Developing Upper Egypt is high on the government's to-do list, but not high enough for some investors, Niveen Wahish reports For years Egyptians have been migrating from Upper Egypt to Cairo and Alexandria in search of jobs. But this also brings problems: urban sprawl, high-density concentration of population, and declining fortunes in outlying regions. "We have to create the environment to attract investments in rural areas away from the traditional industrial cities and keep job seekers at home," says Mounir Abdel-Nour, former businessman and deputy chairman of the Wafd Party. Abdel-Nour explained to Al-Ahram Weekly that unemployment is highest in rural areas because the majority of youth have university degrees and there are no jobs that require such degrees. In fact, he says, these degrees prevent them from taking on agricultural jobs in their hometowns. "They would prefer not to work rather than take a job that they believe is degrading and does not match up to their education." Many attempts to attract investment to rural areas have been in vain. The reason, according to Abdel-Nour, is the lack of infrastructure such as roads and electricity. One stark example, he said, is in the agricultural sector where losses occur during the transportation process after harvesting. The reason is the lack of infrastructure for storage, cooling, processing and transport. This leads to a quarter of the tomato harvest being lost. Abdel-Nour wants to see industrial, storage and service complexes being established next to fields to service agricultural production. "You need to be able to bring such infrastructure and industries near the fields. This requires intelligent planning in choosing the location and the type of industry that would be complementing the local produce," he said. Abdel-Nour gave the additional example of onions in Upper Egypt, which can be dried or exported as a fresh produce. And there is the possibility of processing hibiscus or capitalising on the local handicrafts. The ideas are endless. In fact, the government, through the General Authority for Finance and Investment (GAFI), has prepared a database listing all investment opportunities in each governorate. Possibilities include everything from food industries to textiles, agriculture and mining. These possibilities, coupled with government efforts throughout the past four years to try and lure investors towards Upper Egypt have started bearing fruit. According to Minister of Investment Mahmoud Mohieldin, speaking at the Fourth Upper Egypt Investment Conference held this week in Fayoum, Egypt has maintained its growth even during the year of the financial crisis thanks to increased public and private investment. According to Mohieldin, 925 new companies have been set up in Upper Egypt between June 2009 and January 2010. He pointed out that in Upper Egypt land is plentiful, unlike the Delta where land is in short supply and traditional industrial cities have been saturated. The Upper Egypt Investment Conference is held regularly to enable investors to meet directly with governors of the region as well as with relevant ministers to discuss their problems. Osama Saleh, GAFI chairman, also stressed that the government has done a lot in the past four years to attract investment to the region. Besides the database, he told the Weekly, there are many incentives on offer. To start with, some plots of land in Upper Egypt are available for free. Furthermore, investments worth LE15 million or more are granted financial incentives in the form of LE7,500-LE15,000 on each job opportunity they create. The sum can be deducted annually from tax, electricity or water bills. In addition, the government is now working on infrastructure and improving services; it is rolling out natural gas pipelines to the region and extending roads. The first phase of the Upper Egypt-Red Sea road was recently inaugurated. While the full benefit of this road may not be felt for a couple of years, until it's complete, much hope is pinned on it to bring investment to the region, said Kamaleddin Hussein, media officer for the Assiut Businessmen's Association. The LE3 billion project is financed by the Ministry of Investment's privatisation proceeds. The first phase of the road connects the cities of Assiut, Sohag and Qena with the Safaga road. A second phase would double the number of lanes. Hussein hopes to see an influx of investment, not merely because of the road but also through the development of land flanking the road for projects such as touristic establishments and service centres, as well as industrial and mining projects and other facilities such as gas stations and cafeterias for road users. The road, according to Hussein, will enable investors to easily transport their products to ports where they can be exported. "Purchasing power in Upper Egypt is limited. The goods need to be moved to bigger markets such as Cairo and Alexandria or to the wider export market," he said. But Magdi Selim, head of the Assiut Investors Association, wants more than the road. He told the Weekly that parallel to establishing the road, the government should have started the rehabilitation of the Safaga Port along with expanding its capacity. He acknowledged that the rehabilitation of the port is on the agenda, but he wants it to take priority. On a positive note, Selim agreed that having land available for free is an advantage. Yet he stressed that investors want to see infrastructure extended to all industrial areas. He also wants to see existing incentives granted to a wider number of investors. "Investments of LE15 million are limited in Upper Egypt. The smaller investors should be able to benefit from these incentives as well." He suggested that the size of the incentive be commensurate with the size of investment. "That would be more conducive for small and medium enterprises [SMEs)]." Mahmoud El-Shandawili, head of the Sohag Investors Association, agrees. He believes that extending the incentives scheme to small investors would help create jobs. Furthermore he wants SMEs to be able to benefit from the services of the Industrial Modernisation Centre that currently specifies that beneficiaries must have at least 10 employees. El-Shandawili pointed out that in Tunisia even a small barbershop benefits from industrial modernisation services. Hussein pointed out another problem that needs to be tackled: training labour. "There is not enough trained labour to meet the needs of factories. Very often factories have to bring skilled labour from Cairo to get their plant on its feet." Naglaa El-Ehwany, deputy director and lead economist at the Egyptian Centre for Economic Studies, underlined that technical education needs reforming to provide the necessary skills to rural areas. Such education, she said, bridges the gap between industries that cannot find skilled workers and the unemployed. A survey, she added, must be carried out to pinpoint what specialisations are most needed.
