Egypt on right track, patience required till full implementation of economic reform plan: Elgarhy

I am optimistic about future of Egypt's economy; government, businesspersons alike must do more

Within the past few years, a number of emerging businesspersons, in their late 20s and early 30s, proved themselves in various fields, employing the implementation of the economic reform policy to play a role in supporting the state to continue its achievements.
In an exclusive interview with Daily News Egypt, Mohamed Gamal Elgarhy, managing director of El Garhy Steel, member at the metallurgical chamber at the Federation of Egyptian Industries (FEI), head of the specialised committees secretariat at the ‘Mostakbal Watan' party and a member of Al Ahly Sporting Club's board, revealed how he could played multiple roles in a short period of time.
Elgarhy also expressed his optimism about the future of Egypt's economy, but the government, in his perspective, must work hard to ease the impact of the economic reform methods, and called on all businesspersons to stand hand-in-hand with the state to finalise it.
He also thought that it is too early to evaluate what has been achieved in the economic reform plan till the entire implementation of its procedures.
An onto the text of the interview, the transcript for which is below, lightly edited for clarity:
As a businessperson, how do you evaluate what has been implemented in economic reforms until now?
It is too early to judge the reform plan and its procedures, but, without question, economic reform procedures are successful till now. Economic stability is tangible, and the market really feels it now. In addition, all declarations that were stated and the indicators that are measuring our economic reform from international authorities reflect the improvements that the Egyptian economy is achieving. I consider what we accomplished until now is a starting point for further development. The economic reform programme is not yet not fully completed for it to be judged or evaluated.
Does it mean that the reform plan is not yet effective?
It is no longer true. It was necessary to implement this economic reform plan at this time. Undoubtedly it caused some troubles for all Egyptians and we are still facing them, however, we need to be patient and to be responsible until the plan's procedures are completely implemented, in order to overcome its difficult aftermaths. So, I call on all businesspersons in Egypt to play a role in overcoming the consequences of the economic reform, and to lend a hand to citizens as a key role in getting over this serious stage. For instance, our company coped with this through increasing salaries by 30% to ease the financial burdens on our employees.
Some think that the timing of this plan was not ideal, what do you think?
It is certain that this plan is necessary for Egypt's economy to move in the right direction, with a proper execution to ensure success. And I am sure that the average person is going to reap the benefits of these procedures and perceive its positive consequences, especially that a notable share of the state's resources are allocated to serious sectors such as the health care sector, with President Abdel Fattah Al Sisi's efforts to beat HIV through the ‘100 Million Health' campaign, in addition to his ‘Nour Hayah' initiative which aims to treat diseases which cause blindness and poor vision, targeting the inspection of five million elementary school students and two million needy people nationwide. Under it, one million prescription glasses will be provided and 250,000 eye operations will be performed to those who need them. Such significant efforts cannot be denied not only in the health care sector, but in other important sectors including education, infrastructure, building, and construction sectors.
For the private sector, what is the role it should play in this serious phase?
The private sector has become the main provider of employment in Egypt, so to speak. It is the engine to jump-start Egypt's economy. I believe that it has to play a key role in social responsibility. A ‘better Egypt' should be its target, helping the state to ease the burdens shouldered by ordinary people. Playing this role is important in order to be able to produce, as, eventually, people are the customers who consume our products and we must keep them and play a role in their lives, especially in this critical period. In this regard, many initiatives have been launched until now aiming to stand by the people, in addition to fixing the negative impacts caused by implementing the new economic policy.
Do you mean supporting the state to overcome all obstacles?
The state cannot provide such efforts alone. The private sector, including Egyptian businesspersons, must stand side-by-side with the state to provide relief to poor and low-income families and to all who are suffering now through participating in development and charity efforts. Allow me to use the example of the economic downturn that hit US in the 1930s and how the social responsibility of the private sector played a key role to push the markets to improve, mitigating the impact of this recession that hit the globe.
Then, what is the role you are currently playing now in view of that?
We are already playing our role in this regard, cooperating with number of charity entities, such as the ‘Tahia Masr' fund and introducing food aid to the most needy villages in addition to boosting the ‘Dignified Life' initiative recently launched by President Al Sisi to serve the neediest people through introducing some aid to the neediest villages. In this regard also, we are in the process of establishing the El Garhy for Social Development Society to play our social role in a regulatory framework.
Are you optimistic about the future of Egypt's economy?
The economic reforms which have been achieved in the past few years enhanced Egypt's competitiveness, putting Egypt's economy on a course where it could thrive. Actually, I am optimistic about the future of Egypt's economy, but the government should exert more effort to educate people of the significant benefits of the economic reform procedures simultaneously with their implementation in order to overcome any attempts to frustrate people.
And what about the investment atmosphere?
The improvement that Egypt's investment atmosphere is experiencing currently is clear, and we are seeing all the efforts introduced by the state to lift the burdens that investors are facing. The proof in this regard is Mercedes-Benz's return to the Egyptian market. Furthermore, Apple expressed its interest to inject new investments in the Egyptian market. Undoubtedly, such big corporations would not come to invest in our market if they did not trust the investment climate in Egypt. They are positive of the benefit of investing in our market.
But investment is a constantly changing sector, so it needs continuous reform procedures and facilities, and not simply settling for what has been achieved.
As an investor in one of the most important industrial sectors, steel manufacturing, which competencies make El Garhy able to prove itself among other giant rivals?
El Garhy Steel has all the strong, fair competitiveness factors, as we have qualified technical staff who are enhancing our competition in the market. Our vision is based on considered economic plans and integrated strategy which aims to improve our working mills along with establishing new steel mills, to produce the required essential lines that the steel industry is founded upon. These essential lines, actually, are partially imported. Following that line, we enhance our products' quality, thereby increasing our business share in the market, as we plan to double our production by 2020 after adding new production lines.
In view of higher global steel prices and the impact of the floatation of the Egyptian pound, what is you forecast for steel prices?
It is strange that some thought that the price hikes of steel in the last years caused increases in investors' profits in this sector, considering it as an increase in profit margins. Indeed, steel is a strategic commodity. However, although Egypt's market is currently following a free enterprise economy which set commodities' prices according to supply and demand rules, steel prices are set according to lines' prices that are mostly imported which already have experienced significant hikes in their prices in recent years. Moreover, higher prices of fuel and gas are essential inputs in the steel industry.
You have succeeded to become a part in the sports and political scene as well. What about your political role now?
The secretariat is one of the party's central secretariats which is responsible for considering and preparing projects and documents related to public policies in all fields. Once I am tasked, I carefully prepare a strategy which stems from the party's general strategy, aiming to make the secretariat a source of new initiatives and creative ideas in addition to drafting new laws. So we rely on experts, public figures, former ministers, and academics to work professionally without have it conflict with our policy of empowering the youth.
Does this role add to your experience?
The ‘Mostakbal Watan', (A Nation's Future) party has become one of the most important parties in Egypt, as it has a large number of members, especially from the youth category, and has premises and activities in governorates from all over Egypt. The party also carefully and consistently improves all its structures. So, it has a notable existence in the political scene now. On the other hand, it has an influential, large parliamentary bloc that plays a significant role in the legislative reform process, contributing in preparing new draft laws and discussing others. I think that ‘Mostakbal Watan' has all the potentials; political, human, and technical capabilities which can be tapped to achieve significant amendments in Egypt's legislation which can make Egypt thrive, forming a nation's future identity. We cannot also deny its role in social activities, and its close connection with the people and their daily sufferings, as well as introducing some social initiatives to cope with the hard impacts of the economic reform measures.
What about "Ataqa's' performance in 2018 as one of the biggest companies in Elgarhy group?
Misr National Steel "Ataqa "is one of El-garhy Group's companies and its financial performance in fiscal year 2017/18 positively affected the equity performance as the company registered EGP 200m in 2017 in profits, reached over EGP 190m estimated profits till the third quarter of 2018. Its equity was trading at a lesser value with an estimated profit factor did not exceed three times only.
Let's talk about your role in the sports scene as a member of Al Ahli Sporting Club board?
Indeed, investment in the sports atmosphere in Egypt needs serious legislative amendments, especially that since the new Sports Law has been released in 2017, the market did not experience the establishment of any company for sports investment, although it dedicated an entire chapter in the law for investment.
How do you assess the new sports legislation and the investment chapter included?
Actually the law needs to be reconsidered. It requires essential amendments. In this regard, the secretariat of specialised committees in the ‘Mostakbal Watan' party, in collaboration with the sports committee in the parliament, has prepared a proposal for a new sports draft law aiming to improve the investment atmosphere in Egypt.
Is the sports field an attractive sector for investors to compete in to become members in popular club boards or to finance their activities?
Sports in general, and football game in particular, are an attractive sector for investment. Remarkable businesspersons all over the world significantly invest in such sectors in recent years. Although the football industry in Egypt has not developed yet, yet there is a chance to attract investments to this sector. Let me say that the social responsibility for businesspersons is to motivate the entry into this sector as football games have become one of the key factors which inspire people, making them happy. For sports in general, our role is to sponsor Egyptian champions in various fields, helping the state through this sponsorship to achieve triumphs in all games, and on the other hand to relieve the burdens on the state.