Briefs

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Companies get new names

ALLIANZ Group has bought out its Egyptian partner, Arab International Group, in both the Arab International Insurance Company and Arab International Life Assurance Company. Now 100 per cent owned by the Allianz Group, the new names of the two companies are Allianz Insurance Company of Egypt and Allianz Life Assurance Company of Egypt.

Allianz Group first acquired a five per cent stake in Arab International Group in 1976. It acquired 80 per cent in 2000 and this year it bought 100 per cent of the company shares.

The three core business areas of Allianz Group are property and casualty insurance, life and health insurance and asset management.

While the company's current market share is five per cent, company management is expecting a 350 per cent growth in life insurance premiums and 100 per cent growth in general insurance premiums by 2006. Total life insurance premiums collected in 2003 reached LE52 million and general insurance premiums reached LE62 million.

Looking back

THE LIBERALISATION of the currency exchange market and its relation to the price hikes was the focus of a recent seminar organised by the Foreign Trade Centre (FTC) at Helwan University. Sherine Nasr attended."The Egyptian market has witnessed some crucial changes since the flotation of the Egyptian pound in January 2003. While the prices of the major commodities have gone out of control, the flotation did not contribute to an increase in Egyptian exports as had been expected," commented Ahmed Abdel- Karim Salama, chairman of the FTC.

"The liberalisation of the exchange rate is but one among other tools taken by the government to restructure the Egyptian economy," said Sultan Abu Ali, former minister of economy.

Sultan indicated that in order for decisions to be effective, they have to well-timed. "Unfortunately, economic policy in Egypt is slow to change," he said.

Sultan believes that much of the confusion occurred when the government called the decision "liberalisation of the exchange rate" while it was more technically a managed flotation of the Egyptian pound.

"So far, there is an official and non-official exchange rate in the market and this goes counter to the policy of liberalising the exchange rate," he commented.

Nevertheless, the flotation of the Egyptian pound is only partially responsible for the price hikes the market has witnessed lately, argued Sultan. Among the other "equally important factors" are low productivity, the increase in the international prices of different commodities, the absence of effective market supervision, the presence of monopolies and the decrease in supplies on the local market. "These factors combined with the abrupt decision to float the pound have created a state of insatiability in the market," said Sultan.

In an attempt to maintain the value of the pound, the government has drawn on the foreign reserves. In 2003, the government spent $4 billion to keep the exchange rate from falling further. "The reserves dropped from nearly $17.85 billion in 1996 to $14 billion at present," added Sultan.

While in the short run it is important to subsidise selected vital commodities for the economically more vulnerable classes, "in the long run, it is crucial to adopt major reforms to stabilise the Egyptian economy," he said.

Joining the Global Compact

THE GERMAN Arab Chamber of Industry and Commerce recently held a one-day workshop to acquaint its members with the UN's Global Compact and encourage them to join the initiative. Aimed at promoting corporate social responsibility in the areas of human rights, labour and the environment, the Global Compact was launched worldwide in 1999 and officially inaugurated in Egypt in early 2004. More than 50 Egyptian companies have already joined the initiative. The seminar, jointly organised by the UN resident coordinator and the Konrad Adenauer Foundation, featured not only a presentation about the Compact, but also discussed the practical experiences of several Egyptian companies.

The Compact is a voluntary initiative where companies are asked to respect nine basic principles on human rights, labour and environment. The initiative, according to Sophie de Caen, UNDP deputy resident representative, "emphasises the vital role a united private sector can play when joining hands with other sectors in finding solutions to poverty, social injustice and environmental threats".

She observed that a working environment which takes its employees' rights seriously is "likely to be rewarded with higher working morale, motivation and efforts invested from the employees. The economic result is better performance for the company and increased productivity."

International business leaders are scheduled to meet in New York in June to outline future recommendations for the GC. Among them is the introduction of a 10th principle on corruption, while the leaders will examine modes of monitoring participating companies' work.

A general assembly of the Egyptian members will also be called to decide on how to respond and proceed, said de Caen.

TowerGroup take over

MASTERCARD Advisors, a subsidiary of MasterCard International, recently announced the acquisition of leading research and advisory firm TowerGroup from Reuters. MasterCard Advisors, launched in 2003, offers consulting, research, outsourcing and information products and services.

TowerGroup, which focusses exclusively on the global financial services industry, had been operating as a subsidiary of Reuters since 1999. It will continue to operate as a separate business with full editorial independence and will remain at its current headquarters in Needham, Massachusetts, USA.

Karen Cone, a former MasterCard Advisors global practice leader for research, has been appointed president and CEO of TowerGroup.

Upgrading SFD

THE EU and the Social Fund for Development (SFD) recently signed an agreement to upgrade the SFD's financial information system, project management and evaluation process. The agreement, worth three million euros, is expected to improve the exchange of information and allow for speedier and more efficient lending decision.

Hany Seif El-Nasr, SFD managing director, called the agreement a positive step in the comprehensive development process adopted by the SFD to utilise optimal information system technology.

Moreover, the agreement fosters sustainable cooperation between the EU and the SFD and enables donor countries to monitor the project implementation to encourage greater confidence in SFD performance.

The agreement will be implemented in two phases: the first is to establish an information network to link the SFD with its branches in various governorates while the second will optimise the use of state-of-the-art technology and information systems together with integrated administrative applications in many sectors.

It would help to effectuate a new financial system that includes financial lists, annual balance of sheets, assets and procurement.

The project management system will cover all project phases starting with feasibility studies, financial resources, contracting procedures, disbursement implementation and monitoring, while finishing with a conclusive evaluation and social and economic impact assessment.