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follow up bank fire marks need for
better safety procedures last month, egypt witnessed a number of fires resulting in substantial economic losses, the most serious of which was the suez canal bank fire in downtown cairo in which the top floor of the four-story building was completely destroyed. the bank is located next to a gas station in the heart of the city’s financial and commercial district, meaning that the rapid response by fire fighters was critical in averting a disaster. official reports attributed the fire to an electrical short that occurred after business hours on august 4. the contents of the fourth floor, which housed the human resources department, included 32 computers, 24 air-conditioning units and all employment-related documents. the official report, however, affirmed that vaults were unharmed and that no customer records had been destroyed. while repairs proceed to the rest of the building, which sustained some water damage, operations are to be transferred to the bank’s garden city branch. customers confirmed that their dealings with the bank were proceeding as normal. although bank fires in egypt are a rare occurrence, the incident raised warning bells about the safety measures taken by financial institutions and the need to review measures, including those for regular monitoring. insurance expert sami naguib confirmed that in the majority of instances in which fires have occurred in egypt in recent years, the damage has been limited to the building and its furnishings. further damage was averted because banks have adopted the practice of storing records in fire resistant vaults and transactions are computerized with copies and backups of files being stored at multiple locations including a central mainframe. magdi munir, head of the legal department at misr international bank, said banks in egypt store original customer records in fire-resistant vaults and that those records only leave the vaults when customers need them or if they are being used as evidence in a court of law. bank employees handle original documents as infrequently as possible, using copies wherever feasible. magdy samaan local fertilizer faces
crisis of distribution the new minister of agriculture and land reclamation, ahmed el leithy, is exploring the possibility of abolishing a decree issued in june by the previous minister that gave the agriculture development & credit bank a monopoly on the distribution of fertilizer to farmers. el leithy said the bank’s monopoly over distribution – previously divided between three different agencies – had not only failed to solve the problem, but had actually exacerbated it. under the system imposed by the decree, farmers found they were limited to four 50 kilo sacks of the material per feddan [one feddan is approximately equal to one acre], while they say they need as much as double that allocation. consequently, they turned to the black market to meet their needs, where prices are soaring. before the decree was issued, a sack of fertilizer ran for £e 40; now, as the black market flourishes, farmers are forced to dole out £e 80 per sack. in a meeting convened in mid-august with members of the agricultural development & credit bank’s board of directors and members of the boards of agricultural cooperatives and vendors associations, el leithy said he was ready to listen to all points of view and that he had ordered several departments in the ministry to contribute to a comprehensive study on the matter ahead of making his decision on it. at the beginning of august, the ndp’s farmers committee and the board of directors of the general association for credit, headed by abu al abbas othman, sent a memo el leithy requesting that he abolish the decree by the previous minister. mohammed riad, a fertilizer expert at the center for land & water research, confirmed that the bank issues farmers only four sacks of fertilizer per feddan, and that in recent years the country has suffered from shortages on the fertilizer market, despite a halt in exports. he called for increasing the overall supply of, issuing a new decree, and increasing the per-feddan share from four to eight sacks. in the meantime, he said, farmers will continue to be compelled to turn to the black market for their requirements due to insufficient supply. fathy rabeh u.s. senate putsch to lessen
military aid to egypt quashed last month, us congressman tom lantos (d-california) introduced a controversial proposal that brought egyptian-us relations to the center of attention on capitol hill, and on august 17, the california representative and high-ranking democrat on the house international relations committee personally delivered his message to cairo. the proposal, a planned amendment to the us foreign aid bill for the 2005 fiscal year, would have shifted $570 million of the us aid egypt currently receives from military to economic aid. if passed, the adjustment would have more than doubled us economic aid, while cutting military assistance by more than half. house debate surrounding the proposal elicited myriad opinions
on capitol hill, with support for the measure – voiced by,
among others, house majority leader tom delay [r-texas] – falling
in one of two categories. many lawmakers questioned the need for
such extensive military aid to a country that, in the words of representative
mike pence [r-indiana], “has no real enemies,” and that
“has been largely absent from the war on terrorism.” during
house debate, lantos himself presented egypt’s “bloated
military budget” as “the biggest threat to egyptian stability...
undermin[ing] economic and political development and democratization.”
the move, he said, “is clearly in the interest of the egyptian
people whose prime needs at the moment are in the educational and
medical fields and not in additional high-tech weaponry.” lantos
added, “if we enhance our support for economic and social projects
in egypt, our credibility with the egyptian people will soar.”
the ultimate failure of the bill – which came much to cairo’s relief – has been credited to support from an unlikely ally – the george w. bush administration. us secretary of state colin powell was a particularly active opponent of the plan, sending a strongly worded letter to representative jim kolbe (r-arizona), who chairs the foreign operations subcommittee on the house appropriations committee. according to state department spokesman richard boucher, the letter “focused on the importance of our annual military assistance budget to egypt by outlining egypt’s crucial role in our efforts to achieve peace in the middle east and its contribution to regional stability.” his point was a timely one, given the sensitive negotiations between egypt, israel and the us on the implementation of israeli prime minister ariel sharon’s hyper-controversial proposal to withdraw all israeli settlements from the gaza strip. lantos also acknowledged in the press that he had received a phone call from us national security adviser condoleezza rice urging him against introducing the bill. explaining the bush administration’s position in an interview on egyptian state television, powell said, “egypt has been a good friend, they’re supporting us in so many ways, and it would not be appropriate right now to change the way the funding is provided to egypt.” numerous congressmen expressed similar sentiments. “one of the only stabilizing factors in the unstable middle east is america’s relationship with egypt... any change to this assistance account would undermine that relationship,” said representative bill young (d-florida). “this [proposal] puts a finger in the eye of our friends in egypt,” added congressman john dingell (d-michigan). opposition from lawmakers was reportedly bolstered by warnings from us arms manufacturers that the change in aid allocation – and the resulting loss of an estimated $2.2 billion worth of military contracts – could result in major job losses in home districts. “it was a full court press,” lantos lamented. under the weight of this pressure, the amendment was soundly defeated by a nearly 2-1 margin. speaking to right-wing israeli daily jerusalem post, however, lantos said he was pleased with the support the amendment received, pledging future efforts to trim military assistance to cairo unless egypt improves its behavior. “we didn’t make law, but, hopefully, we made a point,” commented pence. lantos’ attempts to promote the defeated bill during his recent stop in egypt – part of a middle east tour that also included libya, syria, jordan and israel – suggest the matter has not yet been put to rest. richard susalka g-20 score victory for
developing nations in geneva on august 1, in geneva, the world trade organization’s 147-member general council adopted a framework agreement aimed at cutting subsidies and reducing barriers to free trade in agricultural produce – a coup for the so-called g-20 bloc of developing countries, whose members include china, brazil and south africa as well as egypt. founded in the run-up to the wto’s cancun ministerial meeting, the grouping came together with the joint aim of overcoming attempts by developed countries – particularly the eu and us – to promote protectionist agricultural policy unfairly benefiting their own domestic markets. for many, the framework agreement is long overdue. shortly before the trade talks, uk trade minister patricia hewitt, in an interview on bbc radio, harshly criticized “the appalling agricultural subsidies that distort trade with the rest of the world and make it impossible for farmers in many developing countries to make a decent living.” in particular, she said the economies of “desperately poor” countries were suffering from the “huge subsidies” given to sugar production in the eu and to cotton farmers in the us. acknowledging the political and economic challenges of removing the protections enjoyed by agriculture industries in most developed countries, she exhorted the world community “to keep our eye on that bigger prize, which is the possibility of pulling literally hundreds of millions of people out of poverty.” of course, selfless concern for subsistence farmers in developing countries was only part of the reason for the eu-us concession. in return, wto members accepted the proposition that “additional negotiations” were needed regarding market access for industrial goods. just as developing nations are seeking liberalized trade in those industries – such as agriculture – in which they have the most to offer, industrialized nations want developing countries to remove barriers to industrial imports. many observers expect, therefore, that the eu-us gesture will ultimately lead to progress in the opening of emerging markets to industrial goods from developed countries. but if the bartering of liberal trade measures is a benefit to all, it certainly doesn’t benefit everyone equally, and many argue that g-20 members are emerging as the big winners. while the goal of the doha “development round” was to help developing countries in general, it’s been argued that the recent move will only serve the interests of a small subset of the targeted beneficiaries. it’s even possible that the move could hurt developing countries outside the g-20, many of which already enjoy substantial access to eu and us markets, by eroding benefits garnered by pre-existing preferential-trading arrangements or via regional trade accords. in any case, the agreement at geneva has been welcomed as a step
forward in world trade negotiations, and has renewed hope in the
current doha round, which – though originally scheduled for
completion by the end of this year – lost momentum after last
year’s troubled cancun meeting. richard susalka egyptian bank listed on
u.a.e., kuwaiti exchanges in the course of the last three months, local private bank cib received approval to list its shares on both the united arab emirates stock exchanges and the kuwait stock exchange (kse), becoming, in both cases, the first foreign bank to do so. first, on june 23, with the blessing of the emirates securities & commodities authority (esca), cib became the 47th entity to be listed on the uae exchange. “the esca has cleared commercial international bank for listing in the uae, as they have met all our requirements,” abdullah s. al turifi, chief executive of the esca, told emirati daily gulf news, adding, “the egyptian bank has good equity, which is well capitalized, and has a good track record.” despite reports that the bank would then have to choose between the uae’s two markets – the dubai financial market (dfm) and the abu dhabi securities market (absm) – marwa sheikh, an analyst at local brokerage efg-hermes, said cib was pursuing listings in both, as is allowed by the esca. cib would be the first foreign company ever to be listed on the dfm, as the only other foreign companies listed on the uae exchange – qatar telecom and sudan telecom – are both found on the absm. though egyptian media production city secured approval to be listed on the dfm in january, it has yet to do so. the development comes amidst prosperous times for the uae exchanges. “this year, the uae stock market will make history,” ziad dabbas, share-dealing consultant for national bank of abu dhabi, recently told the technical review middle east. he added that, “our preliminary expectations are that the value of traded shares will cross $5.45 billion this year.” the same report indicated that share-dealing in the uae exchange surpassed last year’s total – $2.15 billion – in the first four months of 2004 alone. thanks to the market’s surging activity, “the uae has the ability to attract top companies, and, by the end of this year, there will be many more listings,” turifi was quoted as saying. shortly after its listing approval, cib announced that the emirates’ central bank had granted it a license to open a representative office in the uae. according to sheikh, the two developments demonstrate cib’s long-term interest in gaining exposure and forming contacts in the gulf community. she suggested that the listing wouldn’t yield immediate benefits, as did the company’s gdr offering in 1996, but, rather, reflected cib’s desire to “test the gulf market, slowly but surely, with a focus on business in the future.” then, on august 17, the bank received another listing approval, this time from the kse, which has also set record highs on the back of better-than-expected half-year corporate results. the kse index ended the first half of the year up 13.9 percent, and was up 52 percent on the year. according to cib officials, the listing frenzy is part of a long-term strategy of regional expansion. “the administration is always aiming to make the bank a regional one, serving all arab countries,” said cib managing director sahar sallab. “listing our bank in kuwait and dubai was just one step towards achieving this dream.” sallab added that the bank was currently seeking listings in three other gulf exchanges, and was working hard to fulfill all the prerequisites. while she declined to reveal which particular bourses were being wooed, she hinted that a third listing could be expected this year. cib was egypt’s first bank to offer dollar-denominated shares, in the form of global depository receipts (gdrs), on the london stock exchange. additionally, it now issues shares in the form of american depository receipts (adrs), traded on us markets. richard susalka and summer said party congress expected
to mull reform, leadership changes july’s cabinet reshuffle was widely praised in the business community as an important step towards economic reform. what most close observers are predicting about the upcoming national democratic party (ndp) annual congress vis-à-vis political reform, though, appears to be somewhat of a mixed bag. most observers expect the party to present elements of its political reform platform at the conference, from september 21 to 23, including changes in party leadership, the future of the emergency law and rules for political participation. “generally, i think the conference will formulate an ndp platform for the next four or five years and determine the parameters for the party’s engagement in the next election,” said analyst mohamed sayyed said, deputy director of the al-ahram center for political & strategic studies. observers, however, have cautioned against expectations of dramatic change, like a lifting of the emergency law, or a modification to the way presidents are selected. “there will be no major overhaul of the system; nothing of a radical nature,” maintained said. a number of laws are expected to be discussed – and, perhaps, tweaked – in the course of the three-day conference. law 40 of 1977 governing political parties, for example, is expected to be changed to give opposition parties greater room for maneuver. comments from safwat sherif, president of the shura council and political parties committee, suggest that the modifications could involve including opposition party representatives in the composition of the infamous political parties committee. there is also talk of modifying the law governing elections, as well as the law outlining the limits of political activity in general, so as to open up opportunities for political participation. last year’s conference included an announcement that the hated law 100 governing the activities of professional syndicates would be altered. as this was never addressed, though, some expect it to come up for serious discussion this time around. there will also probably be statements following up on the president’s announcement last march that journalists could no longer be imprisoned for “journalistic offences.” still, said doubted that much legislation would be subject to substantial amendment; rather, he expected minor modifications and changes of phrase. “the very worst aspects of these legislations will be changed,” he said. the fate of the party’s leadership, though, rather than political reform, has been the main grist for pundits recently. several newspapers have quoted party sources as saying that the ndp secretary-general, sherif (appointed in 2002, replacing former agricultural minister youssef wali), will be replaced by someone younger and more reform-minded. originally, there were predictions that gamal mubarak, presidential scion and head of the party’s influential policies secretariat, would accede to the helm of the ndp as part of a plan to bring him closer to headship positions. mubarak’s comments at a press conference last month – that the party was “flexible” rather than “static” – were interpreted to mean that changes were in the offing. the august 15 edition of independent daily al-masri al-youm, though, maintained that mubarak would stay where he was, with someone else in the party replacing sherif. in an article detailing the expected changes, the paper suggested that moufid shehab, minister of shura council affairs, or zakariya azmi, the president’s chief of staff, could be made party head. the report also predicted that other members of the old guard, such as former education minister kamal bahaa el din, would be let go in favor of new, younger additions to the politburo – many of whom were recently awarded cabinet posts. shortly after the publication of these – and several other – predictions in the media, official party mouthpiece mayo denied there would be any leadership changes at all. according to party bylaws, the paper asserted, such changes can’t be made at annual conferences – only at general ones, held every five years. the next general conference isn’t until 2007. still, observers point out that the president has the power to change party postings at any time. one internal issue that will come up at the congress will be next
year’s legislative elections, especially after the large number
of defeats suffered by ndp candidates at the hands of renegade party
members, running as independents, in recent shura council elections.
some expect an attempt at reinvigorating party leaderships in the
governorates, in order to shore up ndp power there. paul schemm supplies of subsidized
milk formula scarce parliamentarians convened one emergency session this summer. their topic of discussion? the shortage of subsidized milk formula, which the people’s assembly’s health committee says is putting 75,000 infants at risk of not meeting their nutritional needs. at the meeting during the last week of july, parliamentarians pointed the finger at the private companies that distribute the formula and even pharmacies, claiming that the latter were selling the milk powder to candy factories. the cause of the shortage, which began in may, is probably much simpler. deputy minister of health ossama el kholi told egyptian state television on august 3, “we used to import 11 million canisters a year, this year we will import 8 million.” he added, “we promise to cover the shortage by producing formula locally.” the government seems to have been counting on the private sector to fill in the gap, but so far manufacturers have not leapt at the opportunity, and pharmacists have reported a sharp drop in the number of canisters they receive each month starting in may. estimating annual consumption of formula at 10 million canisters a year, a source at the ministry said imports for fy 2003/4, which ended in june, fell short of the 11 million mark, but was unable to give a precise figure. the egyptian government is slated to spend £e 69 million in milk formula subsidies over fiscal year 2004/5. the 450-gram subsidized canister is sold for £e 2.90, while unsubsidized formula costs approximately £e 20 a canister. “we used to receive 26 canisters a month, but then the distributors told us that we are entitled to a maximum of 12,” said mohamed khairi, owner of a pharmacy in ain shams, recounting the problems that began for him this spring. “now we only get three canisters and some pharmacists i know told me i should feel lucky because they stopped receiving formula altogether,” he added. in the meantime, some families reported going to the health ministry last month in a desperate bid to obtain formula for their children, but said they were barred from entering the premises. in late august, el kholi said the ministry plans to open a number of outlets for the distribution of baby formula in places where there is high demand. summer said and mohamed mursi te heads leads bond season
with biggest-ever corporate issue the egyptian corporate bond market is set to be invigorated this fall following announcements by three companies that they are putting the finishing touches on plans to issue bonds before the end of 2004. leading the pack is telecom egypt (te), with a £e 2 billion issue – the largest in the country’s history. the subscription period for the offering by te, the state-owned fixed-line provider, is expected to open the last week of september or the first week of october, after the bond is rated by an international agency and pending the approval of the capital market authority. te selected hsbc bank egypt in january to advise it on the transaction, and announced in early august that banque du caire, bank of alexandria, arab african international bank and citigroup had won the tender to lead manage and underwrite the issue. at an august 17 ceremony for the signing of the agreement with the banking consortium, a few of the issue’s details were released. akil beshir, chairman of te, said that the offering would be split
into two equal tranches, fixed and floating, and that the maturity
period would be set for somewhere between five and seven years.
as for te’s decision to make the issue in local currency, beshir said this was part of a broader strategy of reducing hard currency exposure in view of the fluctuation of the firm’s hard currency earnings and the fact that a portion of the company’s investment is in hard currency. “over the past two years, we have tried to make sure that our investments in hard currency are not higher than our revenue in hard currency – although we have not yet reached that point.” with respect to competition from other upcoming bond issues, most
notably from orascom telecom holding (oth)’s issue, mahmoud
abdel latif, bank of alexandria chairman and ceo, said there was
no cause for concern. “the issuing of a number of different
bonds at once will not have a [negative] impact [on any one particular
bond]... because the liquidity is available and its sources are
diverse.” on a smaller scale, amoun pharmaceutical company, a private egyptian company, announced, following approval by its general assembly on august 14, its plans for a £e 150 million bond issue, also anticipated for this fall. hussein abdel halim, head of research at sigma capital brokerage house, commented on te’s decision to offer its entire issue in local currency, saying, “i think it’s the correct decision, because, probably, about 90 or 95 percent of te’s revenues are in egyptian pounds.” he added, “even if you are importing with hard currency, because your revenue stream is in egyptian pounds you don’t want your exposure to be in anything else.” in contrast, oth’s revenue and exposure are in hard currency – “that’s why they’re doing a portion in foreign currency,” he said. abdel halim predicted that the majority of the buyers of te’s issue would be local banks, followed by insurance companies. as for foreign investors, he said, “very few foreign institutions buy bonds in egypt, because they’re not that liquid.” concerning the prospects for a successful issue, abdel halim added, “there won’t be a problem, because they’re underwritten. the banks might end up with part of the issue – they won’t be fully subscribed. people are tight on egyptian pounds, they’re not tight on dollars.” the only other bond issue this year has been by orascom construction industries, which saw its bond twice oversubscribed in february. te’s bond will be the second issued by an egyptian telecom, the first having been offered by mobinil in 1999. willa thayer program aims at raising
aids awareness at the workplace in an effort to inform egyptians about the hiv/aids virus, international ngo care international began offering awareness seminars this summer aimed specifically at private sector firms and their employees. the “awareness against aids” (aaa) project aims to raise understanding about the disease – which has until now received little local attention – by providing employees with vital information about hiv/aids, such as vulnerabilities, associated-risk behavior and health-care availability. “the program aims to synthesize private sector employers and their social responsibility towards educating their staffs about hiv/aids risks and prevention methods,” said project manager wessam el beih. “the project also contributes to educating less fortunate rural communities, especially youth and women in upper egypt.” she added that aaa seminars give employees “tools for making personal decisions about their exposure to risk, and how they will protect themselves and their families.” but why target the workplace? according to el beih, “it’s important to address private sector companies, as they represent the larger community – people from different backgrounds.” additionally, aids can take a massive economic toll, reducing labor supplies, increasing costs and causing shifts of resources away from investment towards health care. according to world bank estimates, the associated costs of the virus to the middle east and north africa region could rise to as much as 1.5 percent of annual gdp. business leaders, therefore, should take steps to protect their employees, save resources and reduce risk, el beih said. the project is currently working primarily with cairo-based businesses in the petroleum, tourism and pharmaceutical sectors. what’s more, revenue generated from corporate business-place orientations is then used to finance community development projects in rural upper egypt. according to hany ziady, a world health organization medical officer specialized in sexually transmitted diseases, the number of hiv cases in egypt is currently estimated at 3,800. “i think it’s a good idea to raise awareness in certain sectors of society that don’t have accurate information about hiv infection,” he said. one private sector employee who recently attended an aaa seminar, while finding it helpful, wondered how effective the program would be in raising general aids awareness in the long term. “it was a healthy exercise, but there should be a follow-up program, so people will constantly have reminders,” he suggested. marwa maraie cola with pan-islamic
conscience distributed locally egyptian supporters of palestinian and pan-islamic causes need only raise a glass of cola to their lips to show that they are behind those struggles, the founders of mecca cola would have their customers believe. the company began selling the beverage locally in july. founded by french-tunisian businessman tawfiq mathlouthi in 2002 in france, mecca cola donates 10 percent of its profits to palestinian charities and 10 percent to those in the countries where it is sold. sales in egypt are slated to be doubly beneficial for the palestinian cause. “the company decided to allocate 20 percent of its profits to causes in the islamic world, particularly palestine,” said mohamed el aswani, sales manager for mecca cola in egypt, in addition to 10 percent for egyptian causes. monies earmarked for the palestinians will go to the purchase of clothing or construction of schools, he said. should the company decide that it wishes to give money to the palestinians rather than donations in kind, it will do so through unicef said el aswani. censorship authorities temporarily held up the launch of the product. “they asked us to remove the illustrations of jerusalem’s landmark dome of the rock and they did not justify their demand,” el aswani told business monthly. a spokesperson from mecca cola’s dubai headquarters speculated that censors were concerned that by displaying on the bottle the image of the dome of the rock, one of islam’s holiest shrines, it might unwittingly be defiled, for instance if someone stepped on or ran over a discarded bottle. the first 100,000 bottles hit the market without depicting the place of worship, but carried the company’s slogan, “no more drinking stupid. drink with commitment.” a local factory produced those first bottles, but the company plans to set up a factory dedicated exclusively to the beverage with a local partner, nashaat salem higazi, an importer/exporter. mathlouthi told reporters that entering the egyptian market is another step in its broader vision to stand up to “american imperialism and zionism by giving people a substitute for american goods and thereby support boycotts of american goods.” mecca cola’s egypt launch in july coincided with its first sales in israel in towns with predominantly arab-israeli populations, said a company representative. committees organizing boycotts of american and israeli products hailed the availability of the product locally. “we consider the entrance of mecca cola into the egyptian market a bold move resulting from the popular boycott campaigns in the arab world. the drink’s success expresses egyptian customers’ rejection of american and zionist drinks,” said ahmed rami, a member of the boycott committee of the pharmacists’ syndicate. coca-cola egypt says it has not been affected by mecca cola’s entrance into the market. “our customers trust our products and know that we are not affiliated with any religious or ethnic group and we have nothing to do with politics,” said an employee at the company’s cairo offices who asked not to be identified. coca-cola’s mother company, however, has previously said that mecca cola had “identified a commercial opportunity which involves the exploitation in europe of the difficult and complex situation in the middle east.” pepsi-cola egypt’s offices did not respond to requests for comment. summer said |
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