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follow up
mining law impedes eastern
desert gold industry
[“gold manufacturers give organization
a try,” december 1998]
while the presence of plentiful goldfields in egypt dates back
to pharaonic times, mining of the precious metal has consistently
failed to contribute significantly to the national economy. australian
mining company centamin is single-handedly trying to change this
trend and put egypt’s gold mines on the map internationally.
centamin egypt, along with its subsidiary pharaoh gold mines (pgm),
has high hopes for egypt’s gold-mining industry, according
to pgm public relations manager hamdy daoud. “egypt is very
qualified to be one of the biggest mining-industry countries in
the world,” daoud said. “egypt has everything... except
the right mining culture under the right mining laws.”
under law 222 of 1994, pgm was given rights to excavate a 5,000-square-kilometer
area in some of the country’s premier geological real estate
in the eastern desert. the company is currently focusing on developing
the sukari gold mine, one of 15 mines that pgm secured in its concession.
according to its 2001 annual report, centamin projects a total output
of 15,175 kilograms of gold per annum at a cost of $4,000 per kilogram.
the potential of the sukari hill alone is in excess of 10 million
ounces of gold, which daoud said could easily make sukari “the
greatest gold mine in africa and... one of the top 10 to 15 gold
mines in the world.”
yet centamin is the only major company working these rich goldfields.
daoud blames the industry’s stagnation on socialist laws of
the 1960s that scare off investors. “the current mining law
is totally useless,” he said, explaining that predatory regulations
hinder the growth of an industry that could earn as much for egypt
as the suez canal, oil and agriculture combined.
under law 222, centamin must bear all extraction costs, but must
provide the state with 3 percent of all revenues and – in the
event of commercial success – 50 percent of profits.
with gold prices falling on the global market from $14 per gram
in 1995 to $10.60 currently, the international market might not,
in any event, be ready for an increased supply of gold. but despite
the obstacles, centamin is negotiating with major banks, the international
finance corporation and the world bank to fund the sukari project.
centamin stocks are currently listed on the australian and london
stock exchanges, but efforts to enter the cairo & alexandria
stock exchanges have been stalled due to lack of local interest
in mining.
the egyptian geological survey & mining authority (egsma) discovered
massive gold reserves in egypt’s eastern desert in the 1970s,
but the government had reservations about the economic viability
of mining the fields. according to former egsma head rushdi said,
the retail price of gold at the time – around $8 per gram –
would have failed to cover the costs of extraction, lifting, crushing,
grinding and treatment. prior to centamin’s entry in the mid-1990s,
no foreign mining company opted to funnel capital into excavations
in the area.
expansion of gold mining in egypt continues to be fraught with challenges.
infrastructure near the mines, which lie in a desert area close
to the red sea city of marsa alam, is poor, with roads, housing,
schools, hospitals, energy, telecommunications and, most importantly,
water all being in short supply.
the environmental impact of mining, meanwhile, has also been a concern.
destruction of desert landscape and the use of cyanide to extract
gold from rocks have made government officials wary of funding mining,
according to said. but centamin officials contend that advanced
mining techniques demand less use of cyanide for excavation than
30 years ago.
daoud said that mining causes “no real damage for the environment.”
pgm, he assured, is subject to both egyptian and australian environmental
regulations.
fatima el saadani
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festival doubles store participation
[“festival showing mixed results,”
august 2001]
arab tourists from the gulf states flocked to egypt this summer
in larger numbers than ever before, according to organizers of egypt’s
fifth annual tourism & shopping festival. salma hafez, advertising
manager for société egyptienne de publicité,
representing al-gomhouriya newspaper, an organizer of this year’s
festival, added that hotel occupancy across the country was up 20
percent over the same time last year.
the festival, held in egypt from july 20 to august 20, promoted
local hotels, shops, restaurants and travel agencies – all
of which offered consumers 15- to 50-percent discounts during the
30-day stretch of the consumer celebration. to facilitate trips
within egypt, meanwhile, national carrier egyptair gave discounts
of 20 percent on domestic flights.
hafez said she had begun the festival’s advertising campaigns
in the gulf as early as january. “every year, tourism is increasing
more and more than the year before because the discounts are fantastic,”
she said.
ashraf wafik, director of sales at the concorde hotel in dokki,
agreed that tourism boomed this summer, adding that his hotel had
recorded a 30-percent increase in business over last year. the festival,
he added, had played an “indirect role” in enhancing the
high season.
middle east political tensions may have discouraged visits from
outside the region, but also encouraged arab tourism, because of
problems for arabs in securing visitors’ visas to europe. “there
is a big increase if you compare it to last year,” he said.
“the arabs do not want to go to europe, so they are coming
to egypt.”
hafez said that 5,000 stores participated in the festival this year,
up from just 2,500 last year, an increase she attributed to the
offering of special prizes for businesses as well as customers.
tickets for the festival’s prize draws could be bought over
the phone or picked up free with purchases from participating stores.
but most importantly, the stores themselves got a weekly chance
at £e 10,000 for giving a customer a winning ticket.
participating stores also took advantage of the right to advertise
specials during the month, something they are not normally allowed
to do. but not all of them recorded an increase in sales. mohamed
zaghloul, manager of el agati silver in cairo, said he was disappointed
with the meager rise in el agati’s sales, which went up only
10 percent during the first two weeks of the festival. the store
offered shoppers 20-percent discounts on all silver products.
zaghloul recounted how tourists would, in past years, buy large
silver products, which are el agati’s speciality. but today’s
tourists, zaghloul said, are holding their wallets tightly closed.
“there are many, many tourists, but they are not buying,”
he said. “they buy small things like cartouches and necklaces,
but they don’t buy our main products, such as silver tea sets.”
but every wednesday during the month, thousands gathered at the
nasr city fairgrounds to hear the names of contest winners. each
week, £e 25,000 in cash and a suzuki all-terrain vehicle were
given out, along with hundreds of smaller prizes, such as air conditioners,
washing machines and gold.
the festival has also been expanded to cover more territory, with
businesses in cairo, giza, alexandria, ismailiya, hurghada and the
north coast taking part this year. promotional events for the festival
included shows by a florida waterskiing team on the nile, mediterranean
sea and suez canal, a swimming competition between 10 african countries,
displays of traditional egyptian handicrafts and trade exhibitions
in cairo and other festival locales.
daliah merzaban
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thanawiya amma goes on line
[“free internet opens cyberspace to
the masses,”february 2002]
the annual rush of graduating secondary students to their schools
in july to find out thanawiya amma (secondary school) exam scores
decelerated this year, as many students found out if they had made
the grade with a mouse click.
for the first time, the ministry of education posted each student’s
natiga, or grades, of secondary school year-end examinations on
line. as soon as the grades were released on july 17, students could
call up any of a number of local internet service providers (isps),
type in their student number and instantaneously see their results.
thanawiya amma grades have long been a source of anxiety for students,
as they rigidly determine the colleges and courses for which they
are eligible. earlier this year, local isps launched huge ad campaigns
in newspapers to announce that the exam results would be available
through their websites. yalla.com, nile online and the al-ahram
portal were among the sites providing access to exam results.
abbas gohar, at nile online’s call center, said that providing
the service had helped isps gain exposure in the market and reel
in new users, adding that his company’s site had witnessed
high traffic when the grades were released. “there’s no
doubt that this service made a lot of people get to know our company
and our services,” gohar said. “the students were so eager
to know the results that many of them called first and asked ‘when
will you post the results on the web?’”
most of the isps that offered the service required that the user
log on through the isp’s free internet dial-up number, while
blocking students who had connected through the numbers of competing
isps.
further enhancing exam-score access, the country’s mobile-phone
service providers introduced thanawiya amma results by text message.
eman wahby
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low costs, mortgage prospects
lure foreign cement firms
[“alex cement shareholders at loggerheads,”
may 2002]
following the lafarge empire’s rocky takeover of alexandria
portland cement in may, other foreign giants have kept their eyes
on local cement makers with a view to utilizing some of egypt’s
underexploited production capacity. crh of ireland in june announced
its intention to buy a 60-percent stake in misr beni suef cement,
followed in july by a commitment from the french lafarge and greece’s
titan cement company to establish a $600 million joint venture in
egypt. misr qena cement, meanwhile, continues to flirt with mexican
giant cemex, which bought assiut cement in 1999.
egypt’s cement market has recently come into vogue among foreign
firms, because of low cost for labor and raw materials, said rasha
al husseiny, senior analyst at cibc. european environmentalists’
concerns about pollution from cement manufacturing, she added, have
prompted international companies to look more closely for non-european
production sites. meanwhile, egypt’s currency devaluations
between january 2001 and january 2002 made local cement companies
more attractive by lowering egyptian cement prices in the international
market.
al-shorouk city investors’ association president osama el-badry
expressed optimism about the industry’s prospects after the
passage of the mortgage law last year. “implementing the law
should boost the performance of the construction and real-estate
sectors,” he said, “which would undoubtedly increase the
demand on cement.”
still, the law is far from being implemented. according to mohamed
abdalla, middle east president of coldwell banker, a us-based real-estate
company, many observers are skeptical that practical application
of the law will ever see the light of day. he, however, thinks there’s
good reason to believe that implementation is coming soon. “we
have been promised something in six to nine months, and i think
this is realistic. besides, everybody needs it – the economy,
the people and the government itself.”
eman wahby
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data carriers ready to merge
[“the big gulp,” april 2001]
the internet bloodbath that some said would come hot on the heels
of free internet’s launch in january has yet to happen. nevertheless,
after several hestitant steps in the past several months, four prominent
internet service providers (isps) are now, apparently, planning
to merge by the end of the year.
nile online (nol), noor, egynet and egyptnet signed a memorandum
of understanding in july formalizing the initial details of the
merger, which will establish a “monstrous company for data
communication in egypt,” according to an official at one of
the companies. “the merger will [create] a strong entity that
will serve customers better and more efficiently and also consolidate
management and personnel,” said the official, who is involved
in merger negotiations.
the merger comes in the midst of government efforts to boost internet
use throughout egypt, through government-funded “it clubs”
for low-cost computer access and “free internet,” which
allows users to surf the internet from home for the price of a local
phone call.
but the demand for internet services in egypt has proven to be smaller
than initial predictions expected. recent figures published in al
alam al youm put the number of internet users in egypt at around
1.1 million, much less than the 3 to 5 million users many analysts
predicted would be on line by 2002. the company official attributed
this lag in internet use to slow growth in the pc market.
while the companies involved in the merger maintain they are in
good shape financially, the official said that when isps first arrived
on the scene a few years ago, they were not expecting competition
from more than three or four companies. today, however, nine isps
operate in egypt. the existence of separate companies that use the
same equipment and provide the same services leads to a lot of duplication
and simply “does not make sense,” he added.
raya holding, linkdotnet and telecom egypt’s isp and data carrier,
te data, will be the new company’s largest competitors. linkdotnet
is egypt’s largest internet service provider, claiming a 40-percent
market share.
linkdotnet ceo and president khaled bishara agreed that there are
too many companies offering internet services in egypt, but he expressed
doubts about the efficiency of such a large merger. “there
are too many players in the market. consolidation is needed,”
bishara said. “but this is a big consolidation at once with
challenges of re-organization and communication with customers.
it is not going to be easy for them.”
while the official from the merging company would not expand upon
each company’s stake in the new internet service giant, he
said they “will definitely not be equal.”
egynet, owned by the national telecommunications corporation (ntc),
and nol, owned by it ventures, are the two largest companies to
merge, followed by privately owned noor and state-owned telecom
egypt’s egyptnet. a merger between egynet and nol has been
on the table for more than one year.
earlier this year, linkdotnet acquired internet egypt from egynet.
egynet also holds a stake in isp soficom, but soficom’s majority
owner, bahraini carrier batelco, blocked a proposed acquisition
at the time.
mats a. palmgren
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pressure eases on regional
currencies
[“shekel declines in lockstep with
pound,” july 2002]
israeli and palestinian exchange shops were buying shekels for
between 4.5 and 4.65 to the us dollar in mid-august, two months
after the israeli currency broke the barrier of five to the dollar.
a clerk at a forex shop on jaffa street in west jerusalem confirmed
that the dollar had reached five in june, until the shekel “got
stronger again.”
the free-floating shekel’s rebound corresponded with an easing
of black-market pressure on the more tightly managed egyptian pound.
black-market dollars could be obtained in cairo for as little as
£e 4.75 in mid july.
the let-up on the two middle eastern currencies reflected a weakening
of the us dollar worldwide, following a widely publicized rash of
corporate scandals in the united states. with the dollar gaining
strength again, however, regional currencies are sure to feel the
pinch from their countries’ ongoing economic problems.
the proprietor of the abu ghazaleh exchange shop in east jerusalem’s
damascus gate area, while offering similar rates to the shops on
jaffa street, added that he would accept egyptian pounds at a rate
of 10 for 8 shekels – suggesting that, traders’ commissions
and premiums aside, the two currencies’ values in an unrestricted
market remain not far apart.
top
local producers aim to undercut
pfizer
[“pfizer stock hits ceiling despite
limp sales,” july 2002]
well-known impotence medicine viagra will become more affordable
for egyptian men as 12 local companies gear up to manufacture a
generic version of the drug. the retail price of viagra could drop
from £e 27 to less than £e 10 per 50 milligram pill
– news that does not please pfizer egypt, which currently enjoys
a monopoly over its production.
prominent figures in the local health and medicine establishment,
however, have pushed hard to break pfizer’s grip on the erectile-stimulation
market.
galal ghorab, chairman of the egyptian holding company for pharmaceuticals,
said that – just as recent press reports had asserted –
patent holder pfizer inc., the global pharmaceutical and consumer-products
company that first sold viagra, does not have exclusive rights over
the drug. shura council health committee head sarwat bassily agreed,
noting that many companies across the world – including pharmaceutical
producers in india and syria, for example – are now making
generic versions of viagra. “many countries have already started
selling it, and european and american companies are going to start
producing it,” bassily said.
but pfizer egypt, subsidiary of the global pfizer inc., maintains
that it has exclusive rights over production and sale of the drug.
pfizer is currently the only company in egypt producing viagra.
pfizer egypt manager ahmed el hakim asserted that other companies
in egypt cannot legally produce the drug. “all this news is
rumors... and i am sure the ministry of health will not put itself
in a position in which it will be violating the law,” el hakim
said. he explained that countries like india and syria are acting
illegally by allowing the sale viagra substitutes made by local
imitators. egypt, he warned, should not follow in their footsteps.
ghorab, however, defended the right of egyptian companies to produce
viagra. “pfizer does not want to believe... that it doesn’t
have the right to be the only viagra producer,” he said. “but
it is true, and viagra will be as cheap as £e 5 because [egyptian]
companies have this right [to produce and sell the drug].”
ghorab named al-nasr company as one of the expected local manufacturers.
he added that pfizer egypt is free to take the issue to court, saying,
“i am sure they will lose this case.”
the intellectual property rights law, ratified in june, was in part
to bring protection of pharmaceutical-product patents up to par
with international standards. as far as global pharmaceutical giants
such as pfizer are concerned, this means protecting their ownership
of the fruits of their research and development efforts.
serge scotto, managing director of multinational novartis pharma’s
egyptian operation, said that pfizer’s original viagra is covered
by a prime ministerial decree regarding data exclusivity. producing
generic versions of the drug, he said, “would constitute an
infringement and would create a precedent in which any company would
be allowed to copy any pharmaceuticals covered by the decree.”
contrary to reports in the local press predicting that egyptian
companies would begin selling viagra within months, health committee
head bassily said that it would take at least a year for egyptian
companies’ versions of the drug to appear on pharmacy shelves.
“it is too early to talk about these egyptian companies producing
viagra, and it is too early to talk about prices also,” bassily
said, emphasizing that he would not support the sale of any drug
unless its safety “is proven to be 100 percent.”
pfizer egypt manager el hakim warned of risks if viagra prices fall
too low, arguing that the drug should only be used in particular
cases of medical necessity. “i don’t think that the ministry
of health wants everyone to be using viagra, because this would
be total chaos,” he said.
in western countries, viagra is a prescription-only drug.
last month, minister of health mohamed awad tageddine said he would
not interfere with the pricing of viagra. ghorab predicted that
once local companies started selling the medicine, its cost would
fall to £e 5 per 50 milligram pill.
berween shoreh
top
boosting exports high on
agenda
[“exports won’t expand by decree,”
january 2002]
in mid-june, the people’s assembly passed the export promotion
law, which, the government hopes, will boost egyptian exports and
narrow the country’s trade deficit by eliminating bureaucratic
hurdles that currently hinder exports. the law calls for the establishment
of an export support fund worth £e 400 million, intended to
help exporters launch new ventures and promote egyptian products
abroad. some of the money will go to export incentive programs.
“when the exporter provides the proper documentation that proves
his exporting activities, he will be granted a financial incentive,”
a ministry of foreign trade official said.
the ministry of finance, meanwhile, will establish a committee to
streamline egypt’s infamously bureaucratic customs regulations
in order to facilitate exchanges between exporters and customs clearance
bodies, the local press reported in august. currently, complained
youssef younan, who exports leather products, “our materials
sometimes remain for months in the seaports because of red tape
and a constant request for documents.”
although official statistics indicate that the trade deficit fell
by $1.08 billion in 2001, minister of foreign trade youssef boutros-ghali
said he hoped the new law would knock the figure down further. the
government’s current five-year economic development plan anticipates
that annual exports will increase by another 13 percent by 2007.
the new law will go into effect by october, boutros-ghali announced
on july 3.
top
local members of egyptian-american
council named
[“zoellick talks globalization, fta,”
june 2002]
these are days of greater-than-usual tension between steadfast
allies egypt and america. amid mounting differences in the two countries’
regional political perspectives, business leaders on both sides
are continuing to work for closer cooperation within the private
sector. their campaign takes the form of the egyptian-american business
council, a new incarnation of the former egypt-us presidents’
council.
minister of foreign trade youssef boutros-ghali announced the names
of the appointees to the egyptian side of the council on july 30,
according to the daily al-ahram. the group will concentrate its
efforts on addressing harmful trade regulations, promoting beneficial
business opportunities and stimulating bilateral investment. the
council, comprised of a well-connected group of us and egyptian
corporate executives, was originally established as part of the
1994 mubarak-gore initiative, which aimed to boost trade between
the two countries.
boutros-ghali said the egyptian side of the council would meet soon
to deliberate the current economic situation and discuss some pending
business proposals. he added that the agenda for the whole group’s
first official meeting, expected to be held in october, would be
dominated by customs-
related issues.
the new council’s 13 egyptian members are: ahmed zayat, president
of al ahram beverages; ahmed ezz, chairman of al ezz steel; ahmed
al-bardai, chairman of banque du caire; galal el zorba, chairman
of nile clothing co.; hossam badrawi, owner of nile badrawi hospital
and member of the people’s assembly; raouf ghabbour, chaiman
of the ghabbour group; shafik gabr, chairman and managing director
of artoc group for investment & development; adel danish, chairman
and ceo of masreya information systems; ali faramawy, regional head
of microsoft; mohamed lutfy mansour, chairman and ceo of mantrac;
medhat khalil, chairman and ceo of raya holding; moataz al-alfi,
chairman of food and tourism group americana; and mona zulficar,
senior partner at shalakany law office.
adam morrow
top
pm invites debtor tycoons
home
[“banks put squeeze on businessmen,”
october 2000]
as a seven-year-old corruption case finally wrapped up with the
july 31 sentencing of the infamous “loan deputies,” prime
minister atef ebeid began urging businessmen who had fled the country
to return to the negotiation table with their banks. the call coincided
with the launch of a new initiative to bring the debtors’ billions
of dollars in unpaid debts back into the local economy.
on august 19, ebeid presided over a meeting with the governor of
the central bank of egypt (cbe), along with several chairmen of
local banks, at which he discussed measures for rescheduling debts
and extending terms of repayment to indebted businessmen.
according to the plan, banks will contact clients, both in egypt
and abroad, to present them with suggestions on how to settle their
unpaid debts and draw up realistic timetables for repayment. a group
of egyptian banks, ebeid was quoted as saying in al-gomhouriya,
will soon “set up a special committee to revise and evaluate
each case so as to reach a compromise with serious businessmen who
wish to settle their debts.” the incentives to be offered will
include an extension of repayment terms, an additional grace period
and lower interest rates. ebeid emphasized, however, that there
would be “no debt exemption at the expense of depositors’
money.” on the contrary, he warned that banks would have the
right to take appropriate legal action against “unserious businessmen”
who chose not to accept the repayment invitation.
according to the august 12 edition of the daily al-ahram, almost
5 percent of bank loans in the country – currently estimated
at £e 15 billion – go unpaid. the international monetary
fund (imf) puts the figure much higher, at £e 25 billion.
until the end of 2001, local banks had 853 cases pending in law
courts, with the national bank of egypt alone boasting 183 cases.
on august 21, a senior official at the national bank of egypt said
that business tycoon rami lakah had been contacted about the repayment
of his outstanding loans and that £e 186 million of his debt
had been repaid.
eman wahby
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