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Al-Ahram Weekly 1 - 7 April 1999 Issue No. 423 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 1 - 7 April 1999 Issue No. 423
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Focus Interview Profile Features Travel Living Sports People Time Out Chronicles Cartoons Letters Splashing out in Alex
by Gamal NkrumahUndoubtedly, the most extraordinary aspect of Alexandria's indigenous business community in the past half a century has been its resilience. Alexandria suffered a severe economic setback in the wake of the flight of the port-city's once industrious foreign business communities in the fifties and sixties. Alexandria never quite recovered its pre-eminence as the country's economic and commercial capital. But the ability of Alexandria's business community to overcome enormous obstacles and pick up the pieces after the exodus of the foreign businesses has been nothing less than astonishing -- especially as the city suffered more than its fair share of peripheralisation as the pace of centralisation quickened after the 1952 Revolution. As Cairo's fortunes soared, Alexandria's waned. But no longer.
A recent one-day seminar organised by the Alexandria Businessmen Association (ABA) in conjunction with the Cairo-based Economic Research Forum (ERF) and the United Nations Conference on Trade and Development (UNCTAD) considered promoting Alexandria as a centre for foreign investment and sought to facilitate business networking in the Mediterranean basin. Delegates attending the conference, held at a beach resort in the new industrial suburb of Borg Al-Arab some 60km south-west of the centre of Alexandria, spoke openly about the challenges facing the city as well as future opportunities.
Foreign direct investment (FDI) was identified as of key importance to Alexandria's development projects. The focus of discussion was on FDI upgrading and on cementing ties between Alexandria and other Mediterranean commercial hubs.
Heba Handoussa
Sherif Delawar"The implicit, if not explicit, reason behind our meeting today is Alexandria's, and Egypt's, integration into the Mediterranean and global economies," Sherif Delawar of the Alexandria Businessmen's Association (ABA) told Al-Ahram Weekly.
However, all is not well with Alexandria's local economy. There are problems specific to Alexandria, and others which Alexandria has in common with the rest of the country. "Egypt still lags behind in management and marketing skills. We must upgrade personnel skills if we are to attract foreign investment," said Heba Mallawani, who was representing the General Authority for Investment (GAFI) at the Borg Al-Arab seminar. "All indications point to the fact that Egypt is not doing enough to enhance the attraction of the country to foreign investors," warned ERF President Heba Handoussa. "The question of good governance, efficient institution-running and institutional building must be tackled head-on. We have to work much harder in making our industrial locations more attractive. It is in this context that we are happy to note that GAFI is in a state of transition. GAFI is moving away from being a bureaucratic body to a more open, promotional organisation."
Participants were able to draw on the wealth of experience from countries which have already trodden the path Egypt is now taking. Only two decades ago Italy was a labour-intensive, export-oriented country. Today, it is an exporter of capital-intensive, high value-added products. Italian exporters have been successful in capturing niche markets internationally. "Egypt accounts for 15 per cent of total Italian investment in the Mediterranean Basin. Italian investors are most interested in the mechanical sector, and in upgrading quality and standards," explained Renzo Grimaldi of the Italian Institute for Industrial Promotion.
"Egypt's per capita gross domestic product is low and Egyptians have relatively low purchasing power. But the Egyptian economy is growing rapidly and Egypt is opening up its economy. Egypt has a number of advantages -- shipping costs, electricity costs and telephone costs are all low," said Mario Caputi, the London-based Italian-born senior manager of Mitchell Madison, Britain's most important investment firm.
"Italy is the largest importer of Egyptian products in the European Union. France and Italy rank as the second largest exporters to Egypt in the EU," added William Marrone, head of international relations at the Bank of Sicily which focuses on concessionary finance and fund management for small and medium-sized Italian companies. "The Bank of Sicily is an active player in the internationalisation of the Italian economy and we would like to share our experiences and exchange ideas with Alexandria's businessmen," he ventured.
Hamed Mubarak, of the United Nations Development Programme (UNDP) called for the creation of a "forum for the private sector to make its voice heard nationally and internationally." Lutfi Louis Seffin considered ways of integrating Alexandria into the Mediterranean economy. "We should look at Alexandria as a corporate institution," he said.
With around five million people, Alexandria has a large market and labour force which industries could capitalise upon. With Mubarak Scientific City, numerous institutions of higher learning and technical colleges for vocational training, Alexandria boasts a highly-skilled labour force.
But against such opportunities stand serious social and environmental considerations. First on the list of concerns is excessive bureaucracy and public-sector monopolies. Transport and communication problems persist, a serious disadvantage in this age of sophisticated information technology. The advantages of river transport in terms of cost, efficiency and reliability have not been fully exploited on a national level with most cargo being transported by road, a less environmentally-friendly and more costly method. Alexandria, as Egypt's main port and with easy access to the River Nile, stands to gain from improvements in the transport of cargo by river.
Alexandria's Borg Al-Arab airport is presently under-utilised. Delegates urged the government to encourage the setting up of private airlines and called for the upgrading of Borg Al-Arab's civilian airport facilities as well as their separation from the airport's military section, so as to allow cargo and passenger planes to leave directly from Alexandria without having to go through Cairo.
Problems persist, and new challenges on the environmental front need to be tackled. Lake Maryut once provided rich fishing and recreational waters. Today it is an environmental disaster. In the 1960s it produced over 7,000 tons of uncontaminated fish annually but today barely produces 100 tons of contaminated, deformed and diseased fish. Not only has the historic and once beautiful lake become an eyesore, but the fish are dying and fishermen are forced to seek employment elsewhere in such areas as construction and refuse collection and sorting.
Unemployment is rising, crime rates are up, incomes are falling and health problems have multiplied. Poisonous gases emanating from the waters of the lake are a source of concern. Industrial waste pollutes the entire length and breadth of the lake; the problem is exacerbated by sewage dumping and the proximity of a solid-waste landfill.
ABA's small business project aimed at firms located in the city's slum areas was singled out for praise. "Our project is Egypt's and the world's most successful small-scale industrial project," Delawar told the Weekly.
Another problem stressed at the seminar was that while the international financial system is no longer in danger of collapse following the Asian crisis, credit continues to contract. FDI is now returning to the industrially advanced countries of the North, and there is a noticeable reversal of flows of FDI to the emerging markets of the South.
In Egypt, FDI is a major conduit to sophisticated technology. In his opening speech ABA Chairman Mohamed Ragab said that there is an increasing number of new projects in Alexandria and that over half have a foreign equity component. He stressed the important role of capacity-building and the necessity of concluding a trade agreement with the European Union and a free-trade agreement with the US as well as working towards regional integration in Africa and the Arab world.
"For the past 20 centuries Alexandria has been Egypt's main port and window to the outside world. It is a city that traditionally faced Europe and the Mediterranean world," Ragab said. "Partnerships and joint ventures with foreign concerns are an important tool that upgrade quality standards of Egyptian products and improve promotional services," he concluded.
