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follow up ‘duopolistic’
move spurs activists, parliament changes in the terms of prepaid mobile phone services were the talk of the town in the first weeks of the new year after mobinil and vodafone announced on january 3 a reduction of the validity and grace periods of their prepaid cards, effective january 13. the validity period of the £e 100 card, the most popular denomination, was to be reduced by both of the country’s two mobile service providers from three months to two, while the grace period was to shrink from one month to 10 days. there was, however, a bright side: concurrent with the reductions, there would also be a cancellation of the 15-percent “administrative” fee, as well as a shift to the assessment of charges in 30- rather than 60-second intervals. nevertheless, most customers felt the cons outweighed the pros. “practically, a prepaid subscriber is primarily a receiver of calls rather than an initiator,” said wael ziyada, a telecom analyst with local brokerage firm efg-hermes. for these users, a long grace period (during which they can still receive calls after their credit expires) is far more important than a small initial discount. discontent among prepaid card users mounted, particularly in light of the timing – only weeks before, a major deal had been struck between vodafone egypt and state-owned telecom egypt (te), effectively signaling the end of the latter’s previously expected independent entry to the mobile market. “because the increase in prices followed te’s purchase of a 25.5-percent stake in vodafone, many people think the government is working with the two service providers against consumers,” said independent mp mohamed el-badrashiny. some mobile users did more than just gripe, though. a group of journalists, lawyers and political activists went so far as to establish a “committee for citizens’ rights” aimed at challenging the two companies, proclaiming that the lack of alternate service providers allowed the “duopoly” to exploit consumers. at the group’s first meeting, on january 8, founding member and journalist ahmed taha el naqr said the committee’s purpose transcends the mobile issue. the group’s ultimate goal, he explained, is to raise public awareness about what its members view as the “monopolistic” practices currently afflicting the telecommunications, natural gas, electricity and public utilities sectors. el naqr announced at the meeting – held at the journalists syndicate and subject to extensive coverage by the local and regional media – that the committee was organizing an indefinite boycott of mobile services by both prepaid and post-paid subscribers, starting january 14. the uproar had an immediate effect, with parliament convening a special meeting of its transport and communications committee on january 12 to look into the public outcry, and more than 90 mps weighed in against the new measures. national democratic party (ndp) parliamentarian tayseer matar took the telecommunications regulatory authority (tra) to task, accusing it of failing to defend the public interest. committee head hamdy el-tahan, also an ndp deputy, went further, characterizing the measures as “extortion,” adding, “we refuse to yield to those who would harm the man in the street.” only hours after the stormy session, the phone companies announced a compromise: they would press ahead with plans to reduce the validity period to two months, but would maintain the current grace period – although only temporarily. the conflict appears set to continue, however. at the second meeting of the citizens’ rights committee, held the following day, activists vowed to fight on, even though the compromise had taken much wind out of the boycott’s sails.
on january 14, tra managing director alaa fahmy said his organization
was discussing the final changes to the terms of prepaid services
with the mobile companies, which would be announced shortly. marwa a. al-a’sar govt. vows meat injection
amid costlier livestock after facing sharp price rises on imported ramadan staples and many other goods last year, consumers are bracing themselves for this year’s eid al-adha holiday. reportedly, meat prices have soared in recent weeks with a kilo of meat now costing about £e 30 in low-income areas of cairo, and reaching £e 34 in up-market districts like maadi and zamalek. during the four-day eid al-adha, which began february 1, it is customary that those with the financial means slaughter a lamb, a third of which is given to the poor. while wealthier folk often substitute lambs with cows, those of more modest incomes will celebrate with a cut of fresh meat from the butcher – a rare luxury for an increasing number of families owing to ongoing increases in the cost of living. according to a december report issued by the federation of the chambers of commerce, local prices for red meat and poultry increased by as much as 50 percent on the year. butcher ahmed abdalla attributed the increases to costlier livestock, pointing out that the cost of a cow is now calculated at £e 18 per kilo compared to £e 10 a few months ago. youssef hussein, a member of the butchers’ committee at the cairo chamber of commerce, cited pricier fodder and increased exports of meat and poultry as other factors helping nudge up local prices. as in ramadan, which ended in late november, many citizens expressed doubts that they would be able to afford the holiday tradition. “i have five children and my monthly salary is £e 250,” said said mandour, a government employee. “we used to eat chicken instead of red meat. now chickens cost £e 9 a kilo – an increase of 100 percent compared to october 2002,” he said. the government has at least acknowledged the predicament. minister of supply & internal trade hassan khedr said at a press conference in early january that the ministry intended to import 4,000 cows ahead of eid al-adha. the ministry also announced that it had contracted importers to provide the domestic market with 10,500 sheep.
for its part, the ministry of agriculture declared in december that
it would cooperate with the private sector to increase meat production
to cover market demand. according to the chairman of the economic
affairs sector at the ministry, projects aimed at increasing domestic
meat production had been initiated on the north coast and in the
sinai peninsula, among other locations. fathy rabeh officials: israeli red-to-med
railway no threat to canal few things raise cairo’s hackles like threats – perceived or otherwise – to the strategically vital and enormously lucrative suez canal. though the suez canal authority (sca) is keeping close tabs on an israeli plan to build a railway connecting the red sea and the mediterranean, the canal’s top man says egypt has nothing to worry about. “the suez canal has no competitors; it’s peerless,” sca chairman ahmed fadhel told the people’s assembly in november. fadhel’s remarks came on the heels of an announcement by israeli minister of finance binyamin netanyahu that israel was considering extending its existing rail infrastructure to connect the mediterranean city of ashdod with eilat on the red sea. “if we extend the railway from beersheba to nahal zin all the way to the eilat and ashdod ports, 180 kilometers, we can break the monopoly of the suez canal,” the israeli news agency quoted netanyahu as telling attendees of a conference in tel aviv promoting investment in israel. the jerusalem post subsequently reported that netanyahu had visited the us to seek private investors for the project. fadhel, however, questioned the competitiveness of the proposed railway. he argued that the transferal of cargo from ship to train – and then back again – would be too costly and time-consuming compared to the ease of simply sending ships through the canal. even if israel did follow through with the plan, fadhel said, the canal could always reduce its fees to undercut the railway, although he emphasized that such a move would only be taken when absolutely necessary. the sca head added that the current political climate doesn’t bode well for such massive projects – particularly in the middle east. he went on to point to the unstable security situation in israel, suggesting that a railway could easily be made vulnerable to sabotage.
deputy minister of maritime transport essam badrawi also dismissed
the possibility that a railway could have a serious impact on the
volume of business currently enjoyed by egypt’s shark al-tafri’a
port, located east of port said. “shark al-tafri’a is
run by an international company that has unrivalled experience in
port management and will be running it for the next 25 years,”
he said. mohamed mursi contractors charge govt.-private
sector collusion in steel the new year appears to have dawned amid a rising awareness – both activist and corporate – of the dangers posed by private monopoly to the workings of a healthy economy. in january, parliamentarians took up contractors’ complaints about the rising cost of steel, charging that insufficient competition in the domestic market was serving to drive up prices. steel hit £e 3,150 a ton last month compared to £e 1,500 in january 2003. while a number of contractors point the finger at a small group of iron importers, saying they have cornered the domestic trade in the vital raw material, the majority blame private sector steel manufacturer ezz al dekheila, a partial owner of which is national democratic party (ndp) representative ahmed ezz. during a parliamentary session in the first week of january, mps accused the government of colluding with ezz to increase steel prices by 70 percent over the last year. they also took prime minister atef ebeid to task, claiming that he had ignored the monopolistic practices wracking the industry. the pm responded by calling for the formation of a fact-finding committee with a mandate to determine whether sector actors are pursuing uncompetitive practices. in response to increased costs, many contractors have put projects on hold, which has led to financial losses and increased unemployment in the sector. according to independent mp fayez darwish, high prices have brought the construction of several bridges, schools and hospitals to a standstill. “ezz knows that people will not boycott steel forever. the company is holding on to it until prices go even higher – then it will start to collect its profits,” said amin al nosiri, an independent contractor. business daily al alam al youm reported on january 12 that ezz al dekheila made £e 297 in profits on every ton of steel it sold during the second half of 2003, compared to £e 66 per ton in the first half. the company manufactured 1.6 million tons of steel last year, the paper noted, compared to a total of only 100,000 tons produced by the two other domestic producers, the partially state-owned al delta company and the egyptian steel company. a few ndp deputies, however, leapt to ezz’s defense during the ensuing debate, attributing the price increase to the devaluation of the pound. however, not all ndp parliamentarians were on side. “when the exchange rate was £e 3.5 to the dollar, a ton of steel was sold for £e 950,” pointed out ndp deputy farouq al maqrahi, “meaning that if the devaluation was the only reason for the increase, a ton of steel should be sold for £e1,900.” independent mp mohamed khalil qeweita went so far as to accuse the government of imposing duties on steel imports to protect the monopoly. on january 14, the government conceded, announcing that it would reduce customs duties on steel imports from 20 percent to 5 percent, with ebeid stating that there would be only 1 percent tariffs levied on steel from saudi arabia, and none on that from libya.
still, mp for the leftist tagammu party aboul ezz al hariri questioned
whether greater reliance on imports was the answer. “6.2 million
tons of iron and steel products are currently available in the local
market, excluding reinforced steel, while local demand is 5.5 million,
meaning there is no need to import,” he said. summer said bread lines get ugly the long lineups outside bakeries – that have appeared intermittently since october – were back last month, bringing with them scenes of anger unseen for years in connection with the purchase of subsidized foodstuffs. cairo police reported in january that numerous scuffles were breaking out every day between people lining up for the subsidized pita rounds commonly referred to as baladi bread. the phenomenon was not confined to cairo, though, with fights erupting in other governorates as well, in some cases resulting in injuries. governor of cairo abdel rehim shehata’s decision in december to restrict purchases of subsidized bread to 20 pieces a day per person added to the difficulties of many low-income egyptians. “twenty rounds of bread are enough for a family of three, but i have four children,” said saad mohamed, a shoemaker from the capital’s al-azhar district. in addition, the increasingly rough nature of the bread queues has deterred him from sending his children pick up their allotted loaves. “they don’t like to stand for hours in a lineup, especially with all the pushing and shoving.” zahra abdel salam, a housewife from imbaba, agreed that the wait is both long and unpleasant. “there are dozens of people outside the bakery, even early in the morning. sometimes i have to wait two hours or more in the hot sun.” the declining quality of the bread itself is also the subject of criticism. “even though the amount of bread we buy is limited, the quality gets worse each day,” abdel salam said. “sometimes it’s so bad that we throw half of it away.” consumers claim that many bakers turn additional profits by selling large quantities of baladi bread to middlemen who then resell it for 10 piastres – double the price bakeries are allowed to charge. “we often buy bread from street vendors to avoid long lines,” said one boulak resident. those who are able to pay a little more have another option, though. aish mohasan, or “improved bread,” the result of a new state initiative using high-grade white flour, costs 25 piastres a round. the chronic shortage of bread comes at a time when prices of most basic foodstuffs have increased dramatically. according to farah wahba, chairman of the bakers’ committee at the federation of chambers of commerce, “inflation has caused many people to stop buying rice and pasta and to depend mainly on baladi bread.” a partial solution, wahba says, is to increase the amount of flour supplied to bakeries by 10 percent. he also suggested that the government increase bread subsidies because bakeries’ production costs – like wages and maintenance — have increased. as the bread lines grew last month, the opposition wafd party sparked a debate among parliamentarians when it directed interpellations at prime minister atef ebeid accusing the government of importing wheat containing animal fodder. the wafd charged that 300,000 tons of wheat, imported by the holding company for food industries from france at $150.78 a ton, was unfit for human consumption. the ministry of supply & domestic trade confirmed that the grains are, indeed, a kind of triticale, which, while often used in animal feed, is fine for human consumption when substituted for 10-20 percent of flour content.
ironically, triticale, a combination of wheat and rye higher in
protein than either of its constituent grains, can usually be found
in the up-end health food stores of the west. summer said rumors of egypt qiz rattle
nerves of local business in may 2000, business monthly reported egypt’s apprehension about establishing a qualified industrial zone – or qiz – like that in jordan. however, egypt’s concern about establishing a qiz – a main component of which is economic cooperation with israel – may be diminishing eight years after its hashemite neighbor took the plunge. the concept was first put forward by us president bill clinton in 1995, a decade after the us and israel agreed to establish a free trade area (fta). essentially, a qiz extends the benefits of that fta to industrial parks in countries that opt to sign on. things moved quickly for jordan after going on board in 1996: within the first four years, it managed to more than double its exports to the us. the jordanians continue to use the scheme profitably, creating job growth and increasing their penetration of the us market on a duty free basis. now, after almost four years of violent intifada, most of it in the face of the rejectionist government of israeli prime minister ariel sharon, there has – not surprisingly – been little action on a similar initiative between israel and egypt. until now. suddenly, in late december and january, reports surfaced of a renewed egyptian interest in the scheme – with a concomitant flurry of denials. it’s no secret that the egyptian manufacturing sector, particularly the textile industry, would love to increase its exports to the us in the current economic climate. still, many businesspeople, it would appear, are loath to face the political implications of launching a qiz, a major proviso of which is the inclusion of specified percentages of israeli content in all exports coming out of the zone. the furor began in december, when reuters reported that president hosni mubarak and israeli foreign minister silvan shalom, meeting on the sidelines of an international conference on it in geneva, discussed the subject of establishing a qiz for textile production and export. the israeli ambassador to egypt, eli shaked, meanwhile, was quoted as saying that a slight warming of israel-egypt ties had prompted some egyptian businessmen to approach israel on the subject. a few days later, israeli news service globes reported that 11 egyptian industrialists were scheduled to arrive on december 25 to meet with israeli manufacturers’ association president oded tyrah, the result of an earlier meeting between tyrah and federation of egyptian industries executive director loutfi mazhar in tunis. there was little mention of these comings and goings in the egyptian press at the time. and on january 19, business daily al-alam al-youm quoted several egyptian industry leaders as saying that no such meeting took place in israel – and if it had, they didn’t attend it. galal zorba, chairman of the egyptian half of the us-egyptian business council, strongly denied having gone to the alleged meeting, going on to state that there were no plans to establish an israel-egypt business council. as for the reported qiz plan, zorba didn’t rule out the possibility that some discussions might be taking place at higher levels.
the governments involved are extremely wary of discussing the subject,
and those following the story – including businesspeople and
the media – are choosing their words carefully. alexander fuchs ict show fizzles, budgets
saved for telecom africa bigger is not always better, some exhibitors at cairo’s annual information and communication technology show, or ict 2004, noted at the event, held from january 17 to 20 at the cairo international conference center. reflecting the stagnant economy and telecom market, the show was noticeably smaller than the year before, which itself hadn’t seen the same number of participants and visitors as it had in 2002, when the sector was still in full bloom (and still expecting a third mobile network). “at most, there are 50 companies to deal with, if we don’t count the larger number of smaller peripheral exhibitors along the walls,” said one exhibitor from a publishing company that has participated in the exhibition every year. maha khairy, marketing and communications director for siemens subsidiary egti, noted that, in the last two years, many of siemens’ multinational competitors had downscaled their presence in egypt. it’s little surprise, therefore, that they aren’t splurging on the kinds of mega-displays seen during the telecom boom, she noted. yet despite the low turnout, she added, “it has in many ways been a better show than the previous year,” explaining that the quality of the visitors, both clients and public, was higher and more professional this time.
unlike previous years, big-name multinationals weren’t very
conspicuous. cisco, on the other hand, showing more confidence in the local market, showed off a large display and held a two-day conference for telecom executives under its auspices. but tough market conditions aren’t the only reason why many exhibitors opted out of ict 2004. in may of this year, the international telecommunication union (itu) is scheduled to hold its “telecom africa” show, likely to be one of the largest international events ever held in egypt. originally slated for 2002, the conference was postponed due to regional turmoil. “itu’s telecom shows are always international, and big – mega-big. they demand suppliers be there,” the publishing representative said. “it’s no surprise companies are saving their budgets for this event.” at ericsson, which also didn’t have a major presence at the ict this year, marketing director lars lindberg agreed. “naturally, we’re restrictive when it comes to participating in exhibitions, and this year we’ll be at the telecom africa show only.” in another indication of the ict’s waning importance, it wasn’t – for the first time in the show’s eight-year history – officially taken under the wing of the ministry of communications & information technology (cit).
while cit minister ahmed nazif formally opened the event, one exhibitor
found his presence half-hearted at best. “he spent 45 minutes
at the exhibition, and two hours at a cisco event the following
morning. that says something about the cit ministry’s current
priorities.” mats a. palmgren at book fair, young capitalists
make cd piracy pay the cairo international book fair, held this year from january 21 to 30, isn’t generally known for the opportunities it affords to ipr criminals. but, even as ipr infringements are causing huge losses to the bottom lines of media corporations, it has become a profitable pastime for many of cairo’s unemployed graduates. and there’s no better place to hawk their pirated wares than at the book fair, enjoyed by thousands of patrons daily. a cd burner, blank discs and a modest presence at the 10-day fair are all one needs to begin a business. “you can make hundreds of pounds,” said saad kamal, a law graduate who got into the trade at last year’s fair. “the only problem is renting the land at the fair grounds.” while renting a meter of space at the high-profile exhibition can cost thousands of pounds, the stiff prices can be avoided by simply subletting small plots from legitimate companies. “you don’t get the land from the fair supervisors, you get it from small companies that have reserved space and are willing to make some extra money by subletting parts of it,” said another amateur pirate. he went on to explain that fair authorities only let booths to genuine traders. “you can’t go up to them and say, ‘i need it to sell pirated cds,’” he stressed, adding that people in the business often know each other and share stall space. pirated materials included music, movies, software and educational resources – even recordings of the quran. “we buy a dozen cds for £e 20, then sell the pirated copies for £e 200,” said mohamed aboul wafa, who works at an internet café. people involved in cd piracy usually insist that they’re offering a service. “we aren’t the only ones doing this,” argued mohsin al nemr, who worked the fair this year. “besides, it’s hard to find original software in egypt.” indeed, according to officials at the ministry of communication & information technology, more than 70 percent of the software used by the local private sector is pirated.
many young bootleggers believe that the government is obliged to
provide them with legitimate employment before it can charge them
with any wrongdoing. “we only make a little money during the
book fair, and the rest of the year we sit at home,” said cd
pirate sherif abbas. summer said inflation tempts producers,
importers to hoard goods the giddy price hikes – on home appliances, vehicles and ready-made garments – are reportedly driving many local manufacturers and importers to stockpile their commodities for a rainy day. according to a january report prepared by the ministry of supply & domestic trade, prices of ready-made garments jumped by 75 percent, vehicles by 100 percent and household appliances by 70 percent, during the period from february to december 2003. traders say the situation is unprecedented, with wholesalers and manufacturers suddenly demanding full payment for goods up front, rather than via traditional installment plans. according to chairman of state retailer omar effendi mohamed bahieddin, it was only because the national retail chain guaranteed wide distribution that manufacturers have continued to accept its incremental payments. “otherwise, they would have asked us to pay before we received the goods, as they require of private sector companies,” he said. ahmed idris, chairman of the egyptian company for automotive trade, put the devaluation of the pound at the root of the problem, pointing out that, last year, “the price of the sahin model jumped from £e 38,000 in january to £e 56,000 in december.” according to idris, car dealerships are now keeping vehicles in their warehouses until prices rise further. but many experts believe that traders shouldn’t be blamed. “forty percent of the country’s factories halted production, and the rest are now operating at only 50 or even 25 percent of their capacity. traders simply want to maximize their profits,” said mohamed mahmoud youssef, director of cairo university’s center for commercial studies & research. “regulating prices should be the job of the monitoring bodies concerned with protecting customers and eliminating monopoly,” he added. at least one trader sees things differently. “this isn’t taking advantage of the local market. rather, it’s compensation for the expenses and risk borne by traders,” he said.
the solution? “prices can be stabilized by raising the value
of the pound against hard currency,” he suggested. khaled moussa al-omrani public sector bigwigs
brace for a shake up public sector managers of a certain age are on edge following an initiative aimed at making way for a new generation of business leaders. public enterprise sector minister mukhtar khattab has begun implementing a decree – issued by the cabinet in december – requiring managerial staff at public sector companies over the age of 60 to retire. needless to say, chairmen of public sector companies are outraged, due in no small part to the fact that 95 percent of them are over 60. the replacement of nabil el marsafawy, former head of the holding company for trade, by the younger hady fahmy is being taken by public sector managers as an indication that the government means business. while fahmy was chairman of misr petroleum company from 2001 to 2003, he significantly increased profits and doubled petrochemical exports. fahmy takes up his new position with a mandate to revive the loss-making firm, which owns many of the country’s department stores. in light of the government’s evident determination to implement the decree, public sector managers are asking the ministry to implement it gradually. chairman of state retailer omar effendi mohamed bahieddin said replacing many new people in managerial positions at once could be detrimental to the performance of companies. “i’m afraid that putting in place all these new leaders at the same time will rock the market due to the new managers’ lack of experience in the sector,” he said. “changes should be made slowly, since all public sector companies have a shortage of highly qualified employees,” he added, “not to mention the fact that none of the companies has had a new head in the last 15 years.” khaled moussa al-omrani second round of talks held on egypt-israel
gas deal
prime minister ariel sharon recently announced that israel would
buy natural gas from egypt and not from the british gas fields in
offshore gaza. egypt, morocco get a little closer president hosni mubarak and king mohamed vi signed the agreements during a high-level joint commission, held in cairo. additionally, the moroccan and egyptian stock exchanges inked a memorandum of understanding to exchange technical expertise and, possibly, adopt joint regulations for listing, bond circulation and payment of transactions.
trade volume between morocco and egypt reached $70 million in 2003. ugandan mps probe claimed nile exports
to israel several ugandan mps insist that egypt pay for the use of nile water – and for any it might be exporting. egyptian officials contend that no such export deals exist.
the invitation comes in the wake of recent calls by several ugandan
parliamentarians for the repudiation of the 1929 nile water agreement
on the basis that it gives egypt dominance over the strategically
vital river. cairo embraces de soto plan for informal
sector egypt has approximately 1.4 million extra-legal businesses, employing
some 8 million citizens, which “hold the potential for making
egypt a rich and powerful country,” a joint study by the two
think tanks concluded. the value of business and real estate assets
in extra-legal enterprises was estimated at almost $30 billion. |
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