it comes to development, because we as HR people tend to develop their professional and personal talents,” says Mansi.

This model will also connect different generations and will absolutely diminish any sort of stereotyping by different generations. A step like this is set to aid in giving a voice to Generation Y, the millennials. As an example, a junior employee in a department can have strengths in a certain skill, while a senior employee in another department can have a weakness in the same area. In this case, the junior employee will mentor the senior employee.

Furthermore, employee engagement is one of the issues tackled by the model, as it works on enhancing employee engagement by connecting employees from different departments and establishing a new relationship between them. According to Mansi, “when someone teaches a skill to another, this creates loyalty. So imagine the amount of loyalty created across the organisation. This will indeed empower the organisational culture and encourage creativity.”

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Too early to predict US foreign investments policy: Nafea http://www.dailynewsegypt.com/2017/02/09/614965/ http://www.dailynewsegypt.com/2017/02/09/614965/#respond Thu, 09 Feb 2017 09:30:49 +0000 http://www.dailynewsegypt.com/?p=614965 In spite of the harmony between Egyptian President Abdel Fattah Al-Sisi and US president Donald Trump, economic experts believe that it’s hard to guarantee bilateral relations are going to improve and that Trump’s good personal relation with Al-Sisi doesn’t mean economic relations will improve. According to Trump’s statements, which voice his putting America first to …

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In spite of the harmony between Egyptian President Abdel Fattah Al-Sisi and US president Donald Trump, economic experts believe that it’s hard to guarantee bilateral relations are going to improve and that Trump’s good personal relation with Al-Sisi doesn’t mean economic relations will improve.

According to Trump’s statements, which voice his putting America first to make it “great again,” Medhat Nafea, economic expert and member of the World Federation of Exchanges, said it is early to predict the foreign policy of the USA under Trump, especially the bilateral relations with a country.

He explained that US institutions—nonetheless of which are the legislative branch, the media, and the presidency—are in conflict with one other, and it seems like Trump has to end Americans’ domestic problems before looking into the country’s relations and foreign affairs.

“The presidency is competing with the judiciary system, the media, and even the government’s employees over who will prevail in the current US internal conflict. I believe the other institutions will win,” Nafea noted.

He added that the US economy under Trump will be more closed, especially in aid programmes and grants, which will lead to the suffering of many countries. Trump repeatedly said that to maintain domestic issues and internal affairs, he puts the American people first.

“It’s not beneficial to talk about personal relations when it comes to relations between countries,” he noted, adding that experts believed Trump’s good talks about Russian president Vladimir Putin and the bilateral relation between them will improve the US-Russian relations. Trump has since changed his tone, Nafea continued, after knowing that Russia played an illegal role in the US elections.

Nafea said that it is important to note that the Egyptian-Russian relations were good, but when the Russian aeroplane crashed in Sinai, Putin suspended all Russian flights to Egypt, despite it being a precious source for foreign currencies back then. It is not right to bet about bilateral relations between countries based on personal relations between presidents. We do not live in the age of the Pharaohs, he noted.

Nafea said that Trump is unconditionally backing Israel, which means he puts Israel at the top of any possible benefits in the region either for investments or grants.

“American investments are as any other: they need well-established infrastructures, stable and investment-attractive laws and regulations, better services, and better investment climates, all of which are currently not up to par in Egypt,” he stated.

Nafea believes Egypt cannot attract foreign investments unless it fixes its interior economic problems.

From another view point, Abou Bakr Emam, head of the research department at Prime Holding, said that knowing the direction of the relation is not granted, adding that former US president Barack Obama started his period with an amazing speech at Cairo University. In the end, however, the relation actually declined, Emam stated.

He believes that military aids to Egypt will continue, but he doesn’t believe Trump will not work on improving American investments overseas.

“Trump probably might help Egypt indirectly through credit facilities and grants,” he noted.

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The social, financial impacts of economic reforms: where do poorer classes stand? http://www.dailynewsegypt.com/2017/02/07/614493/ http://www.dailynewsegypt.com/2017/02/07/614493/#respond Tue, 07 Feb 2017 06:00:28 +0000 http://www.dailynewsegypt.com/?p=614493 Nearly 28% of Egyptians are living around the poverty line, and the percentage continues to increase, based on data provided by CAPMAS in 2015

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The Egyptian economy has witnessed several economic fluctuations in 2016, leading the government to take several extreme economic measures and carry out a number of reforms over the past few months to address the economic issues.

With the introduction of the value-added tax (VAT), the flotation of the Egyptian pound, and the increased cost of fuel, water, electricity, and many other goods and services, it is easy to wonder what kind of impact these changes and reforms have had on the poorer classes of society. Exacerbating the issue is the fact that the inflation rate is expected to increase by 30-35% in the first half of 2017, according to a Beltone financial report, issued in November 2016.

The poverty line is defined as the minimum level of income deemed adequate in a particular country, according to the World Bank. The Egyptian poverty line was changed to EGP 482 per month and EGP 5,787.9 per annum by the Central Agency for Public Mobilization and Statistics (CAPMAS) in its most recent statistics survey for 2015, which means that individuals with an income of less than the aforementioned amounts are considered to be living below the poverty line. Egypt’s population reached 92,000,178 in December 2015, as also confirmed by the most recent report by CAPMAS.

Takaful aims to offer healthcare to children from their birth until the age of 18
Takaful aims to offer healthcare to children from their birth until the age of 18

Official data of poverty within Beltone’s “Income, Expenditure and Consumption” report for 2015 showed that nearly 28% of Egyptians are living around the poverty line, and the percentage continues to increase, according to the report. It showed that 57% of rural residents of Upper Egypt are unable to meet their basic needs, compared to around 20% in rural Lower Egypt. The increased percentage of poverty is highly connected to the level of education these individuals have received. Beltone estimates that 40% of illiterate citizens are considered to be on the poverty line, compared to only 7% of those who have a university degree.

Heba El-Laithy, professor of statistics at the Faculty of Economics and Political Science of Cairo University, said that the percentage of poverty in Egypt at the present day may reach 35% with the continuous increase of prices. She explained that the effect of the recent reforms may have been extremely severe for poorer families and individuals.

After the flotation of the pound— a decision made by the Central Bank of Egypt (CBE) on 3 November 2016 to alleviate the dollar shortage, stabilise the country’s ailing economy, and as part of the government’s obligations before the International Monetary Fund (IMF) to complete the obtainment of a $12bn loan— concerns were raised by experts on behalf of citizens who were left with more financial burdens as a result of the Egyptian pound losing almost half its value in 2016, leading to an increase in the prices of many basic goods and services while wages remained the same.

Mohamed Marzouk, a 42 year-old janitor in one of the government schools with a General Secondary Education Certificate, said that his family of four has been struggling financially for the past year, especially after he was diagnosed with diabetes. “I feel like I have to pay more than I make. Healthcare and education cost me the most, but all other goods are just as costly as well,” Marzouk said.

A report issued by The Egyptian Centre for Economic and Social Rights (ECESR) said that the sudden flotation of the currency will have severe impacts, not only on a social level, but also on an economic level.  “The subsidisation system is acting very slowly in terms of activating social projects such as developing a health insurance system, or restructuring the social insurance system as well as providing subsidies for the unemployed,” the report added.

El-Laithy believes that the government must improve sewage, drinking water utilities, and agriculture. It should enhance the efficiency of agricultural lands, as well as starting to operate factories that had been shut down in order to create jobs, if it seeks to eliminate poverty.

About 88.6% of Egyptian families are covered by the food subsidy card system
About 88.6% of Egyptian families are covered by the food subsidy card system

“Improving the services provided to poorer citizens will help them greatly,” El-Laithy said. “All national real estate and major road projects do not provide any benefit to the poor; however, if one small road was constructed to connect a poor village to a city nearby, the impacts of a project like that on the residents of the village will be significantly positive.”

On the other hand, the Egyptian government has taken initiatives in an attempt to address the price increase and help ease the financial burden of citizens. Some of these include the “Takaful Wa Karama” (Solidarity and Dignity) programme. The third phase of the project was launched in late October 2016 by the Ministry of Social Solidarity, with the aim of enhancing the lives of poorer families and unemployed citizens.

Takaful aims to offer healthcare to children from their birth until the age of 18, on the condition that both parents are unemployed. Parents receive EGP 325 per month. If they have children in elementary school, the child receives EGP 60 per month, EGP 80 if in the preparatory level, and EGP 100 if in the secondary level. The Karama programme aims to provide financial support to people over the age of 65.

In 2015, the Ministry of Defence’s Public Services of the Armed Forces Device opened several mobile sales outlets in several neighbourhoods in Cairo, Giza, Qaliubiya, Gharbia, and several other governorates with the aim of selling products such as meat, poultry, and dairy products for lower prices to citizens in an attempt to counter the increased prices of these goods in the market.

About 88.6% of Egyptian families are covered by the food subsidy card system, which was introduced by the government mid 2014. 95.4% of the families in rural areas are covered by this system and about 80.5% of them in urban areas, as CAPMAS statistics show. About 96.1% of Lower Egypt families benefit from the new subsidy system, compared to 72.5% in urban governorates.

El-Laithy explained that the attempts made by the government to help reduce poverty, such as subsidies and the social security pension, as well as the recently launched initiatives and programmes, can help counter the effects of increased prices and difficult living conditions, but only to a certain extent. She pointed out that monetary and in-kind aids act only as “temporary painkillers,” whereas the correct way to address poverty, according to El-Laithy, lies in providing more job opportunities, social justice and better services to citizens in general. “There is a need for drastic solutions rather than temporary ones, because despite the government’s efforts, poverty is still increasing, and this shows that there is a need for more drastic efforts,” she said.

She wondered why burdens are not equally distributed on all classes of citizens through well-enforced laws. “Why are there no incremental taxes on incomes? There was also a decision to impose taxes on stock exchange profits, but applying the decision was postponed for about three years, which makes me wonder why it was postponed,” El-Laithy concluded.

While poorer classes continue to suffer the most from economic fluctuations, Egyptians on the poverty line still cling to the hope that one day their lives will improve when they are provided with better education, healthcare, and social justice. The only question that remains is: when will conditions improve?

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The economics of football championships between fans and coffee shops  http://www.dailynewsegypt.com/2017/02/06/economics-football-championships-fans-coffee-shops/ http://www.dailynewsegypt.com/2017/02/06/economics-football-championships-fans-coffee-shops/#respond Mon, 06 Feb 2017 06:00:44 +0000 http://www.dailynewsegypt.com/?p=614297 Since the 2006, 2008, and 2010 African Cup of Nations, football became very important to Egyptians, as the country won the title three times in a row. Egyptians are very keen and excited to watch football matches with friends or family. Moreover, they prefer to watch the matches while having hot drinks and smoking shisha …

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Since the 2006, 2008, and 2010 African Cup of Nations, football became very important to Egyptians, as the country won the title three times in a row.

Egyptians are very keen and excited to watch football matches with friends or family.

Moreover, they prefer to watch the matches while having hot drinks and smoking shisha or cigarettes at coffee shops, which turns the airing of football matches into a business opportunity for coffee shop owners resulting in higher revenues and profits.

Egyptian local coffee shops use football matches to increase or double their income through creating an attractive atmosphere to a large segment of Egyptian football fans.

It is cheaper for the fans than subscribing to the service at home, and increases the income for coffee shops.

But why do Egyptians like to watch matches at coffee shops? And how does that affect the coffee shops?

Daily News Egypt took a peak into the new economy of football tournament fans and coffee shops.

 

For a lot of Egyptians, there is nothing better than watching a football match while drinking mint-flavored tea and smoking shisha, and babbling with their friends about the players’ performance.
For a lot of Egyptians, there is nothing better than watching a football match while drinking mint-flavored tea and smoking shisha, and babbling with their friends about the players’ performance.

Shisha and hot drinks: how Egyptians watch football

Since the age of the pharaohs, Egyptians have always had their own traditions and unique approach to many things.

But Egyptians did not stop at celebrating their events with special dishes, building their tombs as pyramids, and creating their special dancing styles. Egyptians created their own way of cheering for their football teams, be it football clubs or the national team.

For a lot of Egyptians, there is nothing better than watching a football match while drinking mint-flavored tea and smoking shisha, and babbling with their friends about the players’ performance.

However, some people prefer to watch their favourite matches with their families.

Daily News Egypt asked people about how they prefer to watch their football matches.

Sherief Sobhy, a 32-year-old lawyer, said that he cannot feel the game without watching it in a coffee shop, adding that he prefers to watch the matches with his close friends and his favourite drinks.

He added that the atmosphere in the coffee shop makes him feel the spirit of cheering for his team, adding that when the national team won the match against Burkina Faso or Morocco, the people celebrated in the streets, and their happiness was indescribable.

Ahmed El-Shazly has the same preference of watching football matches with his friends, adding that friends can enhance the experience by exchanging comments and opinions.

“Usually, we cheer for different football teams, and we always fight when my team loses,” El-Shazly said.

The graphic designer added that sometimes, he watches the matches with his family because he hates when the streets get crowded.

“I love to watch the matches with my wife and my little daughter,” Zamalek-fan and father Haitham Emam said, adding that he likes to share these moments with his wife.

He said that he usually supports Barcelona FC, while his wife likes Real Madrid, and whoever supports the losing team gets teased by the other person.

However, Emam said that sometimes he might take his wife and daughter to watch a match in a coffee house to change the routine.

Mina Wiliam, a driver, said that he likes to smoke shisha while watching the match, adding that it’s a tradition of his during important matches.

However, on the other side of the society, women do not have the same opportunities as men in Egypt.

Dina Khaled, an accountant working in a bank, says that she cannot watch the match at any place but home. He added that she cannot go out to such crowded places.

She believes that local coffee shops which provide football matches aren’t usually suitable for females, and families feel that they aren’t safe for women.

Graduate of the faculty of law Youmna Tarek said that she sometimes watches football matches in coffee shops but she has to go with one of her family members or her whole family.

Aliaa Hassan, a business administrator, has more freedom to watch a football match at a coffee shop with her friends. She said that watching a match with her friends is one of her favourite things to do.

“My father dismissed the idea but I convinced him,” she said, adding that nowadays, she likes to watch the Egyptian national football team with her friends at malls in 6th of October City.

 

They like to work in such atmospheres, in which everybody is generous, likes to give more tips, and also consumes more than usual.
They like to work in such atmospheres, in which everybody is generous, likes to give more tips, and also consumes more than usual.

The business behind airing football matches in coffee shops

They provide coffee, tea, sahlab, and shisha in their customers’ favourite flavours—the coffee shops that air football matches.

A lot of coffee shops in Cairo opt to air Egyptian and international football matches for their customers in order to attract even more.

They like to work in such atmospheres, in which everybody is generous, likes to give more tips, and also consumes more than usual.

Daily News Egypt asked coffee shop employees about how football matches affect their business, why people like to watch football matches at their place, and how much this service costs them.

Mahmoud El-Masry, who works in a coffee shop downtown, believes that during a football match, the number of customers more than doubles, adding that people like to watch any important game in a coffee shop while having drinks and smoking cigarettes or shisha.

He said that the cost of subscribing for a three-month airing contract for a coffee shop is EGP 1,400, adding that providing the African cup alone costs EGP 565.

El-Masry said that workers’ wages aren’t affected by any profit increases, adding that he takes EGP 100 a day.

He said that Egyptian customers prefer to watch important international matches and the Egyptian national football. The most popular matches tend to be Al-Ahly and Zamalek matches, as well as European championships.

“People love to watch European and national teams,” according to Asaad Saber, who works in a local coffee shop downtown.

He added that many people love to hang out in coffee shops all day long, whether there are matches or not.

Saber said that acquiring the necessary contract to allow airing football matches costs around EGP 2,500, including all the relevant channels that air the matches.

However, according to Saber, shisha consumption is lower during the matches than usual. He explained that usually, people consume 100 servings of Shisha, but during a match, they consume less.

For Mohamed Taison, who works in a coffee shop on King Faisal Street, the matches are the “best thing ever”. In the coffee shop he works in, the price of any drink increases to EGP 10, which brings in a lot of tips for him and his colleagues.

He said that watching a match with friends in a coffee shop enhances the atmosphere of the game and makes the overall experience better.

Taison said that if on a normal day the shop makes EGP 500, on a match day, that same shop may make over EGP 1,000.

He also said that a lot of people stay after the match to talk about the game and the players’ performance.

Mahmoud Shokry agrees with Taison. In his coffee shop in Dokki, people tend to consume more than normal and the shop’s income almost doubles.

He said that people prefer to watch the game in a coffee shop because he creates a nice atmosphere for them, and they can watch the game on a big screen which they otherwise may not have at home.

In his coffee shop, the price of tea is EGP 3, Turkish coffee is EGP 6, soft drinks are EGP 8, and any other fresh cold drinks cost EGP 10.

Outside of match days, Shokry’s coffee shop is quiet. He said that he and his colleagues love working on match days because their customers’ spirits are high and the banter is funny.

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Weakened purchasing power decreased economic growth to 3.4% during Q1 of FY 2016/17  http://www.dailynewsegypt.com/2017/02/02/613786/ http://www.dailynewsegypt.com/2017/02/02/613786/#respond Thu, 02 Feb 2017 06:00:11 +0000 http://www.dailynewsegypt.com/?p=613786 Large projects and the improved climate for investment will increase economic growth, exports, and foreign trade growth, says Minister of Planning

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The drop of the Egyptian pound against the US dollar by more than 70% put Egypt through a number of difficult economic circumstances. This pressured the rate of the population’s consumption, which is the main engine of the Egyptian economy.

Last Sunday, the Ministry of Planning issued its report on economic and social performance indicators during the first quarter (Q1) of fiscal year (FY) 2017/2016, which revealed a decline in GDP growth to 3.4% from July to late September 2016, compared to 5.1% in the same period of the previous year.

The value of the GDP reached about EGP 514bn in the first three months of the current FY, which ends in late June 2017.

Economic analysts explained the slowdown as the beginning of a period of stagflation, which means a rise in prices and a decline in supply in the market.

They predicted that the Egyptian economy will continue to slow in light of increasing inflation rates, especially after the government introduced the value-added tax (VAT), raised fuel and diesel prices, increased tariffs on imports of hundreds of goods, and limited imports.

The analysts believe that all the reforms—which President Abdel Fattah Al-Sisi described as harsh—will directly contribute to the inflated prices of the majority of products available in the markets of subsidies and services, especially since Egypt relies on imports to secure the majority of its needs.

Weak consumption decreases growth

The retreat in consumption has become one of the main reasons behind the decline in the growth rate after it had been a catalyst for economic growth. The rapid price hikes prompted people to reduce their consumption..

Consumption represents about 80% of the GDP in Egypt according to Prime Holdings.

The contribution of consumption to economic growth fell during Q1 to 2%, compared to 6.2% in Q1 of last fiscal year.

People are shocked of the prices of goods and services of which some rose to more than 100%. This was the main reason behind the significant decline in consumption in recent months, especially after the Egyptian pound’s flotation, according to Abobakr Emam, head of the research department at Prime Holdings.

This was confirmed by Mohamed Farid, chairperson and CEO of Dcode for Economic and Financial Consulting, who said that the high inflation in the prices of subsidised products, which was not accompanied by a simultaneous increase in wages, was a strong indication that people’s consumption will decline significantly during the current FY, and that consumption will grow at a slower pace than ever before.

According to the Ministry of Planning, the average annual inflation rate in Q1 of the current FY has reached about 14.5% compared to 8.5% in the same period in last FY, due to the devaluation of the pound.

From July to September 2016, the repercussions of the lack of foreign currency crisis led to the devaluation of the pound against the dollar on the unofficial market. The importers were forced to secure their needs of US dollars from the unofficial market, which led to the increase of import costs, especially for production inputs. Thus, the prices of local and imported products increased significantly.

The annual inflation rate in urban areas jumped to 24.3% in December compared to about 19.4% in November.

In a report issued two weeks ago, Prime Holdings expected that this dramatic rise in the inflation rate after the flotation of the pound would contribute to the decline in household consumption growth rate in the current and next FY, to record 3.5% maximum compared to 4.6% in the previous FY.

The report also predicted that the contribution of household consumption to the GDP growth would decline to 2.9% by the end of the current FY, compared to 3.8% in the last FY.

Emam said that the decline in consumption started before the flotation of the pound, as the increase of dollar’s price on the unofficial market increased most products’ prices. After the flotation, some commodities prices had increased by more than 100%, while the purchasing power of the pound has fallen by about 50%.

When the Central Bank of Egypt (CBE) liberalised the exchange rate of the pound in November, the local currency lost more than 100% of its value against the dollar, registering EGP 18.7 on Sunday at the National Bank of Egypt (NBE) compared to EGP 8.88 before the flotation. Meanwhile, the CBE increased the interest rate on the pound to 3%.

Emam added that the local consumer would change his pattern of consumption to face the recent price hikes in the market.

He explained that consumers now resort to buy less amounts of products, while others abandoned expensive products and are searching for cheaper alternatives.

Some companies started to offer smaller packages or reduce their products’ weight and maintained their prices to cope with the recent changes. According to the Income, Expenditure, and Consumption report issued in 2015, Egyptians spend 34.4% of their income purchasing food.

On the other hand, the government expected to achieve a growth rate of 4% during the current FY, instead of 5% as it expected at the beginning of the year.

1Lack of foreign currency and slowdown in the private sector

Hany Farahat, senior economist at CI Capital, said that the recent economic measures did not cause the slowdown in growth in Q1, but were linked to the challenges experienced in 2016, represented in the shortage of foreign currency and the decline of private sector growth.

He added that the growth rate in the current FY will be lower than last year due to the negative short-term impact of the recent economic measures, despite their positive long-term effects.

Arqaam Capital investment bank had issued a report in November after the flotation, expecting that low- and middle-income societal segments will witness great pressure due to the recent economic reforms, but will benefit on the long-run.

Arqaam Capital said that most of the burden will fall on middle-class consumers, while the high-income societal segment will not change its pattern of consumption. The report expected that the higher segments of the middle-class would abandon their unnecessary expenses for a period of three to six months following the flotation.

Estimates of the fund reveal that the contribution of consumption in GDP growth will decline from 4% from 2011 to 2016 to 2.6% from 2017 to 2021, against an increase of the contribution of investment from 0.3% to 2%, and an increase of exports contribution from 0.6% to 1.2%.

Farid expressed his concern about the increase of the banks’ interest rates and its negative effect on investment plans of private companies over the upcoming period; however, he believes it is a necessary step to enhance the demand on the Egyptian pound, and thinks of it as a complementary step to the flotation. “Increasing private sector’s investments will not be easy without strong motivation by the government,” he added.

3Does investment compensate the slowdown of consumption?

In a press conference to announce the indicators of economic growth by the end of Q1 of 2017, Minister of Planning Ashraf El-Araby said that the contribution of investment during Q1 of this FY was estimated at 1.8% compared to 1% in the correspondent quarter.

“The source of growth during Q1 came through investment, although it usually comes from consumption. An unexpected growth took place in private investments,” El-Araby said.

The rate of consumption contribution to growth during Q1 has declined to 2%, compared to 6.2% during the same quarter in FY 2015/2016.

El-Araby said in the press conference on Monday that private investments have acquired 69% of total investments in Q1, while the plan was for them acquire only 51%. He added that he considered that a success of the model adopted by the government to plan large projects and assign their implementation to the private sector.

“This quarter has witnessed a noticeable growth of mega projects which the state is implementing, in addition to a noticeable improvement of the business environment. This reflected on increasing the contribution of investment in economic growth and the growth of exports and foreign trade,” El-Araby noted.

According to a previous statement by the cabinet, the investment rate increased during Q1 of FY 2016/2017 to 12.1% compared to 11.3% during the same period last year, as a result of the growth of the private and public sectors’ investments.

Farid believes that the consumption slowdown will be compensated by the increase of private and public investments, especially with the activation of economic reforms to improve the business climate and the issuance of the new investment and bankruptcy laws, as well as a gradual provision of hard currency.

He said that both the increase in investments and the inflation rate’s gradual decrease will contribute to getting back consumption growth, especially since investment contributes to the creation of new jobs and the increase of incomes.

For his part, Farahat believes that the country’s success in attracting foreign direct and indirect cash inflows, in addition to the legislative amendments to the Investment Law for instance, are able to improve economic growth rates starting next FY.

Documents released by the International Monetary Fund (IMF) on Egypt’s loan, which it posted on a site about the Egyptian economy’s indicators in the next five years, reveals that the IMF believes that local and foreign investments and exports will lead the way for the recovery of economic growth, raising it to 5-6% in the medium-term.

Sectors that shrank and those that achieved growth

The ministry’s report notes that the sectors of hotels and restaurants, extractives, the Suez Canal, and manufacturing industries shrunk in Q1 of the current FY, compared to the same period last year. The sector of restaurants and hotels shrunk by 37.5%, while the manufacturing industries shrunk by 1.6%. As for the extractives sector, it contributed to the growth rate after it shrunk by 3.4%, while the Suez Canal’s contribution was negative, after it shrunk by 1.8%.

Farid said that industry in particular suffers from the problem of resorting to importing to meet its needs of production inputs, as its work does not only depend on local production. Moreover, the industrial sector in general saw a break in the chain of production due to the currency crisis.

In contrast, the sectors of building and construction, communications, wholesale and retail, and public government were the ones that grew the most in the same period. The building and construction sector grew by 8.2%, contributing to the growth rate by 20.8%. As for the communications sector, it grew by 11.2%, contributing to the growth rate by 19.3%.

The Egyptian government has relied on infrastructure projects, such as paving roads and building bridges and power plants on a large scale, in order to push growth forward.

Both sectors of trade and retail, and the public government are the largest contributors to the growth rate by 39.2% and 31.2%, respectively, registering growth of 5% and 5.7%, respectively.

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Could Saudi challenges become Iraqi opportunities for Egypt? http://www.dailynewsegypt.com/2017/02/01/613652/ http://www.dailynewsegypt.com/2017/02/01/613652/#respond Wed, 01 Feb 2017 08:00:45 +0000 http://www.dailynewsegypt.com/?p=613652 In the 1970s, the alliance between Egypt and Saudi Arabia was formed as a result to the countries’ mutual interests and threats. The ties between the two countries were stronger than ever, especially after Egypt had led the Arab participation in the international coalition against former Iraqi president Saddam Hussein in the early 1990s, after …

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In the 1970s, the alliance between Egypt and Saudi Arabia was formed as a result to the countries’ mutual interests and threats. The ties between the two countries were stronger than ever, especially after Egypt had led the Arab participation in the international coalition against former Iraqi president Saddam Hussein in the early 1990s, after the Kuwait invasion.

Egypt, which has been plagued by economic and political turmoil, and security challenges following the 25 January Revolution that toppled former president Hosni Mubarak, has built solid economic and political ties with Saudi Arabia, the United Arab Emirates, and the rest of the Gulf states following the election of President Abdel Fattah Al-Sisi.

However, the Egyptian-Saudi relationship has been significantly strained. Over the last few months, the rift between the two counties started to show, following Egypt’s vote on the Russian-backed draft resolution in the United Nations security council in October, in favour of a Russian resolution regarding a ceasefire in Syria excluding Aleppo. Saudi Arabia interpreted the move as a betrayal, as Saudi envoy to the UN Abdullah Al-Muallami called Egypt’s stance “painful”. The Egyptian vote was followed by Saudi Arabia’s Aramco deciding to halt the five-year agreement to import 700,000 tonnes of petroleum products a month to Egypt, at a time that oil imports were very critical for the Egyptian economy.

Deterioration of ties

Egyptian-Saudi relations have always been characterised by some invisible tensions and sensitivities. The differences in their views and strategic position in the MENA region came to light, especially through their stances regarding Syria, and the Egypt’s refusal to be dragged into the conflict with Yemen.

Saudi’s support for Al-Sisi in 2013 was catalysed by the fact that former King Abdullah bin Abdulaziz Al-Saud, who ruled from 2005-2015, wanted to counter Iran and the Muslim Brotherhood simultaneously. This came in contradiction to his predecessor King Salman, who viewed the Muslim Brotherhood as a tactical partner against Iran, especially in Yemen, where one of the main forces supported by the Saudi-led coalition is Al-Islah party linked to the Muslim Brotherhood.

Moreover, Egyptian government officials do not see Iran as an existential threat and are reluctant to enter the Sunni-Shi’a struggle. Egyptian Foreign Minister Sameh Shoukry said after signing of the Joint Comprehensive Plan of Action (JCPOA), known commonly as the Iran deal, that Egypt’s relations with Iran “are unrelated to the attitude of the Gulf states towards it.” Instead, the Egyptian state has prioritised countering its most direct political opponents, the Muslim Brotherhood, and other Sunni Islamist groups.

Additionally, the mutual sensitivities burst forth in April 2016, when Al-Sisi had reached an agreement to cede ownership of the strategically located Red Sea islands Tiran and Sanafir to Saudi Arabia, in a move that was received with public outcry. Judicial intervention scuttled the move—to the Saudis’ extreme annoyance. No less annoying was Egypt’s refusal to participate in the Saudi-led military operations in Yemen. Following the Egyptian resistance to militarily commit to the Saudi coalition in Yemen, Riyadh started its financial pressure. Al-Sisi had gotten angry and defiant. Saudi Arabia, which had not made good on its financial promises from 2014-2015, cut off its oil supplies and other aid to Egypt.

In November, Egypt and Iraq signed a memorandum of understanding (MoU) for Egypt to receive 1m barrels of Basra light oil each month. The MoU with Iraq, which has grown closer to Iran in recent years, plus one with Azerbaijan, are indicative of Cairo’s quest to find new sellers of oil and gas outside of the GCC, as Egypt’s energy production has fallen and its national consumption has increased.

Habib Al-Sadr, the Iraqi ambassador to Egypt, has called Egypt “the backbone of the Arab world.” He said the countries share similar pressures and risks from armed groups. Furthermore, Iraqi minister of foreign affairs Ibrahim Al-Jaafari recently said that “Egypt is the Arabs’ greatest,” referring to the country’s people, history, and culture.

Russia’s closer relationship with Egypt was the cornerstone of the latter’s shift in stance. Egyptian-Russian ties started to grow stronger in recent years. Consequently in September 2014, Egypt and Russia signed a $3.5bn weapons deal. In May 2016, Egypt announced plans to build a nuclear power plant to be financed with a $25bn loan from Russia. Moreover in October, Egypt hosted a joint military exercise with Russia.

Furthermore, the Egyptian and Russian stances in Syria and Libya are almost similar. Al-Sisi has previously announced his support for the Syrian and Libyan armies. This is considered a stab in the back from Riyadh’s perspective, since it has armed forces opposing Al-Assad and provided them with financial and diplomatic support.

The Yemeni crisis played a major role in the deterioration in Egyptian-Saudi relations. Although Cairo joined the Saudi-led coalition’s campaign (“Operation Decisive Storm”) in March 2016, Egypt has been reluctant to be dragged into the Yemini swamp, since Egypt’s history of fighting in Yemen during the 1960s and accruing massive losses is certainly a major factor explaining Al-Sisi’s reluctance to make a substantial contribution to the anti-Houthi military campaign. This comes in addition to the fact that Saudi Arabia’s warming up to the Muslim Brotherhood branches in both Egypt and Yemen to secure Sunni support for the kingdom’s war in Yemen has created tension in the Cairo-Riyadh relationship.

In December, a high-level Saudi delegation visited the Grand Ethiopian Renaissance Dam, which stirred anger in Cairo, and worsened the already strained Egyptian-Saudi status. The move was viewed as part of Saudi’s pressure on Egypt in regard to the maritime demarcation deal of the two Red Sea islands which was annulled and considered void by an Egyptian court ruling. During the visit, the prime minister of Ethiopia had called for Saudi financial support to the dam.

However, Saudi Arabia has to learn that it cannot buy influence using its petro-dollars. Egyptian officials are leaning toward the Moscow-Baghdad axis, and Al-Sisi has delivered a message to Saudi Arabia that Cairo’s alliance with Riyadh is not irreplaceable and that Egypt has other options, should the Saudis decide to diminish their support for his country.

Future of Egyptian-Iraqi relations

Since the ousting of former president Mohamed Morsi on 3 July 2013, Saudi Arabia and other GCC members have provided the Egyptian government with strong support, in both direct aid and loans. Yet, Egypt’s refusal to follow the kingdom’s policy in Syria and Yemen—in addition to the closer ties between Egypt, Russia, and Iraq—have stirred anger in Riyadh.

Deputies from the National Iraqi Alliance are calling on the Iraqi government to export crude oil to Egypt with facilitated payments
Deputies from the National Iraqi Alliance are calling on the Iraqi government to export crude oil to Egypt with facilitated payments

Since 2013, Saudi Arabia provided Egypt with a $5bn aid package in the form of non-refundable grants, deposits, and petroleum products. The Saudi aid was divided into $1bn in cash, a five-year $2bn interest-free deposit at the Central Bank of Egypt (CBE), and $2bn in the form of petroleum products.

While the bilateral trade volume between the two countries has grown over the years, it was registered at $2bn in 2010 to reach $5.3bn in 2013, $6.10bn in 2014, and $6.3bn in 2015. Moreover, remittances to Egypt from the around 1 million Egyptian expats in Saudi Arabia registered $7.57bn in 2015.

The Iraqi-Egyptian rapprochement will carry numerous benefits for Egypt, as Iraq can provide Egypt with all its oil needs at a lower cost than Saudi Arabia. Additionally, an alliance between the two countries will pull Iraq away from the GCC, specifically from Saudi Arabia, which has the final say in matters of the Gulf.
The Iraqi ambassador to Egypt had announced earlier that after the completion of the ongoing Iraqi army and security forces operations against the Islamic State (IS) and after the expulsion of IS fighters, the affected cities will need total reconstruction so that people can be relocated there once again. He added that the Iraqi government welcomes Egyptian companies and workers to lead the reconstruction process of such cities.

Moreover, he emphasised the importance of the Egyptian expertise in the rehabilitation of factories and establishments, as well as supplying logistical medical support to Iraqi hospitals.

The Iraqi government’s decision for closer ties with Egypt is praised by various politicians and parliamentarians. Deputies from the National Iraqi Alliance are calling on the Iraqi government to export crude oil to Egypt with facilitated payments. Fatima Al-Zarkani, National Iraqi Alliance parliament member, has announced that Egypt and Iraq will form an alliance to fight terrorism and prevent extremism in the region.

Moreover, the Iraqi foreign minister has stressed that the relations between Iraq and Egypt are strategic on all levels—economic, security, and political—adding that rapprochement between the two countries could turn into an alliance or cooperation to face terrorist risks and economic crises.

On the other hand, official spokesperson of the Egyptian presidency Alaa Youssef said that during the December meeting with Al-Sisi, the Iraqi foreign minister called for Egypt’s participation in fighting terrorism.

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Egypt’s treasury bonds: high interest, but for what? http://www.dailynewsegypt.com/2017/01/31/egypts-treasury-bonds-high-interest/ http://www.dailynewsegypt.com/2017/01/31/egypts-treasury-bonds-high-interest/#respond Tue, 31 Jan 2017 06:00:51 +0000 http://www.dailynewsegypt.com/?p=613459 The government of President Abdel Fattah Al-Sisi promised to carry out a lot of economic reforms in the country, which require excessive effort and financing, as the president had mentioned many times during different speeches. The government has been asking for foreign help since Al-Sisi came to office, from Saudi Arabia, Kuwait, the United Arab …

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The government of President Abdel Fattah Al-Sisi promised to carry out a lot of economic reforms in the country, which require excessive effort and financing, as the president had mentioned many times during different speeches.

The government has been asking for foreign help since Al-Sisi came to office, from Saudi Arabia, Kuwait, the United Arab Emirates, and other countries like China, Russia, and Germany.

Ahmed Kojak, Deputy Minister of Finance for Monetary Policies
Ahmed Kojak, Deputy Minister of Finance for Monetary Policies

The government also asked for loans from different international bodies such as the World Bank, the International Monetary Fund (IMF), and the African Development Bank, because it needs to bring together the money that will help it implement the reforms at a time during which Egypt is witnessing a foreign currency shortage.

The government also issued US-dollar denominated treasury bonds, in order to earn $4bn, which would help the country complete the finances needed for its $24bn economic reform programme.

The issuance is divided into three types of bonds: five-year bonds with an interest rate of 6.125%, 10-year bonds with an interest rate of 7.5%, and 30-year bonds with an interest rate of 8.5%.

The bonds’ interest rates were high, and the money needed for the economic reform programme was raised from $2.5-3 to $4bn, due to the unexpected high demand, according to deputy minister of finance for monetary policies Ahmed Kojak.

Kojak said in a conference held on Sunday that 729 investment bodies offered to buy Egypt’s bonds, compared to only 230 investment bodies in the previous issuance in 2015.

Daily News Egypt asked experts to find out what they think of the bond issuance and how the government should allocate the incoming resources.

IMF expects that Egypt’s external debt to reach $102.4bn by 2020/2021
IMF expects that Egypt’s external debt to reach $102.4bn by 2020/2021

The unknown, unclear purpose 

Aliaa Mamdouh, a former economist at CI Capital, said that the idea of selling bonds is not bad, adding that the loans Egypt is currently receiving from the IMF and other international and regional bodies are important, because they imply that the economy is on the right track towards sustainable development.

Unlike what Kojak said during the conference that the current fiscal year’s gap is totally covered and probably more than 50% of the 2017/2018 gap, Mamdouh said that the money Egypt is receiving is not enough to finance Egypt’s deficits.

The expert said that Egypt still need foreign currency resources to finance its financial gap, and different sources of financing, which is why the government issued the bonds.

However, Mamdouh believes that the interest rate is higher than what she expected, explaining that the higher the interest rates are, the more investors do not currently trust Egypt. Interest rates of bonds usually increase in order to attract investors when countries do not have other attractive opportunities to offer.

She also said that the interest is high because a lot of countries are selling bonds as well, such as Saudi Arabia, Argentina, and Israel.

Regarding the interest rates, Kojak had said that the rate is “fair” compared to the previous issuance in 2015. He had stated that if some countries with similar conditions offered bonds at lower interest rates, it is probably because they have better economy indicators.

It is worth noting that Argentina had also offered three types of bonds—just like Egypt—with similar interest rates. The five-year bonds of Argentina had an interest rate of 6.875%, which is higher than Egypt’s. Argentina’s 10-year bonds had the exact same interest rate as Egypt’s (7.5%), and the 30-year bonds stood at a rate of 8%, which is 0.5% lower than the Egyptian bonds.

“This means that investors around the world do not trust us,” Mamdouh noted, adding that after the flotation of the Egyptian pound, the government expected that it would be possible to attract investments. However, this is not an easy task, and the government must improve economic conditions to attract investments, she added.

Mamdouh stated that nobody knows how the government is going to spend the money and on what, adding that until now, the government did not secure any investments, which means that it is spending the money on financing its gap. She believes that the external debt’s interest rates are getting higher, explaining that offering 30-year bonds puts massive burden on the coming generations.

The government needs more foreign currency reserves, as the rate of borrowing will not get any slower, she noted.

It is important to mention that the IMF had published its expectations about Egypt’s external debt and gross international reserves in a statement on 25 January, expecting Egypt’s external debt to reach $102.4bn by 2020/2021, and international reserves will increase annually to record $37.58bn by fiscal year 2020/2021.

“I do not believe that the Central Bank of Egypt (CBE) will use the money to increase foreign currency reserves,” Mamdouh said. She explained that the government must announce how it is going to spend the money, adding that spending on anything but improving the economy and investment environment will not help Egypt in its current crisis.

The expert believes that the foreign currency gap that Egypt has to fill is around $35bn.

However, Kojak had said that the long-term bonds might be used as foreign currency reserves.

Kojak had said that the rate is “fair” compared to the previous issuance in 2015
Kojak had said that the rate is “fair” compared to the previous issuance in 2015

For the government, there are no other options

Abobakr Emam, head of the research department at Prime Holdings, said that there is no other option but to issue bonds.  He believes that Egypt has no different options to choose from, adding that the country has to offer bonds in order to earn foreign currencies.

He also said that the money Egypt would get from the issuance is not enough, but it complements the loans Egypt has been receiving, which is needed for the government’s economic reform programme.

He added that the money should not be used to import important commodities such as petroleum products or wheat, and that it may be used to increase foreign currency reserves to make investors feel safer.

Emam believes that the money targeted was increased due to a problem between Saudi Arabia and Egypt. He added that nobody knows the truth, but Egypt was willing to receive financing from Saudi Arabia before an incident at the United Nations security council (UN).

Since Egypt’s vote on a Russian-backed draft resolution regarding Syria in the UN security council in October 2016, the relation between Saudi Arabia and Egypt had been tense. Egyptian officials, however, are denying any political disagreement between the two countries.

Days following the voting, Saudi Aramco halted its oil supplies to Egypt.

“The interest rates on the bonds are high, but the rates are based on Egypt’s credit defaults swap,” Emam said, adding that the country is offering bonds at a time when other countries are doing the same. Hence, with the problems Egypt’s economy is facing, it is important to raise the interest rate to attract the targeted money.

A credit default swap transfers the credit exposure of fixed income products between two or more parties. It may involve municipal bonds, emerging market bonds, mortgage-backed securities, or corporate bonds.

In Egypt, the credit default swap is more than 4%, which is very high, Emam noted.

The rate is high but there are no other options, and Egypt has already asked several international bodies to finance its economic reform programme, and bonds are a last resort for generating funds, he said.

 

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Despite efforts, investors have not flocked to national mega projects http://www.dailynewsegypt.com/2017/01/26/612538/ http://www.dailynewsegypt.com/2017/01/26/612538/#respond Thu, 26 Jan 2017 08:00:00 +0000 http://www.dailynewsegypt.com/?p=612538 The government headed by Sherif Ismail has repeatedly said that it wants to attract investment to all national projects which were announced by President Abdel Fattah Al-Sisi. However, experts believe that the government is wasting precious time by not establishing the infrastructure of these mega projects. These projects are the Suez Canal Economic Zone, the …

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The government headed by Sherif Ismail has repeatedly said that it wants to attract investment to all national projects which were announced by President Abdel Fattah Al-Sisi.

However, experts believe that the government is wasting precious time by not establishing the infrastructure of these mega projects. These projects are the Suez Canal Economic Zone, the Golden Triangle, and the 1.5m feddans reclamation project.

Daily News Egypt asked various experts about their opinions on these projects and why they think the projects have been delayed.

No investor has signed a contract for any project to invest in the zone
No investor has signed a contract for any project to invest in the zone

The Suez Canal Economic Zone

Ahmed Darwish, chairperson of the Suez Canal Economic Zone Authority, has been visiting Singapore, Japan, Germany, and other countries. He is holding talks and arranging meetings with officials and businesspeople to talk to them about investing in Egypt.

However, up until now, no investor has signed a contract for any project to invest in the zone. The infrastructure is currently being implemented in the zone in order to make it ready for investments.

In spite of establishing the infrastructure in the Suez Canal Economic Zone, experts believe that the government could have made more efforts to accelerate the process of developing the canal.

The national project, which was announced two years ago, has not managed to attract any investments.

Hany Tawfik, executive chairperson of Union Capital, said that if the government really wants to develop the Suez Canal area, it has to accelerate the rate of establishing infrastructure.

He believes that the government has to fix the laws to reduce bureaucracy, because Egypt’s investment climate is hardly attractive now.

Tawfik believes it is necessary for the government to provide concessions to investors in order to attract their investments to the Suez Canal area.

“The government is late in developing the area”, he stated. The expert emphasised that the Suez Canal and Sinai are very sensitive areas, adding that the current counter-terrorism campaign has stalled development.

He added that there is no transparency in what is actually going on with the project.

“With every passing day, Egypt loses another important benefit and the economy suffers,” Tawfik said.

He believes that the project has the potential to attract a lot of investments, which could create jobs, increase Egypt’s exports, and ultimately increase Egypt’s GDP.

Tawfik believes that the Suez Canal’s best projects are ship services, such as welding and supplying, industrial projects, and agricultural projects.

Such projects could develop Sinai as well, he claimed.

Medhat Nafea, a board member at Misr International University, believes that the Suez Canal Economic Zone has the potential to improve the country.

He said that the parliament should inquire as to why the government is late in delivering the project.

The government mainly focuses on creating jobs out of such projects, and developing the Suez Canal area would lead to one million job opportunities according to government statements, he said.

Nafea also noted that the government must find other ways to finance its national projects instead of borrowing.

He believes that Egypt’s external debt is not high, but he emphasised that the rate of borrowing is very scary, which he says shows that the government has not thought of another way to obtain financing.

On the other hand, Nafea said that national projects alone do not develop a country.

He explained that fixing and developing the investment climate and creating new laws is what development is actually about, which the government must understand.

President Abdel Fattah Al-Sisi  while announcing The first phase of 1.5m feddans reclamation project
President Abdel Fattah Al-Sisi while announcing The first phase of 1.5m feddans reclamation project

The Golden Triangle

The Golden Triangle was one of the projects announced by the government.

The triangle is located between Qena, Safaga, and Al-Qusayr, which is an area rich in mining resources that make up 75% of Egypt’s mining minerals.

When Al-Sisi came to office, he ordered the government to consider the Golden Triangle development project a priority in order to attract investments to the area.

The project will be implemented over an area of 2.7m acres and aims to establish a new industrial capital by building industrial, commercial, and mineral sites.

According to studies, the area is rich in metallic and non-metallic minerals, including iron, copper, gold, silver, granite, and phosphate, which are involved in the manufacture of many high-tech industries.

Mining for these minerals could be used as part of the establishment of new industries.

Tawfik said that there is currently a media blackout on the project, adding that no one knows anything about it.

He believes that Egypt is one of the top five countries in mineral reserves and by taking the right steps in the Golden Triangle project, the country would greatly benefit both economically and industrially.

“The government must understand that creating a clear economic environment is the most important pillar for developing the country”, he noted.

He stated said that investors know nothing about the project, which has resulted in the project being stalled at a time when it could help Egypt attract investments and create more jobs.

It is worth noting that Ismail Gaber, the former head of the Industrial Development Authority, had previously told Daily News Egypt that the Golden Triangle development project is considered the second largest project that will aid in developing Egypt’s economy due to the high income expected from the area, once it is developed.

Gaber added that the implementation of the project began following the announcement of the proposal details, which took place in June 2016.

He stated that the project aims at attracting new Arab and foreign investments, in addition to local investments, to enhance the value of the region.

According to Nafea, the project also has a social dimension.

He believes that the Golden Triangle will also help the government develop Upper Egypt, which has suffered from a lack of development for decades, and it would lead to a reduction in the unemployment rate and poverty.

The Sukari mine, located in the Golden Triangle
The Sukari mine, located in the Golden Triangle

The 1.5m feddans reclamation project

The third national project was the reclamation of 1.5m feddans, which was announced by the president on 30 October 2015. The project aims to increase agricultural land by 20% outside of the Delta region.

The president said the feddans will be provided to the public for sale, a provision that is an investment in national food security as much as an investment in their individual futures.

Al-Sisi said that the government will provide the feddans to investors at subsidised prices in order to help entrepreneurs owning small- and medium-sized enterprises to start their own businesses.

He promised that the agricultural lands will not only provide economic stability to farmers, but will provide places of residence and services to them and their families.

It is worth noting that on 21 October 2016, Atter Hannoura, head of New Egyptian Countryside Development (NECD), announced the reclamation of 500,000 feddans as the first phase of the project, at a price of EGP 5,000 per feddan.

However, experts have doubts about the project.

Tawfik believes that the government has not enlisted enough studies on the project.

He explained that no one from the cabinet has created or released pre-feasibility or feasibility studies for the project, which does not reflect transparency.

Tawfik stated that it would not be the best idea if the government were to plant wheat in the project. He explained that it is much cheaper for Egypt to import wheat because there are bigger countries operating in this field and Egypt cannot compete with their prices.

He added that planting wheat will cost Egypt more than global prices.

Tawfik added that the countries that export wheat at low prices depend on rain to grow it, unlike Egypt, which needs water well drilling projects to plant the crop in the desert.

There is no transparency about the project, according to Gamal Seyam, a professor of agricultural economics at Cairo University, who explained that most of the information publicly available is derived from the media.

He added that the modern Egyptian state has witnessed the failure of a lot of different agricultural projects, such as Toshka.

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Prospects and risks of Egypt’s ambitious economic reform programme, according to the IMF  http://www.dailynewsegypt.com/2017/01/19/prospects-risks-egypts-ambitious-economic-reform-programme-according-imf/ http://www.dailynewsegypt.com/2017/01/19/prospects-risks-egypts-ambitious-economic-reform-programme-according-imf/#respond Thu, 19 Jan 2017 06:00:06 +0000 http://www.dailynewsegypt.com/?p=611103 Since 2011, political and regional developments have taken a significant toll on the Egyptian economy. Underlying structural challenges and the prolonged political transition led to the build-up of macroeconomic imbalances. A significantly overvalued exchange rate undermined competitiveness and depleted reserves. Weak revenue, combined with poorly targeted subsidies and a growing public sector wage bill, resulted …

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Since 2011, political and regional developments have taken a significant toll on the Egyptian economy. Underlying structural challenges and the prolonged political transition led to the build-up of macroeconomic imbalances. A significantly overvalued exchange rate undermined competitiveness and depleted reserves. Weak revenue, combined with poorly targeted subsidies and a growing public sector wage bill, resulted in large deficits and high levels of public debt.

Consequently, Egypt’s authorities have adopted  an ambitious home-grown reform programme which was supported by the International Monetary Fund (IMF) under the Extended Fund Facility (EFF) agreement in order to tackle existing structural problems within the Egyptian economy, address macroeconomic vulnerabilities, and promote inclusive growth and job creation.

The IMF released on Wednesday Egypt’s country report, which includes details of the Egyptian reform programme, as well as the IMF staff’s detailed studies on the outlook, and challenges facing the programme.

The main pillars of the economic reform programme

According to the IMF staff report, the Egyptian reform programme can be summarised into several main elements.

Firstly, significant monetary and financial policy adjustments in order to eliminate foreign exchange shortages, encourage investment and exports, contain inflation, and ensure the sustainability of public debt.

On 3 November, the Central Bank of Egypt (CBE) adopted a flexible exchange rate regime, which is meant to improve Egypt’s external competitiveness, support exports and tourism, and attract foreign investment.

Consequently, the CBE would be able to rebuild its international reserves. The IMF believes that containing inflation and bringing it down to mid-single digits over the medium-term can be achieved by controlling credit to the government and banks, as well as by strengthening the CBE’s capacity to forecast and manage liquidity, improving transparency and communication.

Secondly, in regards to fiscal policies, social protection, and financial management, Egypt’s fiscal policy will be anchored to setting public debt on a clearly declining path and restoring debt sustainability. That can be achieved by increasing tax revenues through the implementation of the value-added tax (VAT), in addition to the reduction in subsidies expenditure. At the same time, social protection programmes will be strengthened in order to replace the poorly targeted energy subsidies with programmes that directly support poor households.

Finally, implementing structural reforms and promoting inclusive sustainable growth through streamlined industrial licensing for all businesses, greater access to financing for small- and medium-sized enterprises (SMEs), and new insolvency and bankruptcy procedures.

“Structural reforms are critical for the success of the programme. The aim is to address deep-seated structural impediments to growth and job creation, and create an enabling environment for private sector development,” said Christine Lagarde, managing director of the IMF. “The main areas of reforms include business licensing and insolvency frameworks; public financial management, including state-owned enterprises; energy sector and subsidy reforms; and labour market reform to create jobs and increase labour market participation, especially among women and young people.”

The reform programme’s outlook and risks

According to the report, the macroeconomic medium-term prospects are favourable, provided short-term challenges can be addressed and growth-friendly policies and reforms implemented. Due to various factors, including a dynamic and young population, a large market size, a favourable location, and access to important foreign markets, the opening of the New Suez Canal last August, large investments in the energy sector, and the discovery of a major gas field also bode well for Egypt’s medium-term development.

However, realising this potential depends on overcoming short-term challenges such as foreign currency shortages, low policy buffers, improving the business climate, and a weakened market confidence, as well as implementing wide-ranging structural reforms that support inclusive growth.

In regards to monetary policies, the report says that the authorities plan to maintain a flexible exchange rate regime and accumulate significant international reserves to act as buffers against external shocks, strengthen credibility of the CBE, and preserve competitiveness. The programme targets the accumulation of about $5bn in 2016/2017, and to reach $33bn by the end of the programme, which is equivalent to five months of prospective imports of goods and services.

Following the implementation of the programme, a real GDP growth of 4% is expected in 2016/2017. Growth is forecasted to gradually increase to around 5-6% over the medium-term as investment and exports replace debt-financed consumption as growth engines. The investment boost is based on public investment in social and economic infrastructure, large investments in the energy sector, and the discovery of the major Zohr gas field.

GDP growth will be driven by higher investment and improvement of the net external sector, in addition to the improvement of the business climate and promotion of private sector development by easing their access to finance, and by removing constraints to starting and doing business. Better macroeconomic stability will improve market confidence and attract foreign investment, in particular foreign direct investments (FDIs). Greater exchange rate flexibility will strengthen external competitiveness and support exports. The energy subsidy reform will remove the bias towards energy and capital-intensive industries.

Although inflation is estimated to temporarily increase from around 10% in 2015/2016 to around 19% in 2016/2017, it is projected to decline to around 7% over the medium-term. The budget deficit meanwhile is expected to switch to surpluses starting from 2017/2018. These projections are based on the adjustment programme that includes considerable revenue and expenditure measures.

However, these results are dependent on controlling the public sector wage bill, implementing the next phase of energy subsidy reforms, improving the targeting of social transfers, and increasing revenue measures, which can be achieved by the introduction of a VAT at a higher rate than the current rate, improvements in tax administration, and ensuring that appropriate dividends are paid to the government by profitable public agencies.

Yet, the risks to the programme are significant. Potential fiscal slippages due to revenue shortfalls, higher than programmed wage increases, or delays in implementing expenditure measures could undermine the programme’s debt sustainability objective. Attempts to manage the exchange rate could lead to a loss of reserves or the re-emergence of a large parallel market. Failure to tighten monetary policy sufficiently could lead to a strong exchange rate, inflationary pressures, and a loss of reserves.

Moreover, Egypt is also exposed to external shocks. Tighter or more volatile global financial conditions may raise borrowing costs. Lower growth in trade partners (Eurozone, Russia) or a worsening of regional security would hurt trade and tourism. Persistently, lower energy prices would reduce remittances and financing from Gulf countries. On the upside, lower energy prices would help trade and fiscal balances. Egypt’s new flexible exchange rate and prudent macroeconomic policies under the programme provide sufficient buffers against these vulnerabilities.

One of the programme’s vulnerabilities is that there are also external risks. Egypt’s own security has been vulnerable to terrorism, and it is not immune from the crises of its neighbours. As Egypt re-engages with international financial markets, global financial risks will matter more. As trade and tourism pick up, the performance of its trading partners will also be important.

Furthermore, financial support from Egypt’s international partners is a critical element of this programme.

The World Bank and the African Development Bank are strong partners in the process. Timely and generous support from China, the United Arab Emirates (UAE) and the G7 countries have made it possible to close the financing gap and bring this programme to the board. Fresh financing and rollover of debts falling due will be needed, though the need for such support will taper off by the end of the programme period.

To conclude, this reform programme can solve Egypt’s problems, improve the balance of payments, sustain reserves, and reduce vulnerability while promoting exports; thus, helping Egypt realise its full potential. However, delays in foreign exchange inflows, as well as multilateral and bilateral disbursements, could see interbank US dollar-Egyptian pound rates rise sharply. The CBE may come under pressure to limit exchange rate flexibility and it will be crucial to stay committed to programme policies and targets.

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The global energy sector: what to expect in 2017? http://www.dailynewsegypt.com/2017/01/10/609247/ http://www.dailynewsegypt.com/2017/01/10/609247/#respond Tue, 10 Jan 2017 06:00:54 +0000 http://www.dailynewsegypt.com/?p=609247 Five main trends will be leading changes in the energy industry, requiring leaders to revisit their strategies in 2017, says Booz Allen Hamilton

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2016 was a year filled with an overproduction of energy on a global level, especially in oil and gas, resulting in an overhang of the oil inventory, which reduced the US shale production. However, this did very little to spur the demand needed to bring the global market into balance; therefore, change may be the main feature of the global energy sector throughout 2017.

Not only the oil and gas industry, but also electric power will be going through expected changes, led by many major external and internal factors. These changes will soon require leaders of the industry around the globe to reconsider current strategies, as expected by Booz Allen Hamilton in its forecast of energy trends in 2017.

Booz Allen Hamilton provides management, technology, consulting, and engineering services to corporations and governments across the globe
Booz Allen Hamilton provides management, technology, consulting, and engineering services to corporations and governments across the globe

Booz Allen Hamilton provides management, technology, consulting, and engineering services to corporations and governments across the globe. It has been present in the Middle East and North Africa (MENA) for six years, during which it partnered with public and private sector clients to solve the difficult challenges they are facing in business strategy, data analytics, cybersecurity, resilience, operations, supply chain, and more. Relating to its experience in these fields, the company expected in its forecast of energy trends in 2017 that the industry will be impacted by five main trends. However, an overall look of the region’s expected energy trends and the current circumstances is necessary in order to be able to predict correctly.

The Middle East is relying less on oil; increases investment in high-potential sectors

With the prolonged period of low oil prices, government spending is headed towards economic diversification and reducing reliance on oil, which prompts greater investment in high-potential sectors. These include real estate, construction, hospitality, tourism, and education. More attention is also being shifted towards achieving operational efficiency across sectors, and the most prominent area which will be benefitting greatly from digitally-enabled solutions is utilities. In the past, the sector of utilities has not invested as much as was preferable in information technology (IT). However, many utilities in MENA are now realising the importance of smart technology for them, and will perhaps begin to pay more attention to implementing it in their systems.

In utilities and electric power, the traditional supply chain is undergoing change driven primarily by regulation, public policy, plentiful inexpensive natural gas, and dramatic cost declines in renewable energy and storage, as Booz Allen Hamilton mentions in its forecast.

Dr Adham Sleiman, vice president of Booz Allen Hamilton MENA
Dr Adham Sleiman, vice president of Booz Allen Hamilton MENA

Data analytics will form the future of energy in 2017; greatly contribute to its changes 

Dr Adham Sleiman, vice president of Booz Allen Hamilton MENA, said that data analytics may be one of the main trends expected to shape the future of the energy sector in 2017. “Big data is rapidly changing the way the energy sector operates globally—by reducing costs, optimising investments, and reducing overall risk. In order to achieve these objectives and create additional value from untapped areas, organisations in the Middle East must establish holistic digital strategies that include upgrading their required digital capabilities,” he added.

Executive vice president in energy, chemicals, and utilities at Booz Allen Hamilton MENA, Dr Walid Fayad
Executive vice president in energy, chemicals, and utilities at Booz Allen Hamilton MENA, Dr Walid Fayad

Executive vice president in energy, chemicals, and utilities at Booz Allen Hamilton MENA, Dr Walid Fayad, said that energy and technology form the backbone of global economies and play a main role in the operational success of all other sectors. “As innovation and technological disruption become the norm across the MENA, we are increasingly seeing regulators and policy makers embracing game-changing trends in the energy sector—from support of renewable energy, advanced metering, and grid modernisation to big data and cloud. We expect that wider adoption of these technologies will increase overall operational efficiencies, especially in the wake of a period of prolonged low oil prices,” he said.

Five main trends will impact the energy industry throughout 2017

Booz Allen Hamilton expects in its forecast of the energy conditions in the world and especially MENA that the energy industry to be greatly impacted by five trends in 2017.

The first trend is a focus on capital expenditure productivity, where capital programme execution is put under major pressure by market shifts, and leaders of the oil and gas industry are pursuing everything from technology and information innovation, to greater personnel and asset tracking in oilfield development in an effort to drive greater labour and material productivity. The electric power industry is put under similar pressure as well. Inexpensive natural gas has already caused a collapse in the construction of new coal plants, and nuclear power is now in danger of a similar decline. In the entire energy spectrum, companies are taking steps to develop the ability to conduct deep continuous analysis of their capital projects during execution, and leaders are finding ways to put the insights they gain into management action.

The second trend is the creation of enterprise value from data. With the implementation of advanced instrumentation and metering, the amount of data from the energy sector’s operations has skyrocketed as is the case with many other industries. The most accessible benefits from this data have been realised so far. This data has helped identify opportunities or cost-saving through several actions, inducing labour elimination and incremental improvements of already existing processes. Of course, the usage of analytics in the energy industry is not new, but companies are now starting to realise that data can actually create new value for existing businesses. For instance, vertically integrated oil companies have very limited insight into the markets into which they sell their products, but now, data science is changing this through creating dramatically better ability to unravel and comprehend trends, draw insights, and capture new opportunities. A similar change is expected to take place in safety and reliability, where use of data is changing what engineers know about the optimal safe operating envelope for industrial processes. In terms of organisation, companies in the energy field are growing centralised data science teams, often blending legacy employees with new, more data science-oriented hires. The hard work of building business cases for data science is just beginning.

The third trend is the usage of markets in shaping the future energy grid. Regulators and policy makers in the industry are increasingly moving from a standards-and-subsidy approach to one that is more market-driven. The standards-and-subsidy approach stemmed from the public sector’s support of renewable energy, advanced metering, and grid modernisation over the past five years, in the form of mandatory deployment standards, and direct and indirect subsidies. This has been very effective at driving down the costs of these advanced energy technologies, spurring their broader deployment. Now with the new approach, regulators are trying to form a foundation for future markets, requiring a greater understanding of the value that distributed energy resources (DERs) bring to the grid, so owners of DERs can be fairly compensated. For utilities, particularly in retail markets, this requires understanding how the grid works with greater accuracy, and being able to model how it changes over time with the further expansion of DERs. This also means operating markets where customers have greater choices compared to past times.

The fourth trend is following security to the operational edge. In the energy sector, security has been mainly focused on the protection of the customers’ data on the companies system. Now, the security limit is gaining great importance and is pushed to the operational edge with the increase of instrumentation, automation, and virtualisation of operational assets in companies. The Industrial Control Systems (ICS), which control the automation of power movement through the electrical grid, oil flow through pipelines, and manufacturing systems, are facing threats as they represent an increasingly diverse and extensively connected set of technologies. However, as cyber-attackers become more emboldened, they are recognising the operational, economic, and safety impacts that attacks on the ICS infrastructure can cause. As a result, companies will increase their focus on security beyond their traditional lens.

The fifth trend is that innovation is the tipping point for cloud. In most industries, the decision to migrate IT infrastructure from fixed, on-premises servers to cloud-enabled as-a-service models has been heavily based on cost. While this has been the case in many corporate systems at the oil super-majors, innovation is now leading the current wave of cloud migration in operational business units at these companies. To create maximum business value, the rise of analytics within operation business units is now enabled by a digital strategy that is more flexible through resorting to the cloud. The use of the cloud in the utility industry was delayed because of the inability to predict how the costs of the new service models will be categorised.

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Was the government ready for the flotation’s consequences? http://www.dailynewsegypt.com/2017/01/09/609045/ http://www.dailynewsegypt.com/2017/01/09/609045/#respond Mon, 09 Jan 2017 06:00:08 +0000 http://www.dailynewsegypt.com/?p=609045 Squeezed by economic and political turmoil following the 25 January Revolution that toppled former president Hosni Mubarak, Egyptians are now facing a new era of hardship and austerity. The government’s adopted economic reform programme, backed by the International Monetary Fund (IMF), included the flotation of the Egyptian pound, subsidy cuts, high interest rates, and the …

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Squeezed by economic and political turmoil following the 25 January Revolution that toppled former president Hosni Mubarak, Egyptians are now facing a new era of hardship and austerity. The government’s adopted economic reform programme, backed by the International Monetary Fund (IMF), included the flotation of the Egyptian pound, subsidy cuts, high interest rates, and the implementation of the value-added tax (VAT).

CBE Governor Tarek Amer
CBE Governor Tarek Amer

The Central Bank of Egypt (CBE) decided to free-float the Egyptian pound on 3 November, in a move aiming to improve Egypt’s competitiveness and attractiveness to foreign direct investments, as well as giving a change to the CBE  to restore Egypt’s international reserves to pre-2011 levels.

The decision was followed by a series of challenges, such as the pricing of  medication disputed between the government and pharmaceutical companies, and the investors’ problem with banks demanding that they  pay for the exchange rate gap before and after the flotation from letters of credit issued to cover imports.

Hence, the government’s readiness to tackle the consequences of flotation comes into question, as well as the absence of a centralised economic strategy that can achieve the main goals of the economic reform programme, which can be summarised into improving the investment climate, creating job opportunities, reviving tourism, and supporting exports.

Almost all pharmaceutical companies import a large portion of their production needs in US dollars, and following the liberalisation of the pound’s rate against the dollar, the latter has increased by more than 100%, which in turn increased the production costs for these companies.  (DNE Photo)
Almost all pharmaceutical companies import a large portion of their production needs in US dollars, and following the liberalisation of the pound’s rate against the dollar, the latter has increased by more than 100%, which in turn increased the production costs for these companies.
(DNE Photo)

Medicine shortage crisis

Almost all pharmaceutical companies import a large portion of their production needs in US dollars, and following the liberalisation of the pound’s rate against the dollar, the latter has increased by more than 100%, which in turn increased the production costs for these companies. These companies used to get their dollar needs directly from the CBE at the official exchange rate before the flotation.

As a response to the crisis, which indicates that it had not been taken into consideration before the flotation, the minister of health suggested imposing a 50% annual increase on 10% of the pharmaceutical companies’ products, with promises of cuts in customs, water, electricity, and gas costs, in addition to an exemption from the VAT. However, the minister’s suggestion was rejected by the companies.

Both foreign and various local companies insisted that prices be increased by 60% in order to avoid losses, especially as the official US dollar exchange rate increased by 100% in the wake of the pound’s flotation. This forced the minister to change the price increases period from one year to six months.

Later on, Minister of Health Ahmed Emad El-Din presented a proposal to the cabinet to increase the prices of 15% of domestic medicines that currently cost between EGP 1 and EGP 50 by 50%, and medicines that cost between EGP 50 and EGP 100 by 40%, while medicines that are priced at over EGP 100 by 30%.

From their side, the Pharmacists Syndicate sent an official letter to President Abdel Fattah Al-Sisi in December, calling on him to prevent any potential price increases for medication and asking for the establishment of a presidential committee which includes all the concerned parties to suggest solutions for the crisis.

Moreover, the syndicate notified Emad El-Din of their rejection of any ministerial decision that may stipulate any form of increase in the cost of medication without prior consultation with the syndicate, state-run newspaper Al-Ahram reported. This can be considered a clear warning that any price increases will be met with legal opposition from their side.

It further noted that the rapid issuance of price increases without carrying out accurate studies or consultation with specialists in the field from the syndicate’s members may be a sign that medicine companies are looking to maximise profits at the expense of citizens.

Another sign of the absence of government planning is the suggestion to increase the budget of EGP 3.5bn currently allocated to treatment at the expense of the state by EGP 5bn in preparation for the price increase.

Investment climate 

Although the government expressed its plans to facilitate investments in Egypt, their actions following the flotation came in contradiction to the announced plans. Two major incidents in less than a month could be considered a huge setback. The first was the cancellation of Le Marché exhibition and the second was the letters of credit issued to multiple investors before the flotation.

The decision to cancel Le Marché exhibition just two days before its expected inauguration has led to outrage in Egypt’s the furniture sector. The exhibition was supposed to be held on the Cairo International Fair Grounds in December. (DNE Photo)
The decision to cancel Le Marché exhibition just two days before its expected inauguration has led to outrage in Egypt’s the furniture sector. The exhibition was supposed to be held on the Cairo International Fair Grounds in December.
(DNE Photo)

Le Marché 

The decision to cancel Le Marché exhibition just two days before its expected inauguration has led to outrage in Egypt’s the furniture sector. The exhibition was supposed to be held on the Cairo International Fair Grounds in December.

Le Marché is Egypt’s largest furniture and decoration exhibition. It takes place on an area of 30,000 sqm with the participation of about 250 exhibitors, with companies placing hopes on it to conclude major contracts for one year.

Tarek Nour, chairperson of the advertising agency organising the exhibition, was informed by the Interior Ministry just two days before the planned opening that the exhibition was canceled for security reasons.

Mostafa Ismail, technical adviser to Apex, the company organising Le Marché, said that security forces told the company on Tuesday morning that the exhibition was canceled, despite being informed by official executive bodies on the previous day that the exhibition will be held as scheduled.

“We were surprised on Tuesday at 10am to find security forces of the Nasr City police department evacuating halls, closing the doors, and informing us that they had received instructions to halt the exhibition,” Ismail said.

The estimated initial losses to the company are about EGP 60m after the cancellation of Le Marché, in addition to EGP 500,000 for each participating company.

According to the executive director of Meuble for French Furniture Co. Ahmed Al-Iraqi, canceling the exhibition is an unstudied decision, especially since companies were notified the Monday before that security apparatuses agreed to the exhibition, which made companies double the number of workers to finish preparing the pavilions on time.

“The state restricted imports and floated the national currency, forcing companies to produce for the local market,” Nour said. “Then, they shut down the conference where those companies sold their production.”

From his side, the head of the Chamber of Wood Working and Furniture Industries at the Federation of Egyptian Industries, Ahmed Helmy, said that the size of furniture production in Egypt amounts to EGP 10bn per year, wondering about the message the government sent to investors by cancelling the exhibition.

Letters of credit 

Following the CBE’s decision to float the currency on 3 November, the Egyptian pound dropped in value from EGP 8.88 per US dollar to over EGP 18, which caused the value of the letters of credit issued to cover imports to spike.

Banks then demanded companies to pay the difference in the exchange rate before and after the flotation. The demand was refused by companies, attributing their refusal to their inability to pay.

Consequently a number of Egyptian investors took out a full-page advertisement in Egypt’s daily newspaper Al-Ahram, calling for Al-Sisi to take “emergency measures” to save Egyptian companies and industries after the recent floating of the local currency.

The advertisement, which was signed by nine investors associations, explained that Egyptian companies are at the risk of bankruptcy if they pay back bank loans at the new exchange rate, since they have already sold their products based on the old exchange rate. The Joint Stock Companies Law states that companies should declare bankruptcy if losses surpass 50%.

A drop in imports, accompanied by a shortage in basic goods and higher unemployment rates are excepted if the Egyptian companies go bankrupt, adding that various company owners and investors will face legal action due to their inability to repay bank loans.

The ad was published by various associations that represent Egypt’s prominent industrial zones, such as the 10th of Ramadan, 6th of October City, Obour, and Sadat cities investors associations.

Moreover, nine investor associations held a meeting in order to explain their situation. Mohamed Khamis Shaaban, head of the 6th of October City Investors Association, explained that the liberalisation of the foreign currency exchange market increased import costs, adding that the government should have studied the negative impacts associated with the decision before implementing it .

However, these issues get resolved. The government’s response to the consequences came as a reaction, which confirms the absence of a thoroughly studied plan, and the lack of homogeneity and collaboration between different governmental bodies, which in turn led to contradictory actions. In the case of Le Marché, all efforts by the ministries of industry and investment to reassure and attract investors were wasted by the actions of the Ministry of Interior.

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Ashwa’yat: the underbelly of urban Cairo as understood through data http://www.dailynewsegypt.com/2017/01/03/ashwayat-underbelly-urban-cairo-understood-data/ http://www.dailynewsegypt.com/2017/01/03/ashwayat-underbelly-urban-cairo-understood-data/#respond Tue, 03 Jan 2017 06:00:32 +0000 http://www.dailynewsegypt.com/?p=607961 A recent data survey released by CAPMAS and the Population Council attempts to break down the reality of youth living in informal housing areas through numbers

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In a first of its kind, The Population Council and the Central Agency for Public Mobilization and Statistics (CAPMAS) highlighted the problems afflicting the youth living in ashwa’yat (informal housing areas) in a data survey released last month.

The survey noted that Sustainable Development Strategy: Egypt Vision 2030 refers to the vital need to develop Egypt’s ashwa’yat through the creation of 7.5m housing units, with a concerted effort to find solutions to problems pertaining to those areas by 2030. It continued: “This country vision is in line with the United Nations Sustainable Development Goals (SDGs) agenda, which highlighted the plight of [ashwa’yat] dwellers in its “urban goal”.

Dr. Nahla Abdel Tawab, Country Director of the Population Council said that efforts to develop Egypt’s ashwa’yat and enhance the living conditions of their dwellers have been ongoing for over a decade, sponsored by the government, civic organizations, private entities, non-profit institutions, individuals, and in some cases media officials.

However, there is very limited data that is able to provide reliable statistics on such areas, particularly on the characteristics of young people living in those informal communities, according to the survey.

Population Council in collaboration with CAPMAS conducted a comprehensive situation analysis of young people living Greater Cairo’s ashwa’yat titled “The 2016 survey of young people in informal urban areas of Greater Cairo”. The survey looked into several key indicators, including health, marriage, and employment, among others, to paint a picture of what it is like to be young and living in ashwa’yat.
Around 2947 youth were surveyed in their analysis; from the age group of 15-29.

CAPMAS said that 44.6% of youth in ashwa’yat believed their health was in a good state, with indicating that their health was excellent or very good,
Population Council said that 44.6% of youth in ashwa’yat believed their health was in a good state, with indicating that their health was excellent or very good,

Health

“The health module has shown slight differences between young people living in formal and informal areas of Greater Cairo,” read the survey.

Population Council stated that youth in ashwa’yat expressed through the survey that overall they believed their health was in a good state, with 44.6% indicating that their health was excellent or very good, compared to a 2014 survey that estimated 47.5% of their peers living in formal urban areas of Greater Cairo felt similar about their health conditions.

Rania Roushdy, the senior programme manager of the gender and youth poverty programme at the Population Council, said that researchers in Egypt are plagued by a consistent problem: a lack of information.

She believes that the results found by Population Council and CAPMAS in the ashwa’yat, which gathered data from 245 different areas, are very close to the reality on the ground. She also said that the youth face the same hard circumstances as youth living in formal urban areas.

Roushdy added that youth in ashwa’yat have their own set of problems that tend to make their living conditions worse than those of youth living in formal urban areas, such as the absence of police, which subsequently means less security.

Regarding the data collected on health, Roushdy noted that this sample focused only on how youth feel about their health. No medical tests were performed to gauge the actual health status of survey participants.

She stated that only 3% of those surveyed in ashwa’yat claimed to have chronic diseases, and 25% were not satisfied with the status of their health.

Roushdy said that the rate is fair compared to reality on the ground, while emphasising that youth are likely to accumulate greater health problems in their future due to the heavy pollution in ashwa’yat.

 

CAPMAS stated that 2.9% of young men and women in ashwa’yat said that the ideal age for a girl to get married is younger than 18
Population Council stated that 2.9% of young men and women in ashwa’yat said that the ideal age for a girl to get married is younger than 18

Labour and employment

In a stark contrast, only 15.8% of young women surveyed in ashwa’yat claimed that they were part of the labour work force, whereas 57.8% of young men said that they were employed.

According to Population Council and CAPMAS, the unemployment rate in ashwa’yat is only 9.9%, compared to 12.8% in Egypt.

However, the survey does not reflect the disparity between the informal and formal economy, and how those employed in each differ based on whether they live in ashwa’yat or formal urban areas. A survey of several academic studies refers that the informal economy could range anywhere between 30-60%, with popular assumptions estimating that informal employment surged in post-revolution Egypt. Due to the informality of large sectors of labour, gauging the actual numbers is seemingly impossible.

“They are forced to work in informal markets because they need money,” said Roushdy.

While women find it difficult to find employment in existing businesses functioning within the informal economy, they often resort to creating their own type of employment, by selling milk or cheese on their own.

 

Roushdy added that the government should legalize these types of businesses and encourage others to start their own businesses within a legal framework.

The government recently sponsored an initiative to bolster small- and medium-sized enterprises (SMEs), which are believed to make up a significant portion of the informal economy. The initiative aims to create a legal structure within which such enterprises can exist, while supporting their ability to create much needed jobs.

 

CAPMAS and the Population Council estimated that 4.6% of youth living in ashwa’yat did not attend school during 2016.
CAPMAS and the Population Council estimated that 4.6% of youth living in ashwa’yat did not attend school during 2016.

Education

Population Council and CAPMAS estimated that 4.6% of youth living in ashwa’yat did not attend school during 2016.

However, the survey also estimated that uneducated youth from ashwa’yat who have jobs was stands at 58.7%.

Roushdy said that the dropout rate from formal education in ashwa’yat is 5% (3% among men, 6% among women), compared to 3% in formal urban areas. Reasons attributed to dropping out were poverty and the long distance between their homes and the nearest schools.

She said that one major hurdle in giving women access to education is convincing families to allow their daughters to be enrolled as students. Young women who enter the formal education system statistically continue on to college more often than men.

She said the rate of women who attended college in ashwa’yat is 28%, compared to 27% average for men.

 

The prevalence of drug use (62.1%), drug dealing (60.1%), and street harassment (48.0%) were the three security challenges most widely cited by young people.
The prevalence of drug use (62.1%), drug dealing (60.1%), and street harassment (48.0%) were the three security challenges most widely cited by young people.

Other indicators

The survey revealed that more than three-quarters of young people aged 15-29 residing in ashwa’yat have never been married (75.2%), compared to about 82.5% among their peers in formal urban areas.

“Early marriage (before the legal age of 18) is slightly more prevalent in the informal urban areas (10.2%) than in the formal urban areas of Greater Cairo (8.5%),”according to the survey.

The Survey stated as well that 2.9% of young men and women in ashwa’yat said that the ideal age for a girl to get married is younger than 18. More young women than men preferred an older marriage age (above 22 years) for women, with the majority viewing the age range from 18-22 years as an ideal marriage age for women.

The prevalence of drug use (62.1%), drug dealing (60.1%), and street harassment (48.0%) were the three security challenges most widely cited by young people.

Being insulted in private (7.7%) or in front of others (8.4%) were the most commonly reported types of violence by all youth.

The reported rate of harassment among young women (49%), in the survey was slightly higher than that of formal urban areas (46%) surveyed in 2014.

Services that youth living in ashwa’yat wanted more priority given to included education (26.1%), health (18.6%), programmes to employ youth and train them for the labour market (11.2%), and improving roads and streets (10.8%).

Hala El Saied, the dean of Economic and Political Science College at Cairo University, said that the results show that youth in ashwa’yat and in formal urban areas face the same problems.

The dangers that face youth are the same everywhere, she said.

She added that developing countries also face the same problems around the world, but the problem in Egypt is that the youth make up a large portion of the population, which means the effects of the problems are higher.

“Government and civil society institutions should cooperate to promote how youth could avoid dangers such as criminal activity, carrying weapons, and drug addictions,” El-Saied said.

She emphasized the importance of fighting drug addictions, calling for a great deal of effort to be contributed to this epidemic.

The survey could prove beneficial to officials and experts, said El-Saied, as attempts are being made to improve economic conditions.

If the government were to hold to true its promises and merge the informal areas of Cairo with the formal areas, then authorities would be able to greater understand the life and economy of such areas, said El-Saied.

She noted that the government, through its previously stated ideas and projects for ashwa’yat, appears committed to working to develop these areas.

The more social housing the government provides, the more people would feel secure, she noted.

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Refugees in Germany: tales of Diaspora and dreams http://www.dailynewsegypt.com/2016/12/15/refugees-germany-tales-diaspora-dreams-2/ http://www.dailynewsegypt.com/2016/12/15/refugees-germany-tales-diaspora-dreams-2/#respond Thu, 15 Dec 2016 13:38:03 +0000 http://www.dailynewsegypt.com/?p=604910 Caught between the burdens of alienation and homesickness and the growing pains of integration is how Arab dreamers live in Europe

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Like other Egyptians, during my bachelor studies I dreamed of travelling to Germany to satisfy my ambitions. I saw it as the promised paradise and its citizens as organised beehives. My dream went unfulfilled, and 15 years would go by until I would be able to travel to Germany. I only met Germans during encounters in tourist places in Cairo, until finally I received an opportunity to visit the land I had dreamed of. From the moment I touched its soil, I drew comparisons between the dream I had as a young man and the reality I saw of Arab immigrants.

In my short visit, I met many non-Germans and listened to many stories. I soon found this paradise to be a machine that turns everyone into a gear to fit its capabilities so as to maintain its stability and continuity. I found some of those gears reeling from alienation and nostalgia for the past, falling between the desire to return home and a sense of guilt that the migration dream was not what they expected. This may have been what Hany Azer, a famous Egyptian engineer who has been living in Germany for decades and a member of the Egyptian president’s Advisory Council, was trying to say when he told journalists in a meeting that Germany is a country where nobody succeeds but smart, skilled, and competitive people.

The visit was enough to knock out my young dream as I looked through different eyes at those who were forced to become part of that giant German machine, but failed at becoming irreplaceable gears, in the same way that their dreams would fail. Those who drop out of the system become negligible beings among this civilisation and order governing German life.

This is why I ask whether Syrian refugees will ever be able to integrate into the German community, overcome the fears of Islamophobia, or paint a different picture of the Arab world? Or would they segregate themselves into a parallel Arab community? Will they be able to join the labour market and engage in the German streets, or will they be controlled by the dream of returning to their homelands?

In this series, Daily News Egypt puts a human face on refugees, from across all ages and origins, and details their struggles, dreams, and grief.

 

Ideal integration not fully possible, problems bound to exist: manager of AWO Refugee House in Berlin 

http://www.dailynewsegypt.com/2016/12/12/ideal-integration-not-fully-possible-problems-bound-exist-manager-awo-refugee-house-berlin/

The right exploits the fear of refugees for their own gains: MP in Germany’s Greens party

http://www.dailynewsegypt.com/2016/12/12/right-exploits-fear-refugees-gains-mp-germanys-greens-party/

Closing borders is inhumane and contradicts German values: SPD member

http://www.dailynewsegypt.com/2016/12/12/closing-borders-inhumane-contradicts-german-values-spd-member/

European cooperation integral to solving the refugee crisis

 http://www.dailynewsegypt.com/2016/12/13/european-cooperation-integral-solving-refugee-crisis/

Bureaucracy biggest obstacle to refugees: AWO chairperson

 http://www.dailynewsegypt.com/2016/12/13/bureaucracy-biggest-obstacle-refugees-awo-chairperson/

Refugees are the migrant advisory committee’s main concern 

http://www.dailynewsegypt.com/2016/12/13/refugees-migrant-advisory-committees-main-concern/

Learning from the past: Germany’s refugee policy is dignifying, positive

http://www.dailynewsegypt.com/2016/12/08/603486/

Immigrant lives at mercy of German bureaucracy, knows very well he has no asylum rights

http://www.dailynewsegypt.com/2016/12/08/immigrant-lives-mercy-german-bureaucracy-knows-well-no-asylum-rights/

 Trials and tribulations of the Right of Asylum

http://www.dailynewsegypt.com/2016/11/23/600723/

Refugees in Germany: tales of Diaspora and dreams

http://www.dailynewsegypt.com/2016/11/21/refugees-germany-tales-diaspora-dreams/

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Cathedral bombing may affect Egypt’s credit rating: professor http://www.dailynewsegypt.com/2016/12/15/cathedral-bombing-may-affect-egypts-credit-rating-professor/ http://www.dailynewsegypt.com/2016/12/15/cathedral-bombing-may-affect-egypts-credit-rating-professor/#respond Thu, 15 Dec 2016 06:00:01 +0000 http://www.dailynewsegypt.com/?p=604739 Acts of terrorism rouse foreign concerns about coming to Egypt; therefore, the dollar flow decreases, says Mashhour

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It was with heavy hearts that Egyptians Copts and Muslims followed up on the devastating attack St. Peter and St. Paul Church in Saint Mark’s Coptic Orthodox Cathedral in Abbasiya on Sunday—the same day that Muslims celebrate the Prophet Mohammad’s birth [Al-Mawlid Al-Nabi].

This past week has seen a string of attacks in the capital. On Friday, an attack on two security roadblocks in Al-Haram Street in Giza claimed the lives of six security personnel and injured three others, according to the Ministry of Health. Another bomb reportedly targeted a police vehicle in Kafr Al-Sheikh governorate; one civilian was killed and three security personnel were injured.

Economic experts expect these attacks to negatively affect the economy, especially specific sectors like investment, tourism, and the exchange rate.

Attacks may affect Egypt’s credit rating

Professor of economics at Cairo University, Aliaa El-Mahdi, said current events may affect Egypt’s credit rating. Rating institutions have categorised Egypt at “B” for more than two years, indicating that the country is stable. However, the recent strings of bombings could see these institutions downgrade Egypt’s rating to B- according to political instability and security concerns.

El-Mahdi explained that the civilian casualties from Sunday’s attack put Egypt at further risk, compared to if Friday’s attacks had been the sole incidents—especially as Christians, a minority who are already persecuted in Egypt and across the region, were the target.

Attacks may affect potential investors

El-Mahdi said recent events may affect potential investors who may choose to postpone their business plans and await the outcome of these attacks and for the greater stability.

Meanwhile, those already investing in the country may decide to suspend expansion in the market and depend more on exchange rate policies, taxes, and other economic elements.

Capital is cowardly

Pumping capital or investments requires a secure community and a stable market to guarantee a profit; therefore, investors are afraid to risk their money in an unstable country, according to economic expert Ahmed Zikrallah.

Zikrallah expects the attacks will lead foreign investments to “escape”. Investors will not accept investing in a country on the brink of failure with explosions in the heart of its capital—even inside heavily fortified places.

The Executive Board of the International Monetary Fund (IMF) had predicted that the Egyptian government would attract $9.4bn in foreign direct investment by the end of the current fiscal year, compared to $6.7bn in the last fiscal year. Analysts stressed that this could be difficult under these exceptional circumstances.

Chairperson of the Egyptian Junior Business Association Ahmed Mashhour said any investment needs stability, whether in security, legislations or business factors, and the investment climate must be a catalyst for the investor to launch new businesses in the country.

Will Russia backpedal on resuming direct flights?

Economic expert Khaled El-Shafaei said these acts of terrorism target the tourism sector, especially as the resumption of direct flights between Egypt and Russia are just around the corner, as well as a number of European countries.

Despite the long negotiations between the two sides and the improved security measures in Egypt’s airports, El-Shafaei thinks it’s likely that recent events could affect the return of flights between Egypt and Russia.

El-Shafaei pointed out that investments, which began to enter the market after the Egyptian pound was floated, reached $1bn, explaining that terrorist operations aim to prevent investment inflows to Egypt.

El-Mahdi disagrees with El-Shafaei, saying that stakeholders in the tourism sector are negligent.

El-Mahdi explained that after the terrorist attack in Luxor in 1997 when 58 tourists were killed, former minister of tourism Mamdouh El-Beltagi developed the sector and made a boom in just six months.

“We have to exert more efforts to open new tourism markets, for example in China, Africa, Asia, Eastern Europe, and Latin America,” El-Mahdi added.

Terrorism postpones dollar flow

Mashhour noted that these events arouse foreign concerns about coming to Egypt; therefore, the US dollar flow decreases, which in turn affects economic stability.

“Terrorism affects all sectors and situations inside any country, not only in Egypt, but transparency is required in such a situation to express what is going on and should be expressed through the media to the world,” Mashhour said. “Tourism has been hit and therefore the dollar price will increase due to high demand and lower supply because the main foreign currency sources [tourism] are fading.”

The head of Egypt’s Coalition to Support Tourism, Ehab Mousa, said the bombing will have a significant impact on tourism during the winter season.

Mousa expects a dramatic decline in the number of tourists coming to Egypt over the Christmas and new year holidays.

Mousa noted that Christmas is one of the important seasons for tourism in Egypt but unfortunately, the terrorists have succeeded in striking a blow to the sector due to their choice of time and place.

He expressed his concern regarding the appreciation of the dollar exchange rate in the case that the tourism industry is hit by a recession following the attacks.

Further, Heidi Hemaya, the media planning manager at J. Walter Thompson (JWT) Cairo which is responsible for the promotion of Egyptian tourism, said the company halted its advertising campaign that has been planned for launch on Sunday on CNN.

Hemaya told Al-Borsa newspaper it was decided that the campaign would be halted for 48 hours after the bombing of the cathedral.

Hemaya said the company has started to communicate with overseas offices to see how the cathedral bombing echoes abroad and find ways to handle the repercussions.

The US dollar broke through EGP 18 for buying at the Central Bank of Egypt (CBE) on Monday, for the first time since the flotation on 3 November.
The US dollar broke through EGP 18 for buying at the Central Bank of Egypt (CBE) on Monday, for the first time since the flotation on 3 November.

Dollar exchange rate remains unchanged

The US dollar broke through EGP 18 for buying at the Central Bank of Egypt (CBE) on Monday, for the first time since the flotation on 3 November.

The official price of the dollar against the pound at the CBE on Monday registered EGP 18.0323 to buy and EGP 18.3962 to sell.

At state-owned banks, Banque du Caire, Banque Misr, and the National Bank of Egypt, the greenback registered EGP 17.95 to buy and EGP 18.20 to sell, while the price stood at EGP 17.95-18.16 to buy and EGP 18.2-18.45 to sell at private banks.

The highest buying offer at banks on Monday was recorded by Abu Dhabi Islamic Bank at EGP 18.16 to buy and EGP 18.45 to sell.

Meanwhile, analysts ruled out that the exchange rate would be impacted by the recent terrorist events in Egypt.

Head of the treasury at a foreign bank operating in the Egyptian market, Tamer Youssef, said the impact of terrorism is likely to unfold on the tourism sector, and thus foreign exchange revenues. “However, tourism is already struggling and banks do not rely on the sector for hard cash,” he added. “The exchange rate has not and will not be impacted by these events.”

He noted that the available hard cash has been increasing at banks as the price hits EGP 18.

El-Mahdi said the St. Peter and St. Paul Church bombing cannot be linked to the exchange rate or the Egyptian Exchange (EGX).

On Monday, the first day of trading on the EGX after the cathedral bombing, saw a drop in the morning to 11,224 points during the first half hour of trading; however, it closed with gains despite the expected downturn on the back of the attack.
On Monday, the first day of trading on the EGX after the cathedral bombing, saw a drop in the morning to 11,224 points during the first half hour of trading; however, it closed with gains despite the expected downturn on the back of the attack.

EGX jumps over catastrophic events

On Monday, the first day of trading on the EGX after the cathedral bombing, saw a drop in the morning to 11,224 points during the first half hour of trading; however, it closed with gains despite the expected downturn on the back of the attack.

The EGX closed in the green, up by 1.29%. The EGX30 closed at 11,444 points in a sudden and unexpected market shift. Total trading recorded EGP 1.467bn over 400.3m shares.

Mohamed Deshnawy, CEO of Roots Securities Company, said the EGX absorbed the negative impact of the terrorist operations within an hour at the beginning of the session by the market switching from the red to the green zone and remaining there until the end of the session.

This marked the end of the instant negative impact.  However, the real impact of that operation on investment, whether direct or indirect investment, will be manifested in concerns about terrorism. Although, he added, the quick arrest of the offender should, to a large extent, decrease that negative impact. Moreover, that impact will decline gradually as time passes with no further terrorist attacks.

Deshnawy expected the EGX’s performance to be normal in the next period.

Adel Abdel Fattah, managing director of Themar Securities Brokerage, said the EGX’s performance came contrary to expectations that it would be negatively affected by the terrorist attack on the cathedral, as a result of the selective purchases targeting stocks that have not yet benefitted from the pound’s flotation.

He said the EGX benefited from the timing of the return of Arab investors’ purchases, as they started to purchase again in the middle of last week and continued in the Monday session this week, following a period of continuous selling since the pound was floated. These purchases have helped the EGX to overcome the repercussions of the church bombing.

Arab institutions registered net purchases of EGP 72.218m, compared to the EGP 23.136m in sales Arab individuals made. As a result, net purchases by Arabs registered EGP 49.080m. As for foreigners, they registered EGP 239.000 in net purchases, supported by foreign institutions which registered approximately EGP 5.45m net purchases.

Abdel Fattah expects the EGX’s performance in the coming days to be separate from the repercussions of the terrorist operation, as it saw many disturbances in the previous period, which gave it a higher ability to absorb such incidents without panic.

Ahmed Abu Hussein, managing director of the brokerage sector in Cairo Financial Holding, says the EGX’s performance surpassed even the most optimistic scenarios. These only expected the market to remain stable without retreat, not to make an increase, as happened in the Monday session.

Abu Hussein expects the EGX’s positive performance to continue, despite the successive terrorist operations in Cairo recently, thanks to the foreign and Arab institutions’ trust in the attractiveness of the EGX’s investment opportunities.

Abu Hussein mentioned that floating the pound and enabling foreigners to transfer their profits flexibly have contributed to the creation of foreigners’ trust in the Egyptian market, especially as this trust comes after five years during which the foreign institutions lost their interest in EGX.

The business community must support the country in these circumstances

Abu Bakr El-Deeb, a writer and expert in economic affairs, said the role of the business community in supporting Egypt’s economy is limited and very weak; despite possessing vast fortunes, they seem satisfied only with appearing in the media on talk show programmes.

El-Deeb said the business community must be charitable as business inside the country promotes the economy. The richest Egyptian businesspeople in 2014 have billions of US dollars in combined wealth.

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Refugees are the migrant advisory committee’s main concern http://www.dailynewsegypt.com/2016/12/13/refugees-migrant-advisory-committees-main-concern/ http://www.dailynewsegypt.com/2016/12/13/refugees-migrant-advisory-committees-main-concern/#respond Tue, 13 Dec 2016 08:45:36 +0000 http://www.dailynewsegypt.com/?p=604135 We solve problems gradually, says vice president for Potsdam committee Anna Nicolsova

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The concept of a migrant advisory committee is strange to Egyptian and Arab readers, because it is not part of our political reality. The committee is a political entity whose members are elected by foreigners who do not have the right to vote in the European country in which they reside. Through the committee, foreigners have a chance to excise their political rights.

These committees are advised by the EU and they exist in many European countries.  Every city, district or county could form a migrant advisory committee if there are sufficient volunteers and political support.

The committee in Potsdam is one of the most powerful committees in Germany. It was founded in 1992 and had strong political influence. The Potsdam founders decided it should consist of nine elected volunteers who would represent foreigners living in Potsdam. Daily News Egypt spoke to Anna Nicolsova, the vice president of the committee in Potsdam, to better understand the refugee situation.

Nicolsova is a Polish lecturer who married a German man and moved to Germany to study law. She said the refugees’ needs are the main challenge to the committee, because every refugee has their own problems that need to be overcome. “Our duty is to try to defend the image and rights of refugees, and to work on integrating foreigners and refugees into society,” she said. “Refugees often find themselves in a permanent state of anxiety, fearing their application will be ejected and the uncertainty of their situation. These issues obstruct their ability to develop and their will to integrate because they do not know if they will remain in Germany or not.”

One major issue that Germans and refugees must contend with is Islamophobia. Nicolsova said this issue must be dealt with seriously, adding that she believes people would not be so afraid of Muslims if they knew more about Islam. The committee therefore enables discussion and dialogue between different segments of the community in order to bridge the gap and generate awareness.

Other obstacles refugees must contend with are the segments of society that exploit their vulnerability as well as a restrictive labout market. Nicolsova said refugees must often contend with misleading translators and brokers who exploit the shortage in affordable housing. “We must look closely at these incidents,” she said. “We cannot only look at the refugee’s side of the story; we must also hear from those they accuse because the truth usually lies somewhere in between.”

“We know very well that there are many faults in society, and we are trying to fight discrimination and persecution in order to reach a peaceful solution to the refugee issue so that we can all live side by side in peace,” Nicolsova said. “This is the role of the committee and its members. We want to involve everyone so that we may find the best solutions that we can all agree on.”

Nicolsova also said refugees often have to wait a long time for their applications to be processed, because Germany does not have enough people working in the asylum application process.

Regarding the housing crisis, Nicolsova said most refugees that are aware they are going to a city with housing shortages do not complain because they do not want to be relocated. However, complaints that the committee does receive are taken seriously. “We try to negotiate with our electors in order to be able to implement strategies that can ameliorate the situation,” she said. “Unfortunately, such situations must be gradually and patiently solved, so we work, do our best, and try to enact reforms. Even if these steps are small, they are still better than nothing.”

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European cooperation integral to solving the refugee crisis http://www.dailynewsegypt.com/2016/12/13/european-cooperation-integral-solving-refugee-crisis/ http://www.dailynewsegypt.com/2016/12/13/european-cooperation-integral-solving-refugee-crisis/#respond Tue, 13 Dec 2016 08:15:03 +0000 http://www.dailynewsegypt.com/?p=604129 It is possible to find better solutions if all European countries dealt with this issue together, says Elona Müller-Preinesberger

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Refugees in Europe have more to worry about than the smugglers. Police are chasing them across Europe, but there are those who are trying to help refugees integrate into society, and to legalise their status. Elona Müller-Preinesberger, executive commissioner for social affairs, youth, health and order in the German city of Potsdam is one such person.

“There are refugees standing by the German borders suffering and wanting to live in a place that preserves their humanity, especially children,” Müller said. “In Potsdam we are working on refugee integration. The situation is quieter now, but we still have a lot of challenges to work on.”

“Now we are working on integrating children into education, and we encourage young people to complete their education,”  Müller added. “We have many obstacles facing the labour market and we are still learning how to deal with the situation and get better. In 1993 laws were passed that aimed to create an unappealing atmosphere for immigrants, and particularly refugees. However, now we are talking about integrating them and granting them the same rights as our citizens. We have a large number of asylum requests, and each request carries its own story and reason.”

Müller explained that refugees have the right to social and economic aid, which varies according to their legal status. Due to a lack of staff however, Müller says there are pending applications dating back 12 months.

Müller continued by saying that asylum applicants obtain €370 a month, and they are not charged for basic amenities such as gas, water, and electricity. Once their applications are processed and they are granted asylum, the government provides them with financial assistance similar to the unemployment benefits allotted to German citizens, until they find a job. The state offers training programmes to help refugees find work.

Müller added that those who complain about their living standards had high expectations prior to coming to Germany. “The situation for every refugee is different, and the state ensures that they receive enough support to live in dignity but not in luxury,” she said. “Even if the government accepted giving more, the taxpayers should not have to endure that. How could the state convince taxpayers, who work hard and do not live in luxury, to prop up a life of luxury for refugees! How could a refugee find the motivation to work and achieve success if he already lives in luxury!”

Müller explained that refugees also have access to basic healthcare, which is considered a basic human right in Germany. She said that the process of attaining basic healthcare has improved, adding that employers originally had to refer people to a doctor, but now that process is in the hands of doctors and the patients themselves. The old system, she argues, was unfair and a heavy burden on job seekers.

“Now, even the newborn refugee children have the right to be treated at a hospital,” Müller explained. “Refugees also receive free education and language courses to enable them to integrate easily and effectively in German society. There are six schools specialised in teaching the German language, and some simple study materials. Those schools prepare the children to enter regular classes in German schools located in their areas.

While Germany may be trying to integrate refugees, many other European countries have taken a more restrictive approach. Müller was critical of countries that did not do enough to help ameliorate the suffering of refugees, saying she hoped that European countries could come together and accommodate refugees as a collective. “It is possible to find better solutions if all European countries dealt with this issue together.”

In regards to the work done by volunteers and other concerned Germans, Müller said she was proud of the work they do. She admitted that there have been acts of violence directed at refugees, but noted that the government is doing its best to encourage people to tolerate refugees and stop the violence. “Germans may envy refugees because they do not pay taxes,” she said. “Some citizens have called on the state to stop using clubs and gyms as asylum shelters out of a fear that their sporting activities would be affected.” Müller also believes that the influx of refugees will not result in mass poverty, because refugees would contribute to the development of German society.

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Bureaucracy biggest obstacle to refugees: AWO chairperson http://www.dailynewsegypt.com/2016/12/13/bureaucracy-biggest-obstacle-refugees-awo-chairperson/ http://www.dailynewsegypt.com/2016/12/13/bureaucracy-biggest-obstacle-refugees-awo-chairperson/#respond Tue, 13 Dec 2016 07:45:35 +0000 http://www.dailynewsegypt.com/?p=604127 There is a shortage of qualified volunteers, money, and translators to help refugees

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Manfred Nowak, chairperson of the workers’ welfare association (AWO), woke up early one day to find that Nazi graffiti had been sprayed on the walls of a refugees home in Berlin, drawn by rightwingers.

“This is not a real threat,” Novak said. “This act shows the fear and terror that the voters of the rightwing parties have, and so we need flexible mechanisms and strategies to deal with these problems.”

Nowak said that many Germans were struck with empathy after seeing photographs of a drowned Syrian boy’s body washed up on a Turkish beach in 2015, and offered to cooperate more closely with civil society organisations to help refugees.

Nowak used one of the rightwing parties’ expressions, saying “the image here has two sides: the real fear, and the image of intimidation to exploit the situation. We are used to putting our differences aside, and we deal with facts, so we organise conferences and seminars meant to educate the public.”

Nowak criticised German chancellor Angela Merkel for limiting the number of refugees Germany accepts, adding that he believes the government does not have a concrete plan to deal with refugees. “Our duty in the organisation is to know the nature and conditions of refugees, and give them strategies and tools to enable them to help themselves in the future.”

“Our organisation is experienced in dealing with refugees,” Nowak said. “We have been working in the field since the 1980s, and we have 12 refugee houses, and core staff covering all areas. We also have a long history in working with civil society volunteers.”

Bureaucracy is perhaps the most serious obstacle refugees are facing. According to Nowak, there are over 80,000 refugees in Berlin. “We must develop a mechanism by which to integrate these people swiftly.”

Some of the obstacles refugees face come in the form of those meant to help them, such as translators. Nowak said that some translators deliberately mistranslate because of their political differences with the refugees, adding that this is a deliberate attempt to weaken their legal position. He added that Germany does not have the budget or the number of specialised workers capable of servicing all the refugees.

“We are looking for refugees or foreigners who speak both languages. Many of those that work with us are volunteers and we can only afford to cover their transportation costs. Everyone does what they can to help, but the needs of the refugees exceed the capacity of our staff,” he explained.

One of the most important things refugees can do is learn the language of their host country, Nowak argued. “Children are able to communicate within three weeks if they learn, but it is more difficult with adults—particularly when it comes to the elderly and the uneducated. We must address this issue because whoever cannot express themselves can become more violent.”

Refugees who do not learn the language and integrate may form parallel societies. Nowak says this phenomenon is unhealthy, and that refugees must learn to speak the native language.

 

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The right exploits the fear of refugees for their own gains: MP in Germany’s Greens party http://www.dailynewsegypt.com/2016/12/12/right-exploits-fear-refugees-gains-mp-germanys-greens-party/ http://www.dailynewsegypt.com/2016/12/12/right-exploits-fear-refugees-gains-mp-germanys-greens-party/#respond Mon, 12 Dec 2016 09:00:46 +0000 http://www.dailynewsegypt.com/?p=604122 Integrating refugees will benefit Germany, especially in the case that they return to their countries as relationships will be strengthened, says Marie Luise von Halem

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New refugees in Germany have encountered several problems: from manipulation by translators in accordance with their political leanings or psychology, and the difficulty of learning the language, to brokers taking advantage of their need for low-cost housing, and mistreatment by employers. However, these issues have not caused Marie Luise von Halem’s optimism to falter. She is a member of parliament for the Greens party in the state of Brandenburg, which up to four years ago had the highest concentration of neo-Nazis in Germany.

The Greens is the party that defends minorities in Germany the most. Halem says the obstacles faced by refugees are due to the huge influx in recent times. This led to anyone who knows the language being used as a translator without assessing their professionalism or suitability. Moreover, the housing and labour markets were not ready for the masses of refugees that arrived on German soil. Halem believes that Germany can turn things around, particularly by criticising those who exploit the fear of refugees, foreigners and the unknown for their own political gain—especially rightwingers.

The policy of the Greens, according to Halem, is based on welcoming any person who enters Germany and dealing with them as a German citizen. The member of parliament said: “Despite some people taking advantage of the issue for their own political gain, helping refugees immediately after they arrive at the German border is a necessity. Moreover, integration is a major issue for my party; we will defend and demand this as a single solution for society and for immigration as a global challenge, which is increasing of course.”

Halem acknowledges that the number of refugees was surprising and Germany was not ready for it, especially as the country’s bureaucracy is not known for being fast or flexible. However, she said “with time, the bureaucracy began to show flexibility and were concerned with finding solutions for people within the limits of the law. Moreover, there are people who had nothing to do with civil society or volunteering before, but they have become concerned with helping refugees and helping to establish shelters. This is a positive and much needed move.”

The MP continued: “It really is a cause of pride; it is a wonderful and very beautiful thing that people care for this humanitarian issue. The reason is deep in our historical roots; it is attributed to the experience we ourselves lived as refugees at the time of the second world war. We cannot forget that in the late 1960s we received Turks as labourers with contracts; but we made a mistake then because we forgot they would bring their families and integrate. So, we behaved differently that time and, early on, thought about integrating those who escaped to Germany, and their families, to find a place in society.”

Based on the size of the situation and the pressure, the present chaos is expected and, in fact, legitimate, she said; but the negative aspects can be assessed and changed for the better. “That is why I am optimistic.”

As for the crises caused by some refugees, such as sexual harassment and assault, Halem said these are individual mistakes and must be handled objectively, quietly, and with tolerance. “We have a responsibility to make German society’s ethics and concerns clear for those who escaped to our country so they can deal with the facts and expectations of the hosting society without violating its system and falling foul of the law. All people make mistakes, including the Germans of course,” she said.

On the international responsibility towards refugees, estimated at 60 million worldwide, she said: “we have to ask what we have done to have this huge numbers of refugees escaping wars, dictators, authoritarian powers, and oppression. We have to take into consideration Europe’s capabilities which enable it to absorb more than just one million people.”

On refugees’ complaints of mistreatment, including trouble with brokers, translators and other organisations taking advantage of the newcomers, Halem said: “We must not start [investigations] by doubting employees and individuals; we must assume that they have good intentions unless proven otherwise.”

As for integrating refugees in the labour market, she said for refugees who come to settle and want to enter the labour market, the doors for education and qualifications them must be opened to them, thus enabling them to compete in that market. Of course, that takes time, and the refugees need places and employers that would be willing to hire them.

Syrians, with their large numbers, are actually a great chance to increase the chances of cooperation with Syria in the future, she said. “I believe that if they are integrated into German society in the right way—imagine with me after the war comes to an end and they go back to their country—to what extent they will have an effective role in helping in reconstructing their country, when they go back with the advanced German know-how,” Halem explained.

On concerns about the creation of a “parallel society” by certain refugees who bring ethnic and religious fanaticism with them to Germany, she said that no doubt there are mistakes to be avoided while working to integrate them, and we will be able to do that more efficiently if we take all the citizens’ concerns into account.

“We, as a party, believe that strong roots and not fearing for one’s identity will help in easing integration. We also believe that any society is able to create a new, ideal identity based on pluralism and will become stronger for it. We believe that an identity based on pluralism and accepting others, results in a happier citizen than those who reject, marginalise, and exclude ‘the other’. All people must participate in the identity, laws, etc.” she explained.

It is “unimaginable” that people use the refugee issue as a political tool and the Greens will work hard to stop them from achieving their goals of racism and division. “Unfortunately, we have to admit that the right derives its political strength from Germans’ fears,” she concluded.

 

 

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Closing borders is inhumane and contradicts German values: SPD member http://www.dailynewsegypt.com/2016/12/12/closing-borders-inhumane-contradicts-german-values-spd-member/ http://www.dailynewsegypt.com/2016/12/12/closing-borders-inhumane-contradicts-german-values-spd-member/#respond Mon, 12 Dec 2016 08:30:42 +0000 http://www.dailynewsegypt.com/?p=604116 The head of Germany’s social democratic party (SPD) headquarters in Berlin, Dennis Buchner, ruled out that opening the German border for refugees could be a long-term electoral manoeuvre by chancellor Angela Merkel and the ruling party. He refuted reports that alleged Germany was receiving an increasingly larger amount of refugees, but stressed Germany should not …

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The head of Germany’s social democratic party (SPD) headquarters in Berlin, Dennis Buchner, ruled out that opening the German border for refugees could be a long-term electoral manoeuvre by chancellor Angela Merkel and the ruling party. He refuted reports that alleged Germany was receiving an increasingly larger amount of refugees, but stressed Germany should not close its borders to those fleeing war.

Buchner said that his party’s position on the matter is very clear, and the right to asylum is stipulated in the German constitution. He added that the government welcomes everyone and reviews all asylum claims, stressing that the closure of borders is inhumane and contradicts German values. There are more than 60 million people in the world who are seeking asylum, and Germany can face this quantity challenge, he said.

Buchner noted that Berlin received only 5% of the refugees in Germany. This share is very small, but Berlin had to open some sports halls and schools, as well as stadiums and football, basketball and volleyball fields to accommodate the numbers of refugees. “We should cooperate and combine our efforts to help those refugees, and integration is our most important goal,” he said.

Buchner said he believes that the fear of Islamophobia is not real. “The German people do not ask refugees where they come from,” he said. “The Germans learned that Islam itself is not the problem, but instead it is extremists and Islamist politicians. Such people exist in all religions and beliefs. Some Germans cooperate now with mosques that help refugees. This personal experience has taught them that Muslims are normal people just like everyone else.”

Buchner believes that the largest share of Germans consider aid as a purely humanitarian activity. Even so the government has to take into consideration the fears some citizens have,  especially as some Germans continue to say racist and unacceptable things on social media.

“The government should discuss the fears of those and deal seriously with this issue, because Germans and Europeans also have right-wing extremists,” Buchner said. He noted that the lack of information increases fear and some political currents exploit that.

Some Germans, Buchner added, take advantage of refugees and their need for low-cost housing. He said that it is regrettable, but people like that exist everywhere in the world and the situation is difficult to correct because of supply and demand.

Buchner said that Germany will not be increasing the number of refugees it receives, saying the country does not promote migration but offers asylum for those fleeing their countries. “The government should analyse the number of people it can accept and plan to integrate them in the society,” he said. “Moreover, Germany should search for the reasons that push refugees to escape.”

Buchner said that he cannot predict whether Merkel’s decision to open borders for refugees was designed to take advantage of them in the elections on the long run, or not. He believes that Germany should not close the borders, and now the government faces a big challenge to enable those refugees to live in dignity. He added that the SPD party believes that Merkel was forced to do so, but the European Union failed his country.

 

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