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IN BRIEF

NEPAD calls for $75 billion for Africa
African countries need more money for development – about $75 billion more – to help reduce poverty and propel development. That was the message African leaders taking part in the New Partnership for African Development (NEPAD) summit in Egypt last month tried to stress.

NEPAD aims at revitalizing the continent’s economy by rewarding countries that have strong political and economic management practices with investment from the industrialized world. Egypt Algeria, Nigeria, Senegal, South Africa and other leading NEPAD states work in close cooperation with G-8 members, which include Canada, France, Germany, Italy, Japan, the UK, Russia and the US. Last month’s meeting, which aimed to prepare a report for the G-8 countries, resulted in a timetable for scrapping subsidies to specific countries. Delegates also proposed specific steps to help facilitate African exports to European countries and discussed funding reviews for Ghana, Rwanda, Mauritania and Kenya.

Investments in Egypt on the rise
Investments in Egypt have been on a steady climb since the beginning of this year and are projected to climb further. According to Minister of Investment Mahmoud Mohieldin, foreign investments are expected to double to $2 billion by the end of the next fiscal year in June 2006. Foreign investments this year have already exceeded $1 billion after having reached a low of $408 million in June 2004, he notes.

Holiday bookings hold firm
Travel plans to Egypt have not been affected following the April 7 bombing in Cairo's Khan Al-Khalili bazaar, which killed four people and injured 19. Tour operators have reported no cancellations in bookings to Egypt, allaying fears that the explosion would put a dent in Egypt’s tourism industry.

Although the government had not yet released tourism figures for April as of press time, hotels and tour operators say bookings for Red Sea resorts remain solid. Terrorist attacks in 1997 and fears of flying following September 11, 2001 negatively impacted Egypt’s tourist industry. However, the industry continues to show its resilience and Egypt remains a popular destination.

GAFI opens one-stop shop for investors
Government officials are optimistic that a newly opened Investment Services Complex at the General Authority for Investment & Free Zones (GAFI) headquarters will help relay Egypt’s commitment to investors. The new complex puts all official agencies dealing with investors under one roof. It’s a move many believe will streamline the bureaucratic process domestic and international investors face.

Under the Nazif cabinet, GAFI’s role has become to promote investment in Egypt by identifying issues that traditionally keep investors away and remedying them. The government hopes that streamlining bureaucracy, coupled with the drafting of a new economic courts bill to settle commercial disputes, will encourage more investments.

The Cairo complex is the first of several to be established around the country to help address investment issues pertaining to bureaucracy nationwide.

Greece-ing potato exports
Egypt has accused Greece of taking unfair measures against its potato exports. Egyptian exporters and officials from the Ministry of Agriculture claim that Greek officials are deliberately placing impediments to block the import of Egyptian spuds. The problems started in February when exporters discovered that they were only being permitted to deliver their potatoes to four ports instead of the agreed upon eight. Egyptian officials complain some ports don’t have sufficient warehouses to store the exported spuds, while others are predominantly tourist ports not designed to store goods, especially agricultural ones.

Exporters are also concerned that early last month, potatoes packaged in the agreed upon one-ton units were rejected upon arrival in Athens. Greek Ministry of Agriculture officials decided that only 50kg packs would be cleared through customs. Some in the market claim that the obstacles are the work of the Greek minister of agriculture, who comes from an agricultural area of Greece where potatoes are a prime crop.

Greece is one of Egypt’s major potato importers. In March, it imported 46,381 tons of potatoes out of a total of 175,431 tons sent to the EU.

Chinese cars to roll off local assembly line
Brilliance China Auto has signed an agreement with an Egypt-based partner to produce cars in Egypt. Brilliance’s own brand, the 2.0 liter Zhonghua sedan, will be assembled by Bavarian Auto Group, which also assembles BMWs in Egypt. Production will begin later this year at Bavarian Auto’s plant in Sixth of October City with components and spare parts shipped from China. Other models, including a microbus and a coupe, are expected to follow.

Brilliance is the second Chinese automaker to produce its cars overseas, following Chery Automobile, which began assembling its cars in Iran late last year with an Iranian partner. The company sees the move to assembling cars in Egypt as a first step to making their automobiles more widely available worldwide. Its management strategy is to target markets that are currently overlooked by other automakers.

IFC, Banque Misr expand small loans program
The International Finance Corporation (IFC), the private sector arm of the World Bank Group, signed an agreement with Banque Misr to extend the development of its micro and small enterprises operations to the bank’s branches in underdeveloped areas of Egypt. The move will help Banque Misr provide micro and small enterprises with investment and working capital financing to extend loans to entrepreneurs who are unable to expand their businesses because of poor access to banks financing.

The signing marks the second phase of the agreement between IFC and Banque Misr. The first phase, targeting five bank branches, was successfully completed in October 2004, disbursing more than 6,000 loans worth a total value of $3 million and a 100-percent repayment rate. The second phase will operate through 13 other branches of the bank, 10 in Upper Egypt and three in the Nile Delta region.

Bread shortage looms
Egypt is facing a potential dearth of wheat flour for subsidized bread after the government failed to secure sufficient supplies of wheat to meet demand. Bakeries in lower-income districts have already felt the effect of the shortage. Several have closed down after exhausting their supply of flour.

Following a similar shortage in September 2003, the government announced a program to provide incentives for farmers to grow wheat, offering them an additional £E 100 per feddan cultivated. The government expected that the incentives would increase the amount of cultivated wheat by 100,000 feddans. It now seems that the program did not work as well as the government was expecting.

According to the Ministry of Supply, Egyptians consume around 12.8 million tons of wheat a year. The government spends about £E 7.8 billion annually on imported wheat to make more than 270 million subsidized loaves of bread for limited-income citizens.

Due to increased costs, the government had opted to purchase 50,000 tons of wheat from Syria rather than its traditional supplier, the US. According to officials, the government had expected to fulfill its remaining needs from the UK, but last minute concerns over quality delayed the sale and affected the ability to cover demand for wheat flour.

QIZ products make US debut
After months of debate and threats of boycotts, the first batch of products made in Egypt under the qualifying industrial zones (QIZ) agreement arrived in the US early last month. The QIZ agreement, signed December 14, 2004, allows Egyptian products manufactured in designated areas to access the US market quota- and duty-free provided they contain a minimum 11.7-percent Israeli content.

According to Ministry of Foreign Trade & Industry figures, Egyptian textile and garment exports to the US reached $1 billion in 2004. So far, 397 companies have received licenses to participate under the QIZ model.

Real estate finance given a boost
National Bank of Egypt (NBE) and the Real Estate Finance Guarantee & Support Fund have signed a protocol to enhance the real estate finance system. NBE will contribute £E 100 million to the fund to allow it to finance mortgages for housing units repayable over a period of 30 years.

The fund had previously set aside £E 400 million to be used as mortgages for middle-income Egyptians. The latest move is expected to help in the implementation of the Real Estate Finance Law, which came into effect in 2001. According to the law, middle-income Egyptians can receive financing for their real estate worth up to 65 percent of the value of the unit payable in monthly installments over 30 years. The real estate law does not allow banks to function as mortgagers, but it doesn’t prohibit them from investing in real estate financing companies either. The Central Bank of Egypt allows banks to lend up to 5 percent of their loan portfolio to real estate financing companies.

Ration cards under review
The Egyptian government’s plan to reform the subsidy program is running into fierce opposition. The program, which has been in place since the 1950s, allows Egyptians to receive essentials such as food products and basic commodities well below market prices as part of the measure to alleviate the burden of poverty. For years, the Egyptian government has talked of reforming the program, which it sees as a burden to the country’s deficit. But now the government claims the time for talk is over.

The government is reportedly gearing up to pare down the list of ration card holders, currently estimated at around 40 million names. Limited income citizens are panicked, arguing that the Ministry of Supply’s attempts to determine who really deserves subsidies will likely result in genuinely needy families getting booted off the list.

The Ministry of Finance has been quick to point out that the plan is just to close the loopholes in the current program rather than cancel it altogether. Officials argue that the current system is too inefficient, which results in large amounts of subsidized goods being mismanaged or wasted. The ministry is considering a plan to replace the ration cards with cash subsidies as a way to provide the poor with the safety net promised by the government while limiting mismanagement.

Center to monitor housing market
The Canadian International Development Agency (CIDA) is funding a $500,000 project in cooperation with the Egyptian government to establish the National Urban Observatory, a housing information center to monitor and report changing housing market conditions. The project will be implemented by the Canada Mortgage & Housing Cooperation in coordination with the Egyptian Ministry of Housing & Planning. The National Urban Observatory will produce reports that analyze the supply and demand trends of the local housing market in order to make home pricing more responsive to the market’s needs.

Gas deal turned off again
The inking of an agreement to sell Egyptian natural gas to Israel for the next 15 years has been postponed, again. The signing of the deal, which has been in the works since 2001, was delayed because a summit, taking place in Israel, conflicted with the scheduled signing date. If signed, Egypt would supply Israel with 1.7 billion cubic meters of natural gas over a 15-year period. A private joint Egyptian-Israeli company, Eastern Mediterranean Gas, would be established to buy the gas on behalf of the Israeli Electric Corporation. The gas would be sent to Israel via a marine pipeline to be constructed from the Sinai peninsula into the southern Israeli city of Ashkelon.

Aromatic solutions
Egyptian farmers are eyeing alternative remedies as a cure for the ailing agricultural sector. With both domestic and international consumption of alternative remedies on the rise, Egyptian farmers are attempting to catch the wave by learning new techniques to plant and – more importantly – to dry aromatic plants. The Agricultural Exports & Rural Income Project is currently training framers to produce, dry and package plants including chamomile, jasmine and dried roots for export to Europe and the US.

According to the project’s management, with simple improvements of harvest techniques Egyptian farmers can increase fourfold their exports of plants used in natural remedies. Currently, Egypt exports around 1,000 tons of chamomile, but with some training, they can increase that volume to 5,000 tons. Just to illustrate how profitable these exports could be, one feddan of jasmine produces almost half a kilo of jasmine essence with a market value of £E 20,000 compared to about £E 1,800 for sugar cane and £E 2,000 for green beans.

National carrier seeks investors
EgyptAir has said it will open bids to sell 40 percent of its subsidiary EgyptAir for Air Services through the acquisition of a strategic partner. The company, which many believe is coming up for privatization within the fiscal year, insists that it is only in the market for a strategic partner at this point.
Proceeds from the sale are expected to go towards building a food catering company at airports in Cairo, Luxor, Alexandria, Sharm Al-Sheikh and Hurghada.

Nissan to assemble light trucks locally
One of the oldest Japanese car manufacturers, Nissan Motors, will begin assembling the “Pickup,” a lightweight truck, in Egypt. It will be the first model to be produced and sold under Nissan’s direct management in Egypt. The Pickup will be assembled at the automaker’s expanded and refurbished plant in Sixth of October City.

Nissan Egypt plans to add more models to the assembly line, including several passenger cars. From 1997 until mid-2004, Nissans were assembled in Egypt through a partnership deal with local companies. In June of last year, the company took charge of its assembly line and infused another $60 million into the plant.

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