CAIRO – 20 October 2017: Months after Egypt introduced an amended Investment law and clear investment map, efforts are already starting to pay off says President of Select Group International Shady Samir.
The entrepreneur, who has major investments in the food and beverage, fashion, pharmaceutical, real estate and tourism sectors, believes the new amendments are serving as a catalyst to attract serious investments and address the nation’s investment climate problems and needs—and as a result Egypt has successfully overtaken South Africa as the continent’s biggest investment destination in 2018.
The law has created business-attracting incentives and specific mechanisms to ease and simplify the processes, resolving conflicts. All the above have contributed positively says Samir, adding “Egypt is full of opportunities, especially since the political compass is pointing toward mega national projects.”
In an exclusive interview with Business Today Egypt Samir shares his plans to help revive the Egyptian economy with strong tourism initiatives, foreign direct investments and empowered SMEs.
President of Select Group International Shady Samir – Egypt Today
Is the New Investment Law enough?
The legislative problem was the concern of the public in the first place. The law that Minister of Investment and International Cooperation Sahar Nasr, succeeded in passing this law represents a legislative breakthrough. Moreover, I urge her to speed up the efforts to issue executive regulations for activation of the actual law.
The legislation aims to establish a service centre that will allow the completion of all procedures as quickly as possible. I am certain that Egypt will be placed on the global investment map.
What are the current and future investment opportunities in Egypt?
There is no doubt that the economic conditions in Egypt have significantly affected large companies. This is due to the high operating costs, especially with the lack of liquidity, the delay of customers’ payments and the increase of business financing interest rates. Such challenges have led those entities to refrain from engaging in some projects, which resulted in significant market gaps in some sectors.
On the other hand, this dilemma created multiple investment opportunities for small and medium-sized enterprises to explore new sectors. The oil sector can be a good example here. The sector was monopolized by international companies, and because of the fact that these entities cannot work in oil wells with a stock of less than 200,000 barrels per day due to the incorporated high operating costs, a number of SMEs succeeded to enter the oil sector on small wells.
How do you assess the situation for large corporations?
Under the current market condition, large corporations have opportunities that suit their size; this is mainly signified by contributing in mega national projects that operate through a system of participation. Although they carry high risks, they entail very high returns. Accordingly, injecting large investments in mega national projects can be perceived as an opportunity for long-term profitability seekers, especially with the clear government plan toward focusing on such projects nowadays. In my opinion, this would surely open new gates toward more business cycles and schemes.
About a year ago, a decision was made to liberalize the exchange rate. What is your vision of the economy in light of this event?
I think that the aim of this decision was to control inflation and maintain the purchasing power of the Egyptian pound. In fact, inflation is currently one of the most pressing issues for the Egyptian government. I believe that we succeeded to a great extent in realizing some desired outcomes, especially since our national economy contains numerous elements that enable it to recover, develop and grow.
Does this mean that you were not negatively affected by the decision to liberalize the exchange rate?
Of course I was impacted by the decision. The general business community feared this decision at the beginning, especially those who rely primarily on foreign currency in business operations. However, frankly speaking, we found great cooperation from business partners/consumers and this fact has limited the negative implications. We cannot deny the positive aspects of this decision.
Can you elaborate?
One of those positive aspects is that the Egyptian manufacturer currently holds a large exporting capacity. It is worth mentioning here that the exporting rates have increased significantly since adopting a currency liberalization scheme to date. This means that we approached the same Chinese cost levels which mainly rely on providing a “lowest price” business scheme.
We are currently witnessing a huge boom in the banking sector. The decision to float the pound has led to boosting the sector’s liquidity rates thereby creating excessive monetary resources available for investments and project financing. This has also resulted in increasing the attractiveness of the Egyptian market, especially with the significant reduction in implementation costs of projects.
You started your career in IT and now trying to leave this vital sector despite its importance. Why?
I will never leave the IT sector, but I am only trying to diversify my experience and explore different industries. I believe that the IT sector was a leading income generator for my company’s shareholders. This sector has helped me personally to invest in different segments. I dream of the day when I can establish a holding group with subsidiaries operating in diversified fields.
I started investment in the pharmaceutical sector, moved to the fashion industry, and then explored the real estate and construction sectors for a while before moving to food and beverages. My future plans definitely include investing in tourism, which is crucial to Egypt.
What’s your vision of the sector in light of the low returns due to recent economic conditions in Egypt?
The conditions witnessed by the tourism sector have led to many negative effects, which were certainly reflected in decreasing the volume of foreign currency supplies—previously calculated in billions. The decreased touristic returns have reduced job opportunities and resulted in low occupancy rates in hotels and air traffic. These factors negatively affected the national income and, consequently, the public.
I think that these conditions will not last long because of the measures recently taken by the government, including the liberalization of the exchange rate that gave Egypt a comparative advantage as a low-cost touristic destination. The efforts to return Russian tourism are good steps toward achieving the desired sector recovery. This is mainly complemented by the launched touristic promotional campaigns aiming to grow the returns generated by the touristic sector. Furthermore, numerous opportunities are also expected from encouraging domestic tourism.
Do you think that the spread of charter flights in Egypt will positively affect the tourism sector?
I see that the charter airlines’ operations in Egypt are very useful for generating investment, encouraging tourism, and for the national economy in general. It will contribute to reducing travel costs and encourage tourist inflows to Egypt while increasing the availability of foreign currency. In addition, this is expected to positively reflect on the overall sector employability—directly and indirectly.
Finally, I would like to emphasize that the Egyptian government has taken several reform measures and steps toward boosting the Egyptian economy. I believe that the growth path will require contributions from all concerned parties; it can never be a “one-man show.” So let’s work hand-in-hand to create the flourishing Egypt we all hope for.