Sunday,19 August, 2018
Current issue | Issue 1136, 21 - 27 February 2013
Sunday,19 August, 2018
Issue 1136, 21 - 27 February 2013

Ahram Weekly

New faces of business

The sometimes murky relationship between politics and business was one of the main criticisms of the Mubarak regime. Sherine Abdel-Razek looks at the role of businessmen in Brotherhood Egypt

Al-Ahram Weekly

The influence of businessmen in the economic, and sometimes also political, decision-making of the former Mubarak regime raised many eyebrows at the time, with faces from the business arena heading important state bodies, occupying seats in parliament, and having presence in the cabinet.

The early days of Egypt’s 25 January Revolution saw many of these business icons thrown into jail on charges of profiteering from their relations with the former regime, while others were banned from travelling or tried to keep a low profile away from the limelight.

“We have had a very hard time and have been treated like criminals during the past two years. No businessman in his right mind would ever try to get close to the ruling regime now,” one businessman who faced charges and was banned from traveling told the Weekly on condition of anonymity.

“We learnt our lessons the hard way. Business and politics in Egypt should not mix,” he said.

Ahmed Abu Ali, vice president of the American Chamber of Commerce which includes thousands of member companies whose senior officials now prefer to stay out of the public eye, said that many of the country’s businessmen had kept a low profile after the post-revolutionary media campaign against them.

Remnants of the Mubarak regime disappeared from media shows and from business events and few of them now attend business delegations accompanying President Mohamed Morsi when he travels abroad.

At least eight major businessmen approached by the Weekly, from sectors such as IT, cement, construction and food, all said the same thing: that they want to stay away from politics in the post-revolutionary period.

Abu Ali said that the absence of the Mubarak-era businessmen from the public sphere was part of the changes taking place as a new cast of businessmen appears and some of those related to the old regime quit business and the country.

While the economy has been the main casualty of the changes Egypt is facing, the focus of the regime now is politics, which has moved those taking business decisions to a back seat.

Nassef Sawiris, chairman and chief executive of Orascom Construction Industries, Egypt’s largest listed company, hinted to the situation in a recent interview with the New York Times saying that while the political dialogue in Egypt continues it is essential that those shaping economic policy also participate.

However, the political shocks of the last two years have paralysed economic policy-shaping, he said.

Sawiris and his elder brother, IT tycoon Naguib, are among the many businessmen who have decided to be based abroad after withdrawing from a number of local investments due to problems with the present Islamist regime. 

With the rise of the Muslim Brotherhood to power in the country, a new cast of Islamists has emerged as leaders of business, leaving many of the country’s former big businessmen out in the cold.

Other than three or four businessmen known for their political ties to the Muslim Brotherhood, the names of the new cast are not familiar.

A main feature of such businesses is that they concentrate their efforts on grass-roots companies often run by fledgling entrepreneurs. Years in jail have limited the business activities of the formerly banned Brotherhood group members to small-sized retail businesses in most cases.

Moreover, since they are mostly unlisted it is often impossible to know the origin of the finances of such businesses or to define the line between what is owned by them and what is being financed by the Brotherhood itself.

However, today this network of new businesses is becoming better and better known, and it seems that many of its members are members of the Brotherhood or are Salafis.

Of the most prominent businesses related to the group are the Turkish luxury furniture store Istikbal and Sarar, a Turkish ready-made garments outlet both co-owned by businessman Hassan Malek and Deputy Supreme Guide of the Muslim Brotherhood Khairat Al-Shater. 

There are also many supermarket chains, among them Zad, were also launched by Al-Shater last July, along with the upscale Seoudi supermarket and smaller-scale hypermarkets like Al-Mahmal and the Al-Tawhid Wal-Nour department store.

In the food industries there is Juhayna, a dairy and juice producer owned by Safwan Thabet, and there is the new fast-food chain Mo’men that also has branches in the Gulf and some Asian countries.

While some business moguls in the Mubarak era were represented in business associations either belonging to the state or under a private umbrella, the new icons are mainly represented by the Egyptian Business Development Association (EBDA), which was founded by Malek, the most influential of the Muslim Brotherhood’s businessmen, in 2012.

The number of its members is on the rise, with the association’s media coordinator putting it at more than 600 members. The board of directors includes Islamist heavyweights, mainly from the Brotherhood business arena, starting with Hassan Malek, Ahmed Al-Ezaby, the head of Al-Ezaby Pharmacies, Safwan Thabet, head of Juhayna food industries, and Samir Al-Naggar, a food exporter.

But the role of these new businessmen is not expected to be as influential as their predecessors.

“The group of businessmen around Mubarak was made up of real businessmen and real entrepreneurs, and they understood economics,” Samir Radwan, an economic expert and former minister of finance told Bloomberg last month.

“Malek and his counterparts don’t have an economic vision of how to get this country out of crisis.”

Radwan was commenting in particular on a campaign launched by Malek to come to agreements with the Mubarak-era business tycoons, some of whom he met in London last month in a meeting with wealthy exiles from post-revolutionary Egypt.

Malek said that the return of these investors, who own large projects in Egypt, would be a reassuring sign for the economy. The list includes Travco Travel Company head Hamed Al-Shiati and Yassin Mansour, whose family has interests in the automotive, banking and retail industries.

Malek is also believed to be in talks with Nassef Sawiris, who seems to be withdrawing his multi-billion pound investments from Egypt.

Moreover, Malek told Reuters on Monday that he was involved in negotiations with former trade and industry minister and vice-president of Unilever Mashreq, Rachid Mohamed Rachid.

Rachid was sentenced to five years in jail and fined $1.57 million in absentia in 2011 for profiteering and wasting public funds. Most of the accusations were later annulled and a retrial ordered.

Asked if he was involved in trying to persuade billionaires who had left Egypt and had their assets frozen or been convicted of economic crimes to come home, Malek said, “yes, I am inviting everyone to come to Egypt. It is very important to prioritise legislation, and the court cases should be solved first... before these people come back” to Egypt.

Many observers see Malek’s involvement as an indication of a widening role to be played by businessmen in the new regime, while others see it as a way of saving the economy.

“They have to do it even though I am sure they are not doing it willingly. They are not necessarily fans of Al-Shiati or Rachid,” said one anonymous businessman. “It is politics. Getting money is a matter of life or death for the current regime.”

The businessman said that in Egypt the main sources of accumulated wealth during the last 20 years were real estate, licenses like that for mobiles, cheap energy and the stock exchange. “The potential of all four sources is nil now. So they are desperate for money,” he said.

Most of the current crop of businesses are of small size, and as a result it will be difficult for them to find the needed financing. Thus, the only way for them to get the money needed for investment in the short to medium term is by borrowing from abroad.

The courtship of the icons of the old regime and the new guards of the revolution reflects the deep changes the country is undergoing and the difficulties that an economy growing at an annual rate of two per cent with dwindling foreign reserves and a dire need of foreign investment is facing.

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