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follow up observers question new
subsidy scheme the new ration-card system, launched by the government in may to provide customers with subsidized discounts on seven key food commodities, has led some observers to question the scheme’s efficiency. the seven commodities included in the coupon scheme are rice, cooking oil, fuul beans, pasta, tea, butter and lentils. according to the finance ministry, 9.3 million families – almost 40 million people – are expected to benefit from the new system, which will allow card-carriers to buy the products at lower-than-market prices. one kilogram of rice under the scheme, for example, will cost £e 1.50; beans, £e 2; lentils, £e 3; butter, £e 4.50; cooking oil, £e 3.50 a liter; and tea, £e 0.65 a packet. countering claims that subsidies weren’t reaching the right people, finance minister medhat hassanein explained that, “the ration card will only include a maximum of four family members… by doing that we will guarantee that the subsidies are reaching the right people.” mohamed bassiouni, manager of a government-run outlet for subsidized commodities, or gema’iya, said the new scheme would allow people to buy £e 100 worth of goods at only £e 43. “this isn’t bad at all, compared to the normal prices at any local market,” bassiouni commented. according to a government report presented to parliament in april, prices of basic commodities have jumped 62 percent since the currency devaluation in january 2003. “that means that those who used to spend £e 100 a month on goods will now pay £e 162 to buy the same amount,” clarified one analyst. to carry out the scheme, the government contracted the state-owned holding company for food industries to provide the market with 180,000 tons of cooking oil, 240,000 tons of butter and 360,000 tons of rice every year. the government has contracted other companies for 80,000 tons of beans, 80,000 tons of lentils and 260,000 tons of pasta. these deals will cost the government an additional £e 3.2 billion a year. some observers note that, while egypt’s subsidy program is the costliest in the world, expenses could increase further should inflation rates continue to rise, as the cards guarantee consumers access to goods at fixed prices. mps, therefore, are calling on the government to explore alternatives.
hassanein, meanwhile, has assured detractors that the subsidies will reach all the citizens that need them via 36,000 gema’iyas countrywide. many grocers, however, seemed far from enthusiastic. “it’s very hard to take responsibility for distributing these huge amounts of commodities,” said tarek ghassan, the owner of a grocery in shobra. “there will also be crackdowns by the ministry, which might put you in jail for little mistakes.” according to another grocery owner, qadri mohamed, profits were – by nature – low. “we’re also not sure of the quality of subsidized goods,” qadri added. “they might not be as good as those available on the market, and customers, therefore, will refuse to take them.” some grocers also noted that the temptation to hoard subsidized
goods or sell them on the black market – a scenario that happened
frequently under previous ration systems – would be great.
summer said regional giant o.t. to
launch iraq tv channel iraq’s first post-saddam hussein private tv station, owned by an egyptian telecommunication mogul, will be targeting the pockets of local advertisers after being granted permission by coalition and iraqi authorities to launch this summer. orascom telecom (ot), which also owns and runs central iraq’s first mobile network, iraqna, will launch its hawa tv station in mid-june, two weeks before the scheduled us handover of power to the iraqi governing council. hawa, arabic for “air,” will be managed by video cairo sat (vcs), an egyptian tv production company. the station will terrestrially broadcast news, features on current events and entertainment programs for about six months, “then we will decide if we will move on to satellite or not,” mohamed gohar, vcs chairman and the station’s executive manager, told business monthly. according to gohar, the station has a starting budget of $25 million. future budget forecasts, he said, will depend largely on advertising revenue. ot’s iraqna, he added, would be one of hawa’s first advertisers, but he declined to reveal any details concerning the deal. during saddam hussein’s 24-year rule, privately owned media was outlawed in iraq. the former regime also banned satellite dishes, forcing iraqis to resort to foreign radio stations such as the bbc and monte carlo for alternatives to state-controlled media. after the fall of baghdad, though, many started tuning in to pan-arab satellite stations, including qatar’s al-jazeera and the dubai-based al-arabiya. in february, us government-owned satellite station al-hurra was also added to the constellation of news channels now available to iraqis. according to officials at hawa, the station isn’t aiming to compete with established players, at least for now. “our target audience in the first phase is local iraqis,” gohar said. “when we decide to move to satellite, then we can think about competition.” asked about the station’s editorial policy regarding the ongoing political turmoil in iraq, hassan abu al ela, the station’s deputy manager and chief editor, stressed that all issues would be handled objectively. “we are not with or against anybody,” said abu al ela, a longtime bbc arabic service announcer. “we will be totally objective.” according to marketing experts, though, in order for the station to thrive financially, it should remain terrestrial. “they will find many local advertisers,” oussama jamal, of egyptian media house starcom, said. “but the market for satellite channels is saturated. they will incur more costs and will find it difficult to attract clients.” apart from its headquarters in baghdad, the station will also have three local bureaus in iraq, along with two regional offices, in cairo and jerusalem, and an office in washington dc. according to gohar, the station will depend mainly on local, iraqi hires, and expects initially to employ 240 people, who, he added, would have the right to own shares of the station. alaa shahine local business more realistic
on reconstruction the joke around town a few months ago – that the abbreviation for the us-led coalition provisional authority, cpa, actually stands for “can’t provide anything” – seems a fair charge these days, given the state of affairs in iraq and foreign efforts at reconstruction. the us administration’s assurances that democracy and prosperity for the war-torn country were just around the corner, seem a trifle premature. the cancellation of a reconstruction conference planned for baghdad in early april suggested a firmer grasp on post-saddam hussein reality, while an uprising in falluja and a number of shia towns has set talk of rebuilding firmly on the backburner. local businesses – public and private – also appeared more staid on the issue of reconstruction at a march trade exhibition sponsored by the federation of egyptian industries (fei). in terms of making inroads into the iraqi market, optimism among egyptian businesses depended largely on the kinds of goods they were pedaling. the representatives of companies selling equipment for the fossil fuel sector, for example, simply laughed when asked about their prospects in iraq. a viable iraqi market for their goods was at least five or six years away, said one. a salesperson for a furniture company, too, predicted it would be at least two years before he could start racking up iraqi orders. on the other hand, companies selling foodstuffs expressed optimism. some representatives said their companies had already worked in the iraqi market under the sanctions-era, un-administered oil-for-food program, and had only stopped operations in the spring of last year, during the war. according to alaa ezz, special assistant to the chairman of the fei, foodstuffs, clothing and household appliances have done particularly well since trade resumed after the fall of baghdad, although he added this was just a general impression. as goods destined for the country are usually registered as heading for jordan or kuwait, iraq’s import figures are impossible to gauge. the fei sponsored the attendance of 600 iraqi participants at the event. according to ezz, 50 of these were procurement managers in various iraqi ministries and provincial governments. one thing’s certain – whether at war or at peace, iraq requires considerable rebuilding before domestic industry is able to make a significant contribution to local needs. qais khafaji, head of the federation of iraqi industries, said at the event that 70 percent of his country’s industry was inoperative, and that which was running did so at 20 percent capacity. willa thayer ’04 privatization
agenda questioned recent announcements by the public enterprise ministry – that it plans to sell off 34 state-owned companies this year – have drawn criticism from observers who claim the government has priced state assets at less than fair valuations. public enterprise minister mokhtar khattab, however, insisted that companies lined up for sale were loss-makers. the minister added that the renewed push for privatization was the result of pressure from the international monetary fund and other external sources. according to khattab, the government will retain control of companies in what are considered “key” sectors, including textiles, aluminum, sugar, pharmaceuticals and chemicals. the government will also retain control over public utilities, including electricity, fixed telephony and gas and water distribution. akram bastawi, a former assistant to the minister, welcomed the announcement as a positive step, especially for workers, who, he said, could expect better wages and conditions in the private sector. still, bastawi added that the government’s decision to sell the companies had little to do with their performance, but rather the government’s inability to cope with the current market environment. “privatization is the government’s plan to get out of the market,” he said. “the government is selling most state-owned companies, whether they’re losing money or making a profit.” total revenue generated by the privatization program since its inception in the early 1990s has reached some £e 16.5 billion. according to official figures, 158 companies have been partly or totally privatized since 1992, while another 32 were simply closed down. according to khattab, early retirement schemes had reduced the public sector workforce by 185,000, enabling state-owned companies to repay £e 12 billion in debts, saving £e 1.8 billion in interest charges. but the ministry’s privatization plans were criticized by a “report on integrated development,” released by cairo university’s center for developing country studies in april. according to the study, the government is only privatizing the public sector’s most profitable companies, leaving loss-makers on the shelf. seventy-seven companies, the report said, had been privatized without consulting the legislative authorities; instead, only a minister had led the sell-off. “people and society should be involved in decisions to transfer ownership from the public sector to the private sector,” said cairo university economics professor laila el khawaga. “if this happened, we wouldn’t have so many interpellations raised in parliament,” she added. in early april, egyptian workers’ union chairman el sayyed rashed told the people’s assembly, “we’re not against economic transformation, but this has to be approved by the people, and it should benefit them.” the cairo university report went on to accuse the government of a lack of transparency, in terms of valuation processes, modes of privatization and buyers. according to el khawaga, the public enterprise ministry didn’t allow the central auditing agency (caa) to review its valuations of companies slated for sale until 1999. “when the caa was approved to take part in the process, 166 companies had already been sold,” the report stated. additionally, several companies were reportedly sold off at bargain prices, with investors able to resell them in several cases at 300 percent the original price. the state’s pepsi cola company, for instance, was sold for £e 131 million in 1994. four years later, a major shareholder sold 77 percent of the firm for $400 million. many analysts maintain that the ministry’s valuation process is inherently unrealistic. in 1993, the al-ahram center for political and strategic studies, along with the national investment bank, put the total value of state-owned firms at £e 500 billion. in 1996, then prime minister kamal el-ganzouri estimated that the same set of companies were worth a total of £e 124 billion. four years later, khattab put the figure at £e 29 billion. inconsistencies like these have not gone unnoticed by the opposition. in a parliamentary interpellation in late march, mp from the leftist tagammu party abdel aziz shaaban accused khattab of including profit-making companies on 2004’s privatization agenda at less than fair prices. “the government is planning to sell sohag spinning company at only 5 percent of its value,” he said. “statistics show that the factory... is a huge profit-making entity, with margin profits reaching almost £e 4 million a year.” khattab, however, refused to answer shaaban’s interpellation, saying simply that, “there is no buyer for that factory at the moment.” summer said u.s. wheat’s market
share dips us wheat appears to be losing its traditional dominance in the local souk, with its market share dropping to a current 54 percent from over 80 percent five years ago, due largely to state efforts aimed at diversifying wheat sources. recent figures state that, from july 2002 to june 2003, the government imported a total of 3.84 million tons of wheat, 1.6 million tons of which were from france; 1.32 million tons from the us; and 0.36 million tons from australia. in the same period, private importers bought 1.19 million tons from the black sea region; 49,000 tons from pakistan; 55,000 from the us; and 27,000 from india. according to a study done by the cabinet’s information & decision support center (idsc), the diversification effort has led to savings of approximately $40 per ton. while egypt produced some 5.5 million tons of wheat last year, it had to import another 6.5 million tons to meet local demand, making it the second largest wheat importer worldwide after japan. according to supply and internal trade minister hassan khedr, whose ministry is responsible for buying wheat for subsidized bread, the government is, in many cases, using a “commodity exchange system,” a barter scheme allowing egypt to exchange goods for wheat. the system has been used with a number of trade partners, including russia, ukraine and syria. there are also plans to initiate the system with india, pakistan and kazakhstan. in an effort to woo the market back to american cereals, usaid announced in march that it would earmark $50 million in aid to the egyptian private sector for grain purchases. the scheme would provide importers and private mill owners with dollar-denominated financing for the purposes of importing wheat – from, of course, the us. the loans would then be paid back – in egyptian pounds and at the official exchange rate – over six months, with a two-month grace period. there appears, however, to be a caveat. according to officials at the federation of egyptian industries’
grains division, the us is saying that, as part of the arrangement,
orders must be shipped on vessels flying the us flag, which effectively
raises transport costs by some 30 percent. atef abdallah world bank funds airport
expansion even countries boasting singular attractions – such as the sphinx and pyramids – aren’t exempt from the need to provide services up to international standards if they want to keep visitor numbers up. ever mindful of this, the government is working hard to improve its international airports in cairo and sharm al sheikh. these upgrade projects received a boost in march, when the world bank approved a $335 million loan for airport expansion. owing to the rapid increase in global air travel in recent years, cairo international airport now serves some 9 million passengers annually. handling such volume in a safe and efficient manner, meanwhile, has become increasingly difficult, as expansion hasn’t proceeded at the same pace as tourist growth. because tourism is one of egypt’s main hard currency earners, the airport projects are of considerable economic importance, and require the attention of both the public and private sectors. as mahmood ayub, world bank country director for egypt, lucidly stated in a recent al-ahram weekly report, “evidence indicates that private investment in infrastructure becomes most viable when it compliments public investment, where an enabling institutional and regulatory framework to facilitate private participation exists.” research by the world bank suggests that the financial rate of return on investments in such projects is very high. for cairo’s airport, the anticipated annual return on investments is 16.5 percent; for the airport at holiday epicenter sharm al sheikh, 26 percent. in many developing countries, though, the absence of adequate financing makes it necessary to seek funding from organizations such as the world bank in order to undertake large-scale infrastructure projects. in the case of egypt’s infrastructure upgrades, benefits will also accrue to the domestic economy, by way of the construction and management contracts going to the local private sector. orascom construction industries (oci), for instance, was awarded the project to build the newest addition to cairo’s airport: new terminal facilities including a 4,500-square-meter building; a state-of-the-art baggage-handling system; a security system; and a heating-ventilation-air conditioning system, according to oci. in contracting out airport projects to private firms, the egyptian government intends to use build-own-transfer (bot) schemes, as it did in the case of the successful marsa alam airport in 2001. the london-based pan-arab daily al-hayat reported in april that more than half a dozen private contracting companies were vying for contracts. sabiné v. calle israeli company postpones egypt gas deal measures taken to avert fertilizer shortfall apache signs gas agreement with egpc |
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