Private sector-led growth WHILE the Egyptian private sector is vital to development, it faces serious challenges, Nesma Nowar reports. "We cannot achieve any social justice or improved income levels without achieving economic growth," Egyptian Minister of Economic Development Osman Mohamed Osman said during a conference titled "The Role of the Private Sector in Egypt's Economic Development: Current Challenges and Future Prospects." During the event, Osman confirmed the government's commitment to improve standards of living. "The government is seeking to increase the per capita annual income to $15,000 by 2016-2017, equal to the level of income in north Mediterranean countries, in comparison with the current $3,000." To achieve that, a growth rate of seven to eight per cent is targeted, as well as private sector investments in the range of LE500 billion as opposed to the current LE96 billion. "Egypt's growth rate should catch up with its growing population," Osman said, adding that "there should be integration between the public and the private sectors to achieve these goals. One should not replace the other." Nonetheless, achieving these goals is easier said than done. Osman said the government and the private sector will face many challenges as they will have to double the number of factories in the country. That in turn requires land, financing and simpler government procedures, as well as skilled labour and energy. Cairo University professor of economics Omnia Helmi believes the private sector currently faces many obstacles, with a complex bureaucracy, difficulties in accessing financing and an inefficient market foremost among them. Helmi also noted that the government is crowding out the private sector in the credit market, by borrowing from the market to finance the budget deficit. Abdallah Shehata, also a professor of economics at Cairo University, says the private sector should be encouraged to invest in infrastructure. "Fifteen per cent of investment in infrastructure in emerging countries is financed by the private sector," he said, adding that the private sector's technological capabilities could also be used to offer services at a low cost. Egypt-Guangdong tie up DESPITE a trade balance that stands heavily in China's favour, Egypt remains keen on an economic partnership with China, Sherine Nasr reports. Last week, a high-level delegation of Chinese officials and businessmen representing some 170 enterprises from Guangdong province visited Cairo to conclude 21 business agreements worth some $400 million in investments in the sectors of information technology, textiles, minerals, food industry, vehicle manufacturing and spare parts, to name a few. The initiative to engage with the economically strongest and fastest growing of Chinese provinces, namely Guangdong, is a strategic move on Egypt's part. The province has played a pivotal role in the development of Sino-Egyptian bilateral trade. According to Chairman of the General Egyptian Investment Authority (GAFI) Osama Saleh, the volume of trade between Egypt and Guangdong stood at $1.23 billion in 2009, accounting for almost one fifth of the total volume of trade between Egypt and China. Guangdong Governor Huang Huahua says the province is the pioneer in China's reform policy. "It is home to intensified industries, energetic innovations, and also the hub for foreign direct investment inputs," Huahua said. Located in the southernmost part of China's mainland, Guangdong has a population of 94 million. It hosts the oldest and most significant of China's ports. In 2009, Guangdong's GDP surpassed $570 million, accounting for about 11.6 per cent of China's total national GDP. During the same period, the province contributed a total import and export value of nearly $611 billion which makes up 27.7 per cent of the total national trade in China. "This is a golden opportunity for Egyptian companies who seek to enlarge the scope of their business, export to the outside world or look for business partners in the East," said Huahua. The large market base along with the strong and growing demand in the province provide Egyptian companies with huge potentials, he added. Sino-Egyptian economic relations are clearly on the rise. The volume of trade between the two countries increased ostensively from $250 million in 2004 to $4.7 billion in 2009. Chinese foreign direct investments (FDIs) into Egypt have now reached $320 million. There are currently 1,079 Chinese companies working in Egypt, almost 92 per cent of which have been established during the past four years. More loans for electricity PROVIDED by the European Investment Bank (EIB) for electricity generation and transmission investment in Egypt, a support package of 560 million euros was signed this week. This came alongside the European Union's 20 million euro grant to the Egyptian Power Transmission Project, also signed this week under the Neighbourhood Investment Facility (NIF). The projects "aim at increasing electricity generation capacity and ensuring an efficient transmission network," said EIB Vice-President Philippe de Fontaine Vive, who is responsible for Mediterranean partner countries, during the signing ceremony. He added that the bank's financial support to the Egyptian energy sector represents an important milestone in the strong relationship between Egypt and Europe. The EIB loan for the Egyptian Power Transmission Project is part of a financing package under the NIF, alongside loans from Germany's KfW and Agence Française de Developement, as well as the EU grant funding. This is the first project in Egypt where the EIB has led financing under the NIF. This brings EIB lending in Egypt this year to a record 900 million euros. A $460 million EIB loan was signed in July for the Egyptian Refining Company. Ambassador Marc Franco, head of the European Union Delegation to Egypt, said: "The NIF shows how design of financing packages offered by European Development Finance Institutions can be tailored to address Egypt's specific infrastructure financing needs, in particular the energy sector." The projects will strengthen and expand the Egyptian electricity grid and connect wind farms currently under construction on the Red Sea coast, said Franco. "Increased use of renewable energy is a priority for both the EIB and the Union for the Mediterranean," Franco added. Another project to be supported by a 300 million euro loan is the 1,500 megawatt Giza North Power Plant. The combined cycle gas fired plant 30 kilometres northwest of Cairo, to be operated by the Cairo Electricity Production Company, is expected to be commissioned in 2014. The project will be financed by the EIB, World Bank and the OPEC Fund for International Development. Egypt and South Africa bond EGYPT and South Africa are pushing hard to upgrade their bilateral trade relations, reports Nesma Nowar. Last week, President of the Republic of South Africa Jacob Zuma visited Cairo for the first time. He was in Egypt to inaugurate the EgyptianSouth African Business Forum which was held to facilitate economic cooperation between the two countries, and to offer business match-making opportunities for South African and Egyptian companies. Zuma's visit also aimed to deepen economic relations between South Africa and Egypt. He called on businessmen to make use of opportunities in both countries to increase trade and investment. He also highlighted common goals. "Our key strategic objective is the eradication of poverty and achieving economic prosperity," Zuma said during the opening session of the EgyptianSouth African Business Forum. In all, 120 South African businessmen and 800 of their Egyptian counterparts attended the forum to explore cooperation opportunities in nine fields, namely construction and infrastructure, pharmaceuticals, finance, mining and energy, industrial development and innovation, tourism, agro-processing, automotion and information and communication technology (ICT). Meanwhile, Egyptian Minister of Trade and Industry Rachid Mohamed Rachid was also looking to take the relationship even further. He called for the establishment of a free trade agreement (FTA) between the Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and the East African Community (EAC), the three major trading blocs in Africa. Such an FTA would create a large free trade zone in Africa encompassing 27 countries. "The possibility of an FTA between the three blocks can help increase Africa's international profile as a whole by making investments in the three trading blocs particularly attractive for those wishing to access the entire African market," Rachid said. Rachid's proposal was well received. "Egypt and South Africa are the two giant economies of the continent and closer economic ties could put us among the top 20 economies in the world," said South African Minister of International Relations and Cooperation Matie Nkoana Mashobane, adding that the idea would create opportunities for the whole continent. Bilateral trade between Egypt and South Africa is currently quite small. It reached $158 million in 2009, with Egyptian exports to South Africa standing at $27.6 million and Egyptian imports from South Africa reaching $140.4 million. According to Geoffrey Qhena, CEO of the Industrial Development Corporation -- a South African institution which provides financing to entrepreneurs and businesses -- the lack of bilateral trade is due to the fact that businessmen in both countries do not know much about each other. Qhena told Al-Ahram Weekly he hopes last week's state visit will help both sides better understand each other. He believes Egypt's agricultural and ICT sectors are the most attractive for investors. Further increasing the chances that trade will grow is the fact that an Egyptian delegation is due to visit South Africa in February 2011.
