Bringing In More German Investment

CAIRO - 31 August 2019: On the sidelines of his visit to Germany, leading a high ranking delegation to partake in the 22nd German-Arab Business Forum held in Berlin from June 24 to 27, Prime Minister Mostafa Madbouly inked several deals with leading German companies, including a deal bringing Mercedes-Benz back into passenger car assembly in Egypt after years of hiatus. The signing came few days after Cabinet’s dispute resolution committee ruled in favor of an importer of Mercedes-Benz cars in a dispute worth LE 700 million with the Egyptian Customs Authority.

Under the MoU signed between the luxury carmaker and Egypt’s Trade and Industry Minister Amr Nassar, who accompanied the PM to Germany’s Stuttgart, Mercedes-Benz will resume the assembly of passenger cars in the local market by building a plant in the Suez Canal Economic Zone (SCZone).

In 2015, the German automaker decided to close its assembly line in Egypt, in light of a crippling foreign currency shortage, while Egypt was preparing to slash tariffs on EU-built and fully assembled imports. The tariffs hit zero at the be- ginning of this year.

“The move will improve the company’s market position and boost the Egyptian economy,” Mercedes parent company Daimler said in a statement, adding that the deal would enable the company to structure its production net- work even more flexibly and efficiently, better responding to its customers’ needs.

Madbouly also witnessed the signing of an agreement between the Minister of Trade and the German company Bosch for electrical appliances to set up an industrial complex in 10th of Ramadan. The complex would provide employment and training opportunities for Egyptian youth, says Madbouly, adding that it contributes to increasing exports as well as raising the efficiency and skill of Egyptian labor, which will receive the latest training at Bosch’s specialized training centers.

Bosch’s manager affirmed his keenness to in- vest in Egypt, considered a gateway to Africa and the Middle East. The new branch in Egypt will be their sixth plant as they have five branches around the world.

Prime Minister Madbouli noted that the Egyptian government welcomed the agreement with the German company to establish a production center in Egypt on an area of 80,000 square meters.

“Reaching this agreement is a result of the meeting held by President Abdel Fatah al-Sisi, with the chairman of the board of directors of Bosch in October 2018, which encouraged the company to move ahead with its plans to invest in Egypt,” he added.

The Arab Organization for Industrialization (AOI) also clinched four separate agreements with German companies to boost cooperation in the fields of medical supplies, water treatment and providing technical training to workers.

Boosting Egypt’s railways is a key focus

In Berlin, Madbouly met with officials from Siemens to discuss bilateral cooperation for up- grading Egypt’s transport sector, renewable energy, vocational training, tech-driven manufacturing, and the company’s planned investments in the local market. Minister of Transportation Kamel el-Wazir urged the German firm to bid in upcoming tenders for railway locomotives.

Following a meeting between Madbouly and President of the German Railways Company Richard Lotus, both parties agreed to start preparing the framework for a cooperation agreement to promote Egypt’s railways. The framework will define proposed areas of cooperation, the Egyptians’ needs in various technical sup- port sectors, and means of financing ahead of the launch of a proposed cooperation agreement.

During the meeting, the prime minister re- viewed the challenges facing the railway system in Egypt, one of the oldest railway systems in the world.

Madbouli added that President Abdel Fatah al-Sisi is paying great attention to this issue in order to make a qualitative leap in this vital facility, which requires comprehensive development and upgrading.

He noted that the Ministry of Transport is need of new diesel tractors to be compatible with the existing lines, and that the state will study the use of electric tractors in the new lines under construction.

The meeting also dealt with efforts to develop the Training Institute for Railway Workers, under the framework of the ministry’s goal to raise the efficiency of human capital.

The head of the German Railways Company expressed his agreement with the prime minister and the minister of transport on the importance of developing and upgrading human resources. Lotus revealed his readiness to train Egyptian cadres by sending German trainers to Egyptian training institutes, in addition to studying the establishment of a center of excellence through a cooperation with the German side.

Showcasing macroeconomic indicators’ improvement

In his speech at the Arab-German Business Forum, Madbouly reviewed key economic indicators to assure the attendees that the country is on the right track and has started to reap the fruits of its bold economic reform program launched in late 2016. “Egypt is expected to achieve an initial budget surplus of 2% of gross domestic product (GDP) in 2018/2019 for the first time in 15 years,” the PM said.

Foreign reserves have picked up to exceed pre-2011 levels, reaching a record level of $44.3 billion by the end of May 2019, compared to $14.9 billion in June 2013, allowing Egypt a temporary fund that could finance Egypt’s import bill for more than 8.5 months, he added. Net inflows of foreign direct investment (FDI) rose to $7.72 billion in FY2017/2018, compared to $4.18 billion in FY2013/2014. Egypt has regained its position as the first destination in Africa for FDI, according to the African Development Bank.

The most populous Arab country aims to reduce the public debt to 80% of GDP in 2020, compared to 107.8% in fiscal year 2016/2017. The unemployment rate fell to about 8% in March 2019, compared to 12.7% in 2011/2013, contributing to the provision of job opportunities for young people and other segments of the Egyptian people, the PM said, noting that the unemployment rate is the most important criterion as to whether current growth rates benefit the wider segments of the population.

Madbouli stated that the objectives of the economic reform program launched in 2016 have yielded some fruit, referring to Egypt’s growth rate of 5.6% in 2018/2019, one of the strongest and highest growth rates in the region among emerging economies.

Egypt is a guest of honor

Egypt was a guest of honor at the Arab-German Business Forum this year, reflecting the appreciation and confidence of the Arab and German sides of Egypt’s economic success over the past years.

Madbouli concluded that Egypt considers Germany one of its major partners in economic development efforts, not only in Europe but globally as well.

The prime minister was accompanied by a delegation comprising the ministers of electricity, investment and international cooperation, oil, communications, trade and industry, transport, the chairman of the Arab Organization for Industrialization, Egypt’s ambassador to Germany and a large number of businessmen.

“The importance of Egypt’s participation in the forum stems from it being the guest of honor in the current session,” Cabinet’s official spokesperson Nader Saad said.

Saad added that Egypt’s participation represents an excellent opportunity to promote investment opportunities in Egypt. “The forum is attended by about 600 businessmen from both the Arab and German sides, and is an important economic and investment forum; it is considered an important economic and investment forum for cooperation and economic and trade partnerships,” the spokesperson argues.