Egypt expanding trade, investment spheres in the south

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CAIRO: Egypt is embarking on a LE 490 million plan for trade and logistics zones in several Upper Egypt governorates, reported the State Information Service.

Located in Luxor, Beni Suef, Fayoum, Minya, Sohag and Aswan, the zones will be realized in three stages, establishing wholesale and retail markets as well as packaging and packing of fruits and vegetables, Trade Minister Rachid Mohamed Rachid noted in a statement.

In September, Reuters reported that Egypt would lease a minimum of 200,000 acres of farmland this year for strictly agri-business projects, located largely in Upper Egypt as well as the North Sinai and the North Coast, with between 60-70,000 acres allocated to Minya.

“We are offering six zones for poultry production to double our capacity,” Agriculture Minister Amin Abaza said.

The government has been targeting the southern region after having “forgotten” it for some time, noted Alia El-Mahdy, professor of economics at Cairo University, adding that it is an “untapped” area that is set to give an economic boost to the rest of the country if capitalized upon properly.

The economic situation in the region is critical because “there is high unemployment, and agricultural crops are left unexploited,” said Magdy Sobhy, senior economist at Al-Ahram Center for Political and Strategic Studies — making it the “least developed region” in Egypt.

Sobhy explained that this situation obliges job seekers to leave the southern region in search for higher standards of living in Alexandria and Cairo.

El-Mahdy stated that the agricultural sector represents a huge source of economic potential for the country, and that water resources, largely from Lake Nasser, are not being fully taken advantage of nor are the fisheries that are present in the area.

In El-Mahdy’s opinion there is huge micro, small and medium-enterprise promise in the region, noting that there is little competition there due to the lack of industry present.

Nevertheless, both experts agree that the establishment of the new industrial zones, for example, is a step in the right direction.

In the last three to four years the government has been building infrastructure, such as roads to connect Upper Egypt to Lower Egypt and the Red Sea coastline, in addition to the industrial zones, Sobhy stated.

Thanks to these government efforts, new textile, food processing, cement — which has been leading the way in the past five to six years — as well as steel factories have been established in the area, he continued.

An airport has been built as well as a new gas pipeline, which reaches Aswan, and more villages now have proper sewage systems, explained El-Mahdy. However, she said, the investment zones are not being fully taken advantage of, indicating that industry and investors have yet to truly tap into the zones’ full potential.

After the zones are built, the local governor of the area quickly ignores them, she said.

Both economists agreed that the private sector has a bigger role to play in developing the region not only through driving investments, but through linking up with the government through public-private partnership (PPP) cooperation.

El-Mahdy thinks that the private sector can help shoulder road, rail and even Nile transportation infrastructure projects, such as by building a new port as well as one to two airports, which should be all the more feasible given that a new PPP law was adopted earlier in 2010.

Sobhy added that the private sector would be “eager” to fill in the gap left by the government, especially if provided with incentives such as lower taxes and tariffs on equipment.

In a nutshell, there needs to be a more “targeted” economic and development policy geared toward Upper Egypt, Sobhy underscored.


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