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EGYPT FOCUS
Interview with Orascom founder, Onsi
Sawiris |
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The suffering of the people of Palestine is being graphically
illustrated on our television screens and in our newspapers and we hear daily
examples of the stress, trauma and tragedy that has become the norm for so many
Palestinians. Conscious of the concerns of Arab Banker readers and their
desire to do what they can to help the people of Palestine the Arab Bankers
Association has established the ABA Emergency Palestine Relief Fund. All
monies donated to this fund will be distributed on an equal basis between the
following well-respected UK-registered charities that work in Palestine.
• Action around Bethlehem Children with
Disability
• Foundation for Al-Quds University Medical
School
• Friends of the Spafford Children’s Centre
• Interpal
• Medical Aid for Palestinians
• St
John Opthalmic Hospital
If you would like to donate to this
group of charities please contact the ABA or click here to download a Pdf file
containing the donation form (Requires the Adobe Acrobat
reader)
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| Learning from the past and
present |
Onsi Sawiris |
Orascom was founded
in 1950 and now comprises Orascom Construction Industries, Orascom Projects
& Touristic Development and Orascom Technologies. In an interview with
Arab Banker, Orascom founder Onsi Sawiris offers his analysis of the
economic outlook for Egypt. |
Q Between
1999-2003 Egypt went through an economic slowdown from which it has recently
started to recover. What has caused the recovery and how can it be sustained?
Onsi Sawiris. The main
drivers have been the boom in tourism as a result of the revaluation of the
Egyptian pound and the regional boom in real estate construction, which has had
a beneficial impact on the demand for Egyptian labour – leading to a rise
in remittances from overseas – as well as Egyptian goods.
For the
recovery to continue, foreign exchange policies have to more flexible,
predictable and stable than in the past. It is also important for the Egyptian
economy to attract its share of foreign direct investment from global emerging
market investors.
Q Some
observers believe that, beginning in the mid-1990s, many banks were not careful
enough in assessing the credit-worthiness of the projects they lent for. Do you
agree with this assessment and have the Egyptian banks improved their credit
controls and risk analysis?
OS. Yes, credit assessment and controls could have been better
and tighter in the 1995–1999 period and banks could have avoided a great
deal of unsound lending.
Fortunately, during the past year or so,
Egyptian bankers who have worked in overseas private sector banks have been
appointed to head several important banks in Egypt. This development has
injected new – and usually younger – blood that has been exposed to
modern management methods, tighter credit controls and risk management
procedures. Because of this development and the economic recovery, the rate of
non-performing loans is likely to decrease.
Q Although the Government has announced that it
intends to vigorously pursue economic reform there is as yet no evidence of a
beneficial effect on the economy. What should be done expedite the process?
OS. The government has
indeed asserted that it is pursuing economic reform but unless it makes a
determined effort it will not be able to accomplish the task, and a change will
have to be made.
Q There is a
perception that a major push in the privatisation programme will grind the
economy to a halt. Do you share this perception?
OS. The government could do more in that regard.
In fact, when the climate was more conducive to successful privatisations
during the 1994 – 1999 period, some of the privatisation attempts were
tentative and not sufficiently encompassing. After 1999, it became less
attractive to privatise the less straightforward companies.
We are now
all waiting to see how energetically the government will pursue privatisation
since the economic environment is more receptive for flotations and trade
sales. This will be a test of the government intentions and seriousness.
Q To what do you attribute the
success of Orascom?
OS.
The success of the Orascom Group is due to several factors. First, we are
very focused on our own core lines of business, namely the construction,
telecommunication and tourism sectors. We have also been fortunate in
anticipating the 1999 – 2003 slowdown and early on disposal of several
non-core businesses, whilst reducing corporate debt. This latter point has
helped a great deal in a declining market because of the high borrowing rates
on Egyptian pounds. The third main reason is our management team.
In
several key positions we have chosen to hire talented Egyptian managers who
have been foreign educated or have had the opportunity to train abroad.
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