It is easiest to start a business in Alexandria, Cairo and Giza, deal with construction permits in Suez, register property in Port Said, and enforce a contract in Damietta. Meanwhile, it is most difficult to start a business in Aswan, enforce a contract in Cairo, register property in Damietta and deal with construction permits in Alexandria, according to the recent Doing Business in Egypt 2014 report. The report, put out by the World Bank Group, measures where it is easiest for small and medium-sized firms, local entrepreneurs and investors to do business, using four indicators to do so: starting a business, dealing with construction permits, registering property, and enforcing contracts. The report also examines cross-border trading at five ports. According to the report, with the exception of Ismailia, which ranks in the top third of the locations studied for all four indicators, no other city or governorate does equally well in all four areas. In Damietta, for example, enforcing contracts is easier than elsewhere, but starting a business and registering property are ranked below most other cities. The report, launched earlier this week at a conference held at the General Authority for Investment and Free Zones (GAFI), covers 15 cities: Alexandria, Assiut, Aswan, Cairo, Damietta, Fayoum, Giza, Ismailia, Kharga (Al-Wadi Al-Gadid), Mansoura (Daqahlia), Port Said, Sohag, Suez, Tanta (Gharbiya) and Zagazig (Sharqiya), together with trading across borders at the five ports of Alexandria, Damietta, Port Said, East Port Said and Sokhna. It measures business regulations that affect small and medium-sized enterprises which employ almost three-quarters of the labour force in the country and account for 63 per cent of GDP. These businesses are key drivers of competition, growth and job creation, particularly in developing economies. During this week's conference, Hassan Fahmi, chairman of the GAFI, said that the report shed light on locations other than the capital. “Cairo represents Egypt in the annual international Doing Business report, which compares regulatory practices in 189 economies around the world. But Cairo does not tell the whole story. Egypt is set apart by differences between the thriving north and the less developed Upper Egypt,” he said. People living in deprivation represent three per cent of the population in Suez and Damietta, for example, while in Aswan, Sohag and Assiut they account for 54, 59 and 69 per cent, respectively. Dealing with paperwork is the biggest hurdle for Egyptian businesses planning to export their products abroad or import from other countries, the report found. Marcus Leitner, ambassador of Switzerland to Egypt, explained to the meeting that a Swiss medium-sized company operating in Egypt in the textile sector had been experiencing problems in delivering to clients abroad. “This textile company is losing market share to Romanian and Turkish competition, due to difficulties in cross-border trading in Egypt,” he said. According to the report, companies need to submit eight documents to export and 10 to import, unlike in France, for example, where only two documents are needed for imports and exports. Even the Middle East region has a lower average of six documents needed for exports and eight for imports. The time requirements for exports and imports also differ from one port to another. Exporting a 20-foot container takes 10 days in Damietta, but 12 days in Sokhna. Importing a container takes 14 days in Alexandria, Damietta and Port Said West, but 16 days in Sokhna. These differences are partly due to customs clearances in each port. As a result of the increased unrest over the past two years, port authorities have heightened safety measures, but some authorities are stricter than others. In the case of Sokhna, all containers now go through X-ray scanners, and this takes time. The report found that local entrepreneurs face different regulatory challenges depending on where they establish their businesses. Large cities deal with larger capacities of business services, which can lead to delays and higher costs for services because of increased demand. The time necessary to register property varies considerably. In Sohag, firms can transfer property in 18 days, whereas in Damietta the process takes more than four months. Minister of Local Development Adel Labib said that in the light of the report Egypt needed to maximise the role of the local administrations in the different governorates. In starting a business, a one-stop shop was the driving force behind the rankings, Labib emphasised. The one-stop shop for business start-ups in Cairo had proved that high demand for business services could be dealt with competently not only for entrepreneurs in Cairo, but also for neighbouring Giza, he said. For years, entrepreneurs from across Egypt had had to travel to Cairo to register and start a business. Today, there are one-stop shops in Alexandria, Assiut, Cairo and Ismailia, however. It takes just eight days to register a business in Cairo, Alexandria and Giza, while in Aswan, Kharga and Port Said it takes 11 days. The cost varies from 9.7 per cent of income per capita in Alexandria, Assiut, Cairo, Giza and Ismailia, to 10.5 per cent in Aswan. This is because investors in cities without one-stop shops have to factor in travel costs. “We need to support competitiveness among governorates, maximise the role of governorate administrations, improve and develop the services of the local administrations, amend the local administrations to reflect a greater role for the localities, and give greater authority to governors in the interests of decentralisation,” Labib said. Osama Saleh, the minister of investment, said that the report could guide policy-makers to areas where improvements were possible. In doing so, it provided important insights into best practices that could be replicated across the country. “Through such reports, we can put our hands on the obstacles facing investments, find ways to improve the business environment, and highlight best practices in different governorates to standardise the procedures for the benefit of all investors,” Saleh said. He said that enforcing contracts had been a major problem for investors. It takes 42 steps and variable costs and time spans to enforce a contract across Egypt, depending on where investors are. Enforcing a contract is less difficult in Damietta, where it takes a little over two years (810 days) and costs 18.2 per cent of the claim value. It is most difficult in Cairo, where it takes almost seven months longer (1,010 days) and costs almost 45 per cent more.
