Good news?

EGYPT's balance of payments account showed a remarkable increase to $602 million during the third quarter of the 2002-2003 fiscal year. That figure is up from $92.1 million during the second quarter and $83.5 million during the first quarter. The report also shows improvement in the overall account surplus for the first nine months of the current fiscal year as against the same period for the previous year.

CBE economists say this unprecedented quarterly surplus is due to a drop in the trade deficit that coincided with a slight decrease in the services account surplus, the former being attributed to the devaluation of the pound. The trade deficit shrunk from $1.96 billion during the second quarter to $1.21 billion during the third quarter (ie a decrease of about $750 million), whereas the services account surplus decreased from $1.14 billion during the first quarter to $1.03 billion during the third quarter.

Egypt's falling trade deficit is due to the almost $500 million drop in merchandise imports and a $270 million increase in merchandise exports. Merchandise imports went from $3.87 billion to $3.39 billion between the second and third quarters, a retreat explained by the depreciation of the Egyptian pound against the dollar that made imports more expensive. By the same token, a devalued pound lowered the price of exports, making them more competitive and thus more in demand in world markets.

EIB comes to Cairo

THE EUROPEAN Investment Bank inaugurated its first ever regional branch outside the EU last week. The office, located in Cairo, will give the bank a stronger presence in Egypt and the Middle East. The EIB provides long-term funding for strengthening and expanding infrastructure projects in areas such as transport, energy, water and telecommunications. It also provides loans to the private sector and supports environmental projects through EU Commission-subsidised long- term loans.

The EIB office, which has been operational since July, was inaugurated by EIB President Philippe Maystadt on a visit to Cairo last week. The mission of the office is to liaison with the 12 Mediterranean Partner Countries (MPCs) cooperating with the EU, while optimising the process of project identification and monitoring and to facilitate the implementation of technical assistance for projects and financial institutions in the beneficiary countries.

The EIB has channelled more than 2.45 billion euros into Egypt since 1978. This funding has gone primarily into building up infrastructure, environmental projects and private sector enterprises. In 2002 it provided 225 million euros for the extension of the Cairo metro line and the first phase of the Nubaria power plant as well as in equity funding for Egyptian Small and Medium-sized Enterprises (SMEs). In 2003, the bank lent some 150 million euros to finance the second phase of the Nubaria power plant.

The EIB's lending in the Mediterranean region is currently provided under the bank's new Facility for Euro-Mediterranean Investment and Partnership (FEMIP). The EIB was entrusted with the task of setting up FEMIP by EU heads of states in 2002. FEMIP supports private sector development, regional cooperation projects with a social dimension, assistance for the twin processes of economic reform and privatisation, and the provision of innovative financial products such as risk capital and technical assistance. FEMIP also provides for MPC involvement in the deployment of EIB funding through a ministerial committee bringing together representatives of the 15 EU member states and the 12 MPCs.

In the 11 months since its activation, FEMIP has provided more than 1.65 billion euros in new loans. Total lending is expected to reach 1.8 billion by the end of this year. Some 60 per cent of these funds is earmarked for the development of local businesses whether small and medium enterprises or large scale industries. The remaining funds are allotted for areas such as health, education and environment.

EIB, operative in the region since 1974, has provided 14 billion euro in long-term loans to MPCs. A further eight to 10 billion is also expected to become available between now and 2006.

Raya exhibition

RAYA Holding recently announced a 34 per cent growth in revenues for the first half of 2003. The company's revenues totalled LE345 million, while a target LE605 million is anticipated by the end of the year.

Raya Holding offers a range of information technology and telecommunications-related services including system integration, networking solutions, Internet access and a call centre as well as retail and distribution of technology products. The company is jointly owned by United Bank of Egypt, Al-Watany Bank of Egypt, EFG Hermes, CIIC and a number of individual Arab and Egyptian investors.

The growth in the company's revenues is attributed to the increased number of entrepreneurial endeavours undertaken by the company both locally and regionally. Among the company's current projects is the modernisation and maintenance of Banque Du Caire's ATM network at a cost of LE19 million. It is also in charge of deploying an LE18 million network infrastructure for the "Smart Village" initiative.

Regionally, the company has projects worth $20 million in Saudi Arabia, Kuwait, the United Arab Emirates, Lebanon, Tunisia, Syria and Yemen. It is now trying to take its success to an international level by establishing a branch in the US. The branch represents an attempt to penetrate the US market, which comprises 50 per cent of the world's IT transactions.

Kompass out

THE EIGHTH Kompass Egypt Financial Yearbook was recently published. The yearbook is a comprehensive reference on 1,088 stocks listed on the Cairo and Alexandria Stock Exchanges, including detailed profiles on each company with their four most recent financial statements and their stock performance.

The publication by Fiani & Partners/Kompass Egypt also provides a directory of 88 banks, 423 financial services and 21 mutual funds in Egypt. It also reviews all activities represented on the stock exchange by sector.

Indian acrylic enterprise

ON THE HEELS of the Aditya Birla Group's successful joint venture in the Alexandria Carbon Black Company, which has become the second largest carbon black producer worldwide, the Indian corporation aims to establish an acrylic fiber plant in Egypt.

The first-of-its-kind in Egypt plant will be established jointly, with 60 per cent of the shares to the Aditya Birla Group, 20 per cent to the Ministry of Petroleum, 10 per cent to the Arab Petroleum Investment Corporation and 10 per cent to the Saudi Egyptian Industrial Investment Company.

The initial investment is estimated at LE500 million for the first phase, which will create at least 1,000 jobs and 18,000 tonnes of acrylic fiber annually. "During the next phase, expected to start soon, the production will increase to 36,000 tonnes annually," said K N Agarwal, managing director of the group.

The plant will meet domestic needs for acrylic fiber, which is indispensable in the manufacturing of carpets, blankets, garments and various other textiles. Agarwal said that eliminating Egypt's need to import the substance will save the country "a handful of hard currency" and that increased production in the second phase will produce a surplus for export.

Egypt is widely considered one of India's most important business partners on the African continent.

In 2002 trade between the two countries increased by 45 per cent, with a $46.25 million balance of payment favouring Egypt, the first time Egypt has been in this position vis-à-vis India since 1994.

Natural gas agreement

A PROTOCOL for cooperation in the field of energy and mining was recently signed by Egypt and Sudan. "Energy and its related industries and services come on the top of the agenda of joint cooperation between both countries," said Awad Al-Gaz, Sudanese minister of energy and mining, after his meeting with Sameh Fahmi, Egyptian minister of petroleum.

"While Sudan has rich energy resources, Egypt has lengthy experience in the fields mining and exploration. Cooperation between both countries will bear fruitful results," Fahmi said. The protocol promises cooperation in exploration, refining, transport, exchange of expertise in addition to a number of other petroleum-related services.

Al-Gaz stated that Sudanese territory will be open for exploration by Egyptian petroleum companies. Egyptian companies will also have priority to engage in natural gas exploration once Sudan decides to exploit its presumably vast natural gas wealth.

Egypt will provide technical support as well as training facilities to Sudan in the field of mining. The protocol also paves the way to establishing joint ventures in the field of petrochemicals. "We are looking for building a strong and lasting partnership with Egypt in the energy sector," Al-Gaz said.