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NDP takes lead in national elections

Egypt’s Higher Election Commission, the supreme body overseeing the legislative electoral process, announced the final results of the first phase of parliamentary elections on November 17.

According to Al-Ahram state newspaper, the ruling National Democratic Party (NDP) won 114 seats out of the 164 seats contested. The outlawed Muslim Brotherhood boosted their position in the first stage winning 34 seats, which amounted to almost 20 percent of the vote. Independent candidates won eight seats while officially recognized secular parties won eight seats. Turnout for the first stage of voting, held on November 9 with a run-off vote on November 15, was reported at 24 percent.

The second stage of the elections kicked off on November 20. A run-off was held on November 26, while the third and final stage for 136 seats starts on December 1. The three-stage election will determine the makeup of the lower house of parliament; 444 seats are at stake.

QIZ participants exchange accusations

A group of Israeli industrialists and manufacturers that supply the qualifying industrial zones (QIZs) in Egypt have complained to Israeli vice premier Ehud Olmert that Egypt is violating the agreement, which offers products manufactured in the QIZs duty- and quota-free access to the US market provided they contain a minimum 11.7-percent Israeli content. The group claimed that Israeli factories exporting to Egyptian QIZs are at risk of closing down due to Egypt’s limited imports of their material.

Eleven packing, thread and clothes hanger manufacturers signed the petition. Egyptian manufacturers, meanwhile, have complained that their Israeli colleagues are taking advantage of the QIZ agreement to charge exorbitant prices.

TE to offer 20-percent stake

A 20-percent stake of the total outstanding shares of Telecom Egypt (TE) is to be offered on the Cairo & Alexandria Stock Exchanges (CASE) and the London Stock Exchange as a GDR. The cabinet approved the sale of the stake – approximately 340 million shares – in two tranches for both individuals and institutions. Trading will commence in early December.

TE is Egypt’s sole fixed-line telephone operator, with a subscriber base of 10 million individuals and capital of £E 17 billion. Its sales revenue in 2004 was £E 7.7 billion, up from £E 3.2 billion in 2000.
According to the telecommunication law, the majority of the company must stay in the hands of the government. Up to 49 percent can be put up for sale.

COMESA readies for bird flu

Ministers of agriculture of Common Market for Eastern & Southern Africa (COMESA) member states met in Cairo on November 16-17 to seek solutions to the problems resulting from bird flu, which could soon spread to Africa.

Ministers attending the meeting recommended the formation of a joint strategy to detect and combat a number of diseases including bird flu. They stated that there is also a need to put in place a regional information exchange network that will facilitate early response to the disease.

The total trade in poultry and poultry products in the 20-member economic bloc stands at $15 million per year, according to COMESA figures.

UN chief visits Cairo

UN secretary-general Kofi Annan arrived in Cairo on November 7 for a three-day visit as part of a multi-leg tour of the Middle East and North Africa to discuss regional stability. Annan met with Foreign Minister Ahmed Aboul Gheit, and discussed the Israel-Palestine “peace process” and the current situation in Syria and Lebanon. At a press conference the following day, he said the meeting also touched on proposed ideas for UN reform, the current situation in Sudan, and rising tension between the governments of Ethiopia and Eritrea.

Democracy conference ends in disarray

A US-backed conference to promote Middle East democracy ended in chaos after the Egyptian delegation, led by Minister of Foreign Affairs Ahmed Aboul Gheit, appeared to storm out in protest. The Egyptian delegation reportedly objected to the Bush administration’s proposal to fund groups that promote political reform.

The White House had hoped the conference, held in Bahrain on November 12, would showcase political progress in the Middle East, a region characterized by monarchies and single-party rule. Aboul Gheit, however, dismissed a US proposal to subsidize groups that promote democracy. He later said he objected to the phrasing of the declaration from the 36-nation conference, claiming that Washington had dropped wording in the statement that restricted the distribution of funding only to NGOs operating legally in their country.

Egyptian legislation requires NGOs to have written approval from the Ministry of Social Affairs before accepting foreign funds. Aboul Gheit stressed the importance of this requirement, as it allows the government to monitor funds received and the activities they are used for. This is one way in which the government can keep tabs on terrorist organizations such as Al-Qaeda, it has been argued.

US officials counter that limiting funds only to “legally registered” NGOs would undermine the purpose of the statement, which is to promote NGOs as catalysts for political reform.

Turkish delight

Luxury retail house Beymen has opened its first store in Egypt, offering shoppers a selection of 90 prestigious international fashion brands at its two-story outlet in the Four Seasons Nile Plaza Hotel, Cairo. The Turkish retail chain, which owns 30 stores in Turkey, has invested $5.7 million in the store, which employs 200 Egyptians and boasts a 6,000-square-meter selling area. Observers have described Beymen’s entry as a significant development in the local retail market with the potential to compete with luxury retailers in European capitals and the Gulf.

Nairobi accuses Cairo of unfair competition

Kenya and Egypt appear to be headed for another round of confrontation over dominance of the Common Market for Eastern & Southern Africa (COMESA). Kenya has accused Egypt of unfairly subsidizing its industry, making it difficult for Kenyan manufacturers to compete among members of the COMESA economic bloc.

According to the Federation of Kenya Employers (FKE), Kenyan businesses are losing $9.35 million per year due to the practice. It has asked the government to take retaliatory measures against Egypt.
Analysts say Egypt is trying to adopt market economy policies in which subsidies can be scrapped or reduced, but to do so could lead to a sharp increase in the cost of living and instability.

Mobiles take the lead

According to Australian research firm BIS Shrapnel, for the first time in Egypt the number of mobile subscribers has exceeded the fixed-line subscriber base. By the end of September 2005, Egypt had 12 million mobile and 10.3 million fixed line subscribers. This compares to 9.9 million mobile and 9.7 million fixed line subscribers at the end of June 2005.

The BIS Shrapnel report noted that Egypt’s cellular market is currently experiencing unprecedented growth, a phenomenon the research firm forecasts will result in the number of mobile subscribers in Egypt reaching 21.1 million by the end of 2008.

CASE granted WFE membership

The World Federation of Exchanges (WFE) has accepted the Cairo & Alexandria Stock Exchanges (CASE) as the first Arab bourse to be given full membership in the world body. Minister of Investment Mahmoud Mohieldin said WFE membership reflects CASE’s success in attaining high international standards. He added that membership gives financial houses and investment firms a positive image of the Egyptian bourse and the professional way it is managed. This should make it more appealing to potential investors.

Dealership files suit against Kia

Kia Motors Corporation, Egypt branch (Kia Egypt), a dealer of Kia automobiles, has filed a suit against the Dubai-based regional bureau of the South Korean car manufacturer Kia Motors. Kia Egypt is demanding $222.8 million in compensation, as well as 9-percent legal interest on the sum until paid, for alleged damages incurred by the regional bureau’s decision to “arbitrarily and unjustifiably” terminate its distribution agreement.

According to a statement filed in a Dubai court by the claimant’s lawyer, Kia Egypt concluded a dealership agreement with the regional bureau in 1995, which was renewed in 2004. The regional bureau allegedly failed to provide the total agreed upon vehicles outlined in the agreement, and in August 2005 notified the claimant that it wanted to rescind the agreement.

The claimant’s lawyer said Kia Egypt could have earned $13.4 million in profits from the sale of the undelivered vehicles, as well as $2.6 million in maintenance and customer service during their warranty period. The lawyer also claimed the company incurred $55 million in additional expenses for promotion and overhead.

Egypt and Russia sign trade agreement

The Russian Federation and Egypt have completed talks on Russia’s accession to the World Trade Organization (WTO). Boris Alyoshin, deputy chairman of the Russian government, said the two countries signed an agreement formalizing the end of talks and that Russia had promised Egypt trade preferences on certain types of goods.

Bilateral trade totaled $450 million in the first half of the year, with Russia’s exports reaching $387 million and Egypt’s, $61 million. Cereals, oil derivatives, steel, chemical products and machinery constitute the bulk of Russian exports to Egypt.

US aid linked to reforms

On November 14, US president George W. Bush signed into law a $20.9 billion foreign spending bill that allocates to Egypt $1.3 billion in military aid and $495 million in economic assistance. For the first time, the law stipulated that the aid would be conditioned to “significant economic and political reforms,” though it did not elaborate on these measures.

Black cloud snuffed

According to the environment minister, Maged George, the so-called “black cloud,” a choking haze that results from the burning of rice straw in the autumn months, appeared only once this harvest season. Data gathered by air quality monitoring units show that the number of hours with pollutant concentration levels exceeding 300 micrograms/cubic meter dropped to 49 hours, compared to 64 in 2004, he said.

Citigroup expects steady growth

Citigroup Investment Research raised its rating of Egyptian equities to overweight from neutral. The US-based research firm said the Egyptian market is likely to continue to do well particularly “as investors turn their attention to 2007 forecasts, which look especially encouraging in the mobile [sector] given their strong ongoing growth profile.”

Fresh development for Smart Village

Dubai-based Emaar Properties has signed a memorandum of understanding (MoU) with the Egyptian government to lay the groundwork of an integrated community based in Egypt’s new Smart Village on the outskirts of Cairo.

The land development on 2.4 million square feet in the technology park will include a convention and exhibition center, hotel, serviced apartments, commercial, office space and shopping village. The integrated community is expected to complement the high-tech environment of the Smart Village by providing commercial, corporate and leisure facilities.

Egypt sends mission to WSIS

A large delegation headed by the minister of communications and information technology, Tarek Kamel, took part in the World Summit on Information Society (WSIS) held on November 16-18 in Tunis. Several presentations were shown on how Egypt’s IT sector has developed. Egypt had a stand in the Partnership Pavilion through which new initiatives were launched such as the Arab Info Mall, one of the projects initiated by Bibliotheca Alexandrina to provide access to the activities of NGOs and civil society organizations. Moreover, Egypt received the World Summit award for its innovative e-culture site www.eternalegypt.com.

The first phase of the summit, which took place in Geneva in 2003, resulted in the formulation of a declaration of principles and an action plan. The objectives of the action plan are to build an inclusive information society (IS), to use the potential of knowledge and ICT tools for development, to promote the use of information and knowledge to achieve internationally agreed development goals and to address new challenges of the IS.

The second phase, held in Tunis, entailed a process of monitoring and evaluating the progress made towards bridging the digital divide between developed and developing countries, and realizing the targets laid out in the Geneva Plan. Kamel said he believed the digital gap was being bridged in Egypt thanks to strategic investment in the infrastructure of information and communications networks. He urged other developing countries to follow suit, highlighting the importance of focusing on value-added services through the Internet.

Businesswomen convene in Cairo

The second Businesswomen’s Forum, with the theme “Investment in Time of Peace,” took place in Cairo on November 19. Sheikha Hessa Al-Saad Al-Sabah, head of the Arab Businesswomen Council and executive president of the forum, stressed that the council has the role of an economic firm that works for the integration of Arab women into regional economies and the creation of opportunities for the effective participation of women.

Al-Sabah added that the council also aims to channel investments to supporting the national economy, and to maintain dialogue in the cultural arena.

Key sponsor of the forum Prince Al-Walid bin Talal voiced his support to giving women a greater role in the Arab economic arena.

Fund allocates $100 million to expand jobs

The US, Egypt, Morocco and Denmark signed a memorandum of understanding (MoU) at the annual ministerial meeting held in Bahrain on November 12. Under the terms of the MoU, the Future Forum, a global institution for private investment, will allocate $100 million to help expand industries in Egypt and Morocco, targeting the creation of jobs in medium-sized enterprises. The US will contribute $50 million, Egypt and Morocco $20 million each and Denmark $10.

The fund will have a board of directors comprising 11 representatives from the private sector and companies benefiting from the scheme. Each country will be represented proportionate of its capital input.
Minister of Investment Mahmoud Mohieldin said enterprises financed by the fund will commit to corporate governance principles of transparency, openness and accountability.

Indian firm partners in fertilizer plant

Fertilizer and cooperative giant Indian Farmers & Fertilizer Cooperation (IFFCO) has formed a joint venture company with El Nasar Mining Company (ENMC) to establish a phosphoric acid unit in Egypt at a cost of $325 million. The project, Indo-Egyptian Fertilizer Company (IEFC), will be financed with a debt equity ratio of 70:30 in which IFFCO will be the major stakeholder with a 76-percent stake. An Egyptian mining company will supply rock phosphate, the basic raw material for the project.
The project will be constructed near Edfu close to rock phosphate mines, on land afforded free zone status by the General Authority for Investment & Free Zones (GAFI).

EU supports banking reform

The EU will offer Egypt $17.7 million to support banking reform following a cooperation agreement between the European Central Bank (ECB) and the Central Bank of Egypt (CBE). The loan will help Egypt to initiate a program that offers training and capacity building to the CBE to develop and implement an advanced banking supervision system based on international standards.

The program is to be implemented as of December 1, and will include traineeship and study tours in Europe for CBE staff.
Egypt is the first Middle East country to reach such an agreement with the EU.

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