Tuesday,24 October, 2017
Current issue | Issue 1305, (28 July - 3 August 2016)
Tuesday,24 October, 2017
Issue 1305, (28 July - 3 August 2016)

Ahram Weekly

Investing in Egypt

Egypt remains an attractive destination for investment in the food industries sector, Mahmoud Bazan, deputy head of Egypt’s Food Exports Council tells Al Ahram Weekly

Economy
Economy
Al-Ahram Weekly

The Hero Group, an international food company, has operated in the Egyptian market since 2002 when it acquired 65 per cent of local jam producer Vitrac, obtaining the remaining 35 per cent in 2005. Since then the company has invested around $40 million in Egypt.

Before the end of this year an additional $5 million in investment will be finalised. And, according to Mahmoud Bazan, managing director of Hero Middle East and Africa and deputy head of the Food Exports Council (FEC), the new investment is in quality as well as capacity, in comments made to Niveen Wahish.

Bazan believes that Egypt’s food industries sector is very attractive to investors. The raw materials his company needs to manufacture jams, syrups and juices are available locally at competitive prices, he said, as is skilled labour.

“Apart from the fact that domestically Egypt is an extremely attractive market with a 90 million strong population, it has a competitive edge in exporting to surrounding markets as well,” he said, referring to the free-trade agreements between Egypt and the European Union, the Common Market for East and South Africa (COMESA), and the Arab countries.

The company, which posted sales of LE640 million in sales in 2015, exports approximately 35 per cent of its products.

International companies which are already in Egypt are expanding their businesses and using Egypt as a base to export to the surrounding region, Bazan said. He said that regional conflicts were affecting his company and the industry, especially in Libya, Yemen and Syria, but “what we are doing is focusing more on the countries that are stable, like the Gulf, Jordan and Sudan, as well as expanding more into Africa.”

“Africa is a challenge due to logistics, but there are a lot of very good initiatives that can be taken to support expansion,” he said.

Fruit and vegetables and olive oil are some of the products in which Egypt has particular strength in export markets. Bazan said the FEC was working on a strategy to determine which segments Egyptian manufacturers need to focus on for the next five years, particularly since hard currency shortages were another major challenge not only to the food industry but also to the whole economy.

“We are able to overcome this in a way through our exports, but definitely it is a challenge,” he commented, stressing that Egypt-based companies need to export their products. “Instead of crying about the lack of availability of hard currency, we have to find the solution ourselves, and the solution is that we export part of our production.”

However, Bazan stressed the need for more clarity in regulations, which, he said, should not change with changes of government. “Making your own rules as a country is not what hampers investment. The main thing is to have a stable set of rules,” he said.

Companies that are already in Egypt and know their way around are increasing their investment in the country, he said. “You will hardly find any international company that came and invested in Egypt that did not further expand. They have understood how the market works. They see opportunities, and they are expanding. The challenge is getting new investment,” Bazan concluded.

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