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follow up egypt anticipates power
export as region’s grids link up in a press conference on march 28, minister of electricity & energy hassan younis announced that 2003 would witness the final phase of the integration of the region’s electricity grids, through which egypt’s spare electricity could eventually be exported to europe. the minister pointed out that egypt had already earned more than $5 million in march from electricity exports to jordan, as a result of a january 2003 agreement with the kingdom. the agreement aimed at supplying jordan with egyptian electricity by linking the two countries’ power grids. the two combined power grids are now expected to be further linked with other grids in the region: to those of the north african maghreb states and spain, and to syria and turkey, the latter of which is already connected to the european grid. cairo, meanwhile, will act as the “regional control center” of an expanded regional electricity network. according to younis, the arab countries have vast potential for hydroelectric power, and the new electricity transit industry promises greater revenue for the countries involved. “revenue received for exported power will be immense,” the minister said. “although it’s hard to give precise figures,” he added. ismail hilal, deputy minister of electricity & energy, however, said the new industry has the potential to replace tourism as the country’s staple earner. some observers say the initiative has positive political implications as well. “the electricity network represents a first step towards uniting the arab countries,” opined al azzab essam mansour, professor of economics at the american university in cairo. “and it will also narrow the cultural and political gap between the east and west.” he estimated that the scheme, if successful, could earn egypt more than $200 million per year. but not everybody’s as gung ho, with some observers fearing
that too little research has gone into the project. “the arab
countries’ capacity for exported electricity needs more consultation
from experts in order to assess the economic and environmental risks,”
said mohammed awad, chairman of the egyptian electricity holding
company. “but with efficient consultation, we will be able
to launch an industry that adversely effects neither our health
nor our money.” khaled moussa al-omrani mokattam residents brace
for end of days since the beginning of the year, some residents of mokattam, a district close to old cairo, have adopted a siege mentality. january saw the local currency devalued, which brought in its wake a painful wave of inflation; in february, the community’s garbage collectors – long considered a pillar of the local economy – lost their jobs to a foreign waste management company; and march saw the outbreak of a highly unpopular war in iraq. in preparation for perceived tough times ahead, therefore, many of mokattam’s denizens have begun stocking up on non-perishable foodstuffs, in the expectation that such commodities will soon become much more expensive or unavailable altogether. some mokattam residents believe there is a possibility that the united states will attack other countries after iraq – perhaps even egypt. others believe that the current wartime economic crisis – replete with massive shortfalls in both export and tourism revenues – will also serve to hasten the disappearance of basic commodities. “my wife asked me to buy 10 kilograms of rice, immediately,” said maamun hussein, a 41-year-old employee of the state and mokattam resident. “i laughed, telling her that if a regional war broke out, the country could stop importing. we would need to buy more than 100 kilos.” while hussein thinks that such worst-case scenarios are exaggerated, he, and several of his friends, chose to err on the side of caution, stocking up on whatever basic commodities they could find. many locals believe the country’s economy will still be bruised by the war in nearby iraq, and prices on most products will inevitably go up. some think that the government, despite pledges to the contrary, will be unable to institute viable price controls and stanch the rising tide of inflation, leaving citizens with little choice but to hoard. “the government will not be able to control prices completely, and stockpiling food may seem the only solution left for us,” said shaaban mohsin, a 35-year-old lawyer. he added that local fears pertained not only to threats of war and a weak currency, but to unscrupulous local traders as well. “in the event of inflation and disasters, traders will try to capitalize from the situation by raising prices to satisfy their greed,” he said. the phenomenon isn’t unique to mokattam. similar fears have been voiced among the residents of other areas of cairo as well, such as imbaba and boulak. a resident of the latter district, preferring not to give his name,
said that the hoarding of commodities was actually one of the reasons
why prices are continuing to rise. “if the government has supposedly
fixed prices already,” he asked, “what else could be responsible
for the continued inflation?” summer said new meters, garages to
provide more parking space for cairo’s million-plus drivers, finding a parking space can be a daily ordeal. while the urban governorates of cairo and giza together can provide 208,000 cars with parking spaces, this, according to official statistics, falls short of what is needed – by almost 100,000. in order to provide relief to the increasingly aggravated hordes of drivers, therefore, the cairo governorate has launched a new system of parking meters in the downtown district, one of the capital’s most crowded areas. since november 2002, drivers have had to pay, via newly installed parking meters, to park their cars along major downtown avenues, including 26 july street and talaat harb street. per hour, the meters charge £e 1 between 7am and 4pm; £e 0.80 from 4pm to 10pm; and £e 0.10 from 11pm to 7am. drivers must purchase plastic “smart” cards – available in denominations of £e 5, £e 10 or £e 20 – to use the machines, with an additional charge on the first card to cover sales tax and insurance. “the project is considered the best solution yet to the traffic problem,” said safwat imbabi, the abdeen district councilor. fawzi ibrahim, owner of an accounting office in the downtown area, agreed, saying that the project was a clever way to solve the traffic problem since “people can now find a space to park at any time.” storeowners along the area’s busy streets, however, hardly welcome the new system. “the project is completely, 100-percent futile,” opined mohamed badr, who owns a shop on 26th of july street. “store owners and residents will pay huge sums of money if they park in these spaces,” he added, noting that it costs much less to park in local garages. nearby, walid imam, another shop owner, was equally dubious. the new system, in his opinion, would discourage people from spending time downtown, which would, in turn, be bad for business. “people used to pay low rates to the suyyas [car parkers], but now they are charged for one hour – even if they stay for less time,” he complained. the meters were built by local company saydo on a build-operate-transfer (bot) basis, after the cairo governorate granted the company a five-year contract in march 2002. saydo is set to install more meters in ramsis square and along al-kasr al-ainy street in the near future. the governorate has also opened another front in its campaign to provide its citizens with adequate parking, in the form of an £e 1.2 billion project to build eight new underground garages, with a holding capacity of 40,000 cars, by march 2004. a private investor, also working on a bot basis, is expected to build the garages over the course of the next 24 years, during which the governorate will receive £e 757 million of the revenue generated. the garages will be in high-traffic areas, like tahrir square,
darasa, torgoman, ahmed helmy, roxy and heliopolis, among others.
according to cairo governor abdel rehim shehata, new multistory
garages will also be built in abbasiya, and next to the helwan and
sayeda zeinab metro stations. khaled moussa al-omrani under war clouds, cairo’s
arab season starts early it’s well known that vacationers from the arabian gulf swarm into cairo every summer. they come both to take advantage of the relatively cheaper accommodation and the – again, relatively – cooler climate. egyptian hoteliers have even named a season after them. this year, though, with the launch of the us-led invasion of iraq, the “arab season” started early. as the first bombs began to fall on baghdad on march 20, large numbers of kuwaitis began hastily packing their bags for cairo, fearing saddam hussein’s – possibly chemical-tipped – retribution. according to sources at cairo international airport, the first seven days of the war brought roughly 10,600 passengers from kuwait to egypt’s various points of entry, including the airport itself and the ports of nuweiba and safaga in sinai. the traffic from kuwait was so heavy, in fact, that the egyptian ministry of transportation was moved to establish an “air bridge” from kuwait to cairo, which aimed at aiding incoming refugees. as part of the initiative, the government provided those who arrived at the nuweiba and safaga ports with food and, for the destitute, £e 50 in cash. fearful that greedy traders might prey on new arrivals, the ministry of supply & internal trade intensified its supervision of the markets in and around points of entry. “we are currently making sure that no trader uses the chance... to raise prices,” a ministry of supply spokesman was quoted as saying in the march 22 issue of weekly al misaa. unlike in previous years, the kuwaitis seemed to forego the five-star hotel circuit. opting instead to rent furnished flats in cheaper areas, the kuwaiti exodus largely disappointed cairo’s hotels, already reeling from a severe drop-off in occupancy rates. “during the first week of the war, there was a fall in the number of tourists,” said an employee at the royal nile tower hotel in garden city. “after hearing about the kuwaitis fleeing their country, we expected an increase in hotel residents. ironically, we found no change.” other hotels enjoyed slight rises in occupancy thanks to the visitors, “although it wasn’t as much as we expected,” admitted a receptionist at mohandiseen’s atlas hotel. one kuwaiti visitor said that most of his friends couldn’t afford expensive hotels because they had fled kuwait without taking much cash with them. “i had to leave all my possessions with my family,” said hosni al-shafiai, a 37-year-old kuwaiti accountant who had just arrived at safaga. most of them say that they plan to stay on in cairo until the war in iraq comes to an end. “i intend to live here until i run out of money, then i’ll return to my country – hopefully, after the war,” explained ahmad al agri, a kuwaiti who currently resides in a furnished flat in mohandiseen. kuwaitis weren’t the only ones to flee the range of iraq’s alleged weapons of mass destruction. upon the commencement of operation iraqi freedom, hundreds of egyptian expatriates too, who had been living in both iraq and kuwait, returned home en masse. many egyptian returnees from kuwait complained that they had little hope of getting their kuwait-based jobs back once hostilities come to an end. “in the last few days before the war, the kuwaiti government treated us very badly,” said magdi ibrahim abdel aziz, an egyptian who had been working in kuwait city before the war. “they told us that those leaving the country would not be able to get their jobs back.” during the war’s first week, therefore, the egyptian government promised to do what it could to find work for its returning native sons. whether the state will be able to provide several thousand returnees
with jobs, though, considering its already infamously bloated work
force, remains to be seen. summer said uni students see cost of
textbooks rise almost every segment of society is feeling of the pinch after january’s currency devaluation and the subsequent wave of inflation. even college students – traditionally broke – have been affected, with the retail cost of university textbooks up by an average of 20 percent. higher textbook prices are the most noticeable in science faculties such as medicine, pharmacology, engineering and computer science. technical books that had previously cost about £e 200, for example, now cost more than £e 250. “we already had to buy expensive books,” said ahmed mohsen, a medical student at ain shams university’s faculty of pharmacology. “but now, with these increasing prices, there are only two solutions: to either photocopy the books or not to buy them at all.” rising prices aren’t confined to imported materials. “i’ve paid more not only for english-language novels but also for arabic books printed in egypt,” complained noha al sayed, a student in cairo university’s english department. some observers blame retailers for taking advantage of the post-devaluation confusion to jack up book prices, warranted or not. “floating the pound has no relation with rising prices, said nagi sharaf, a father of three university students. “traders and booksellers are increasing prices in order to benefit,” he said. local booksellers, meanwhile, claim that the rising cost of paper
is behind the spike in prices. “a couple of weeks ago, i started
to pay £e 15,000 per ton of paper, up from £e 13,200,”
said the owner of a company that imports paper for resale to local
publishers. “so in turn, i have had to increase my prices,
or lose money.” summer said drug prices continue to
rise post-float since the government’s january 28 currency devaluation, the prices of vital drugs and medicines have risen dramatically, while many imported medical products have disappeared from the market altogether. essential drugs, such as lanoxin, emovan, epanutin and insulin, to name only a few, have seen their prices skyrocket. “i suffer from rheumatism, and i use only foreign medicine because it is safer for me,” said sara hassan, a 23-year-old teacher. “last time i needed epanutin, i searched for weeks, and when i finally found it, i paid £e 10 instead of the usual £e 5.30.” because of the local industry’s reliance on imported inputs, even locally manufactured brands have become pricier. “i used to buy the egyptian-made insulin for a low price,” complained manal mahmoud, a mother of a six-year-old child with diabetes. “now i pay £e 1 more, and sometimes i can’t find it at all.” zakareya gad, head of the pharmacists’ syndicate, meanwhile, has urged people not to panic. “there will be no changes in prices of essential drugs,” he insisted in a recent appearance on egyptian state television’s popular program akhbar al nas. “if we have to increase prices, it will happen only with vitamins,” he promised. meanwhile, pharmaceutical companies, in a bid to offset the rising overhead costs of imported materials, have petitioned the government – which has always controlled medicine prices, even in the private sector – to allow them to increase retail prices on another 523 drugs by 20 to 25 percent. in defense of the move, drug companies point out that the cost
of imported base materials had already affected prices before the
devaluation. summer said gov’t endorses eu
fta following six years of debate, the people’s assembly finally ratified a free trade agreement (fta) with the european union on april 9. known as the egypt-eu association agreement, the deal will bring a number of egypt’s goods that much closer to the markets of europe, its largest trading partner. in 2000, total eu-egypt trade amounted to €11.17 billion ($12.15 billion). prime minister atef ebeid described the agreement as an economic victory for egypt, opening up markets in the 15 eu member states to egyptian goods, thereby boosting foreign trade and enhancing job opportunities. “the european union is the largest international political union, which supports the economic stability of its partners,” ebeid said. “being part of european stability, this agreement will assure egypt’s own security and stability.” under the agreement, duties on a range of industrial goods will be dismantled completely over the coming 12 to 15 years, which is expected to substantially boost local exports. “the advanced level of free access we achieved for industrial products enables us to compete in international and european markets,” said minister of industry ali el-saiedi. el-saiedi pointed to the textiles sector in particular. while textiles and yarn were excluded from the 1977 eu-egypt cooperation agreement, the new fta, which supersedes the earlier one, will eventually allow both materials duty-free entrance into eu markets. the ratification of the agreement followed rigorous negotiations, which had gone on from 1995 to 1999, during which talks regularly broke down over disagreements on agricultural concessions. while the majority of parliamentarians approved the agreement, some expressed consternation that it didn’t go far enough in opening up the eu’s – infamously protective – agriculture market to egyptian agricultural products. the wafd party’s mounir fakhri abdel nour urged the government to keep pressuring the eu to further dismantle its restrictions on agriculture, saying that they were both “unfair” and a hindrance to the development of the local sector. but despite these reservations, the agreement will reduce eu tariffs on a number of egyptian products – particularly potatoes, horticulture produce, oranges, dried and frozen vegetables, frozen fruits, fruit juices and jams. some processed agricultural goods too – including sugar, chocolate and pasta – will also be subject to tariff reductions. minister of foreign trade youssef boutros-ghali, meanwhile, assured mps that a new round of discussions was currently under way with several european countries aimed at further expanding agricultural access. the agreement is part of the eu’s larger euro-mediterranean framework, launched in 1995, which includes a raft of trade deals and initiatives, aimed at promoting freer trade and enhancing cooperation between the countries of the mediterranean. within this framework, the eu has so far signed ftas with tunisia, jordan, the palestinian authority, morocco, and algeria, and it is currently in negotiations with syria and lebanon. but egypt won’t be tasting the fruits of the deal just yet
– the agreement must be approved by 11 more eu member states
before it will actually go into effect. mohamed mursi war sees dollar up, speculation
earns fatwa after the launch of the us-led war in iraq, the value of the dollar fell to varying degrees on the world’s currency markets – with the notable exception of egypt’s. while dollar prices elsewhere more or less followed the wavering fortunes of invading coalition forces, in egypt, by contrast, they simply continued to rise, albeit incrementally. in the first week of the war, egypt’s official exchange rate hovered around £e 5.78 to the dollar, but by the second week of hostilities – despite us military setbacks – it had managed to creep up a further two piastres, to £e 5.80. sell rates on the black market, meanwhile, ranged between £e
6.10 and £e 6.50. the state’s policymakers have often attributed the depreciation of the pound’s value to mercenary currency speculators who – according to the government line – sell out their country’s economy for personal gain. over the course of the last two years, several forex bureaus were closed down for allegedly participating in black market activities. in egypt, currency speculation came to the fore around 1997, when global circumstances – namely the asian crisis – resulted in greater pressure on the egyptian pound. subsequent currency devaluations have made the practice quite profitable. the perpetual slide of the pound since then – both officially and unofficially – has also led some religious figures to debate the morality of illicit foreign currency trade vis-à-vis islamic law. shortly before the outbreak of the war in iraq on march 20, nasr
eddin farid, former mufti of al-azhar and professor of islamic law
at al-azhar university, went so far as to issue a fatwa, or religious
edict, against the practice, according to state daily al-ahram.
“trading hard currency in the black market is haram [forbidden
by islamic law]. it is like a weapon of mass destruction, as it
totally destroys the national economy and harms the citizenry,”
the mufti was quoted as saying. ismail hassan, ceo of the misr-iran development bank and former governor of egypt’s central bank, approved of the issuance of the fatwa, hoping it would slow currency speculation, which, he said, “only serves to hinder the development of the local economy.” at least one observer doubted the edict would be enough to stop
the practice as popular confidence in the local currency has already
been damaged beyond repair. “the egyptian pound is deteriorating
day after day,” said hisham hasabou, an economics professor
at ain shams university. “people don’t trust it anymore.”
khaled moussa al-omrani banks make move to chip-based
cards the plastic cards with the little magnetic strips on the back will soon move into obsolescence, as banks come under increasing pressure to convert to chip-based cards instead. thanks to new global standards in the realms of e-banking, banks will be required to migrate completely to chip-based debit and credit cards by 2005. two new companies in cairo, meanwhile, have been established to usher in the new generation of smarter transactions. the mediterranean smart cards company (mscc) is one of the first outfits in the region devoted entirely to the establishment and maintenance of smart card payment systems. the company’s shareholders include credit card giant visa international, along with local banque misr and it investments. mscc has subcontracted giesecke & devrient (g&d) – one of the world’s leading providers of smart cards and bank notes – to physically manufacture the new-and-improved chip-based payment cards and distribute them to all of mscc’s banking clients. the national processing company (npc), which is in turn owned by the national telecommunications corporation, has recently been certified by visa to manage all future chip-based transactions on behalf of banks. npc’s chief operating officer, marwan aasar, stressed the importance of incoming smart card technology to the retail banking sector. “banks are looking for economy of scale and are focusing their investments on the core services of retail banking,” aasar said. as the 2005 deadline draws closer, mscc and npc might find themselves fighting over the same turf. but for now, said aasar, “we have our own expertise and niches and we are trying to find room for both companies.” npc is already helping its first client, the arab african international
bank, make the jump to the new system. “it is now converting
its entire base into our system, with new terminals that are chip-certified,”
aasar said, adding that the conversion would take another four to
six months to complete. larger banks, with more money at their disposal, were still considering
the option of devising their own transaction systems, without bringing
in a third-party operator, aasar noted. mats a. palmgren |
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