|
in person
investing in change
last year’s shake-up at the general authority
for investment & free zones (gafi) has created a leaner, more
effective investment authority. gafi vice president amr el sharnoubi
speaks to business monthly about the agency’s new management,
new attitude and new mandate to promote investment.
by réhab el-bakry
since its formation in the late 1970s, the general
authority for investment & free zones (gafi) has been plagued
by bureaucracy, inefficiency and – at times – corruption.
last year, the investment agency underwent a major makeover when
minister of investment mahmoud mohieldin ordered that the authority
be relocated from its scruffy downtown building to a spiffy, modern
premises in heliopolis. but the changes weren’t purely cosmetic.
the minister also sacked the management, replacing them with a new
board of directors, all of whom hail from the private sector and
most of whom are under 40 years of age.
gafi vice chairman amr el sharnoubi is the face of the new management.
he’s an animated speaker who strives to see the glass as half
full, though admits optimism requires more labor than complacency.
“as an official, you should be aware of all the challenges
and be honest enough to admit that they exist. but you should also
identify improvements that are taking place and celebrate them.
if you don’t do that, you’ll simply be unable to achieve
much,” he says.
a graduate of the american university in cairo, el sharnoubi earned
an mba from britain’s exeter university in 1993. while he might
have stayed to work in the uk, he returned to egypt in the early
1990s to join the workforce and apply his skills. “at the time,
the potential of egypt was great and many changes were taking place
in so many sectors that it was important for me to be present and
take part in this exciting time,” he recalls.
over a decade, el sharnoubi gained experience both working in the
private sector and developing it. he worked initially for the government’s
privatization unit and dabbled in investment banking before the
market turned sour in the late 1990s. he was working as a manager
at ciic brokerage when mohieldin, who had heard of his exemplary
performance, tapped him for a position on the newly formed gafi
management team.
el sharnoubi joined gafi in september 2004 as one of three vice
chairmen. “all of us came from the private sector and we knew
that there was a lot we wanted to accomplish,” he says. “we
divided the work among us [with the recognition] that our roles
would change according to the needs of gafi because it’s a
very dynamic place.”
dynamic indeed. gafi was undergoing major changes as it transformed
from an obstructive regulatory authority to an investor-friendly
agency with a mandate to encourage foreign direct investment (fdi).
previously, gafi was cited as a major obstacle to investment. the
management change aimed at making the agency work for investors,
not against them. “we needed to advocate the side of the investor
and not the government – not that the investor is always right
and the government wrong – but to make sure that someone was
looking after the interest of the investor,” he explains.
this is important, argues el sharnoubi, because up to 70 percent
of new investments come from existing investors. companies with
a presence in a country are likely to consider opening additional
production units if their experience in the country is pleasant,
transparent and uncomplicated. the revamped investment authority
is seeking to streamline the investment process and promote the
country’s business opportunities.
not surprisingly, gafi’s 2,000 employees were initially wary
of the new management, watching closely to see how the sweeping
changes would affect their jobs. “we were also observing them
closely as well,” says el sharnoubi. “we sent the clear
message that there were a lot of changes that were going to take
place, not only in policies but also in how we expected our employees
to deal with clients. those who were willing to adjust and embrace
this new attitude would have no problems.”
increasing transparency was the first priority. previously, investors
“would come to gafi and have no idea what services we provided,
how long they would take or how much they would cost. it was ridiculous,”
he says. “this lack of information created a lack of transparency,
which is not really very conducive to investment.”
the new management created a list of the 39 services that gafi provides,
how much each costs and how long the processes take to complete.
it also set out to remove a number of unnecessary processes “that
did nothing more than delay approvals for investors.” for example,
gafi used to require that investors seeking to increase their capital
provide a feasibility study. el sharnoubi believes such a step is
a waste, as investors should be free to spend their money as they
wish. after all, if investors make bad decisions, they are the ones
who suffer from them.
a bigger obstacle to investment was gafi’s highly centralized
chain of command. as is typical with many government agencies, almost
all decision-making was handled by the chairman. “employees
simply were not used to making decisions regarding anything,”
he says. “now, we have a more decentralized decision-making
process. but for employees, this was initially very hard to accept
because they didn’t want to take the responsibility that goes
with making decisions.”
decentralization and accountability formed the cornerstones of gafi’s
one-stop shop, an investor portal that effectively brings over 30
government entities under one roof. instead of running around from
one government agency to another securing signatures, egyptian and
foreign investors can visit just one window to register a company.
the process that once took up to a year can now be completed in
as little as a day.
gafi’s multilingual customer service representatives guide
investors through the registration process and match them to registration
specialists, who assist investors in filling out all necessary permits
and contracts. gafi signs and stamps these documents and collects
fees on behalf of all government authorities. “investors were
previously required to pay separately for every step of the registration
process because the different government agencies didn’t trust
that gafi would transfer the money to the different authorities.
but now, the one-stop shop has a [bank] branch in house that transfers
the money automatically,” says el sharnoubi.
since its opening in december 2004, the one-stop shop has been registering
an average of 40 companies a week. el sharnoubi says the media attention
it receives often overshadows the other significant accomplishments
the investment authority has made, such as its concerted effort
to put egypt back on the investment map. “if you think of egypt
as a commodity, you need to have the right market to sell it to,”
he says. “you must identify your potential markets, then prioritize
them and know what exactly you are selling.”
he says gafi focuses on areas where egypt enjoys a comparative advantage,
such as the tourism, textile and natural gas sectors, and the country’s
unique commodities, such as high-quality egyptian cotton. in either
case, investors want the best bottom line. “investors look
at the factors of production such as labor cost, utility costs –
all the factors that affect the cost of producing one unit of whatever
it is they produce,” he explains. “[they want to know]
how much would it cost to make the initial investment, such as buying
the land and creating the infrastructure. here investors have to
consider their initial investment and your running costs have to
be competitive compared to other countries in the region.”
el sharnoubi has optimistically set a goal of making egypt one of
the region’s top five investment opportunities. it’s been
tried before, but he insists this time is different. “we’ll
have to do our homework,” he says. “we need to know the
different sectors with investment potential as well as which countries
might be interested in investing here in which sector. moreover,
we need to know the details of how their sector is structured so
that when we give them a presentation, we’re actually speaking
their language.”
he says that for the time being, egypt’s best opportunity lies
in targeting gulf arab investors, who are already familiar with
egypt and have capital to invest. the far east also offers potential,
particularly china and japan, where investors have shown increasing
interest in egypt.
el sharnoubi is proud of gafi’s new focus on accountable management
and value-added customer services. while this approach has helped
the authority to streamline the investment process, where it overlaps
with other government entities things get much more complicated.
“unfortunately, gafi might have worked to transform itself
to become more customer-oriented and investor-friendly, but this
concept has yet to become the norm in other government bodies. so,
we often run into problems trying to address problems investors
are facing with other government bodies.”
too often, he says, it boils down to having someone at the managerial
level in gafi contact someone at the managerial level in the other
body to negotiate a compromise. while el sharnoubi admits this sort
of method is frustrating, it is also a motivating factor for him
to be a catalyst of change. he told business monthly that he plans
to run in this fall’s parliamentary elections, where he hopes
to apply his vision of change to all aspects of egyptian policies,
not just investment. “i believe that if we want change, making
economic policy changes will not be enough. we also have to make
them on the political front as well. i’m running for parliament
because if we expect things to be different, then we need to have
different people with different attitudes and ideas.”
submit
your comment
top
|
