Qatar insurance industry to enjoy CAGR of 6.7% through 2017 (2024)

The world is beginning to notice a recovery in Egypt and its growing potential. How optimistic are you at the moment regarding Egypt’s potential and its future and why?

We are extremely optimistic in terms of the objectives, but the key is going to be the implementation. Also, I think we have some concern about the magnitude of the Mega Projects because they usually are expensive and very few pan out. We’re lucky to have a government which is both down-to-earth and practical. In essence, they are not your typical politicians.

When you say that you have concerns about the magnitude of these projects, and you look at the amount of investment made at the conference with 90 billion in MOUs and 30 billion in actual contracts signed, do you feel that Egypt is really ready for this type of investment?

Egypt has always been ready. The question is how these investments will be implemented, who will do the implementation, what the time frame is, and what will be the quality of the guidelines. The responsibility is that of the companies doing the projects. Some are more prepared than others so it’s important that they launch them. It’s not important that all of them will succeed because they won’t. It is important to change the mood and views of a country, which is what it takes to make it progress. The biggest obstacle of the conference was not as much about changing the perception abroad, but about changing the perception of Egypt in Egypt in addition to changing it abroad.

You’ve had some objective views regarding previous governments. What are your thoughts on the current reforms that have been put in place? Do you feel that this current government is on track with their reforms? What could they be doing better?

Being in government is a tough job. There are 6 million civil servants in the country while the UK has 700,000. It’s a bit disproportionate in terms of the numbers. The biggest challenge is changing the mentality. You have a country that was historically shut down by socialism, pan-Arabism, etc. There are ingrained work habits and ethics that are counter-productive. Changing that is difficult; it is a feat that cannot be underestimated. All of these civil servants disguise the unemployment.

Unemployment is one of the biggest issues in the country, so how do you fix that?

Unemployment can be addressed with more investment, expansion and economic development. Labor intensive industries must be more closely examined. There’s no point in installing the latest in electronics to manage a cement plant with 47 employees to run the whole production process. Perhaps excellent cement is produced but it does not benefit employment. What is needed is gainful employment, which ties into the educational and training system. These things are long term, and they don’t change overnight.

What sectors do you believe would supply gainful employment?

The most obvious sector to provide this is tourism. We already have 3-4 million employed in tourism, though this needs to be increased.

You mentioned that the implementation of the megaprojects is a major challenge. What are some of the important steps that need to be taken post-conference to build on the momentum created by the conference and create actual results?

First, the ease to invest, set up and start producing must be there. The reason it is so difficult is due to the intangibles of dealing with people’s motivations, energies, and state of mind. There needs to be successes and quick wins more than anything else. It will pick up people’s confidence that the system will work.

Concord Investments is one of the largest investment banks in Egypt. When you look at the other investment banks in the country, what do you feel sets you apart?

Concord Investments is focused on business. We are not trying to do everything. We manage investment portfolios, mutual funds, and funds for companies. We’re not trying to be the biggest underwriter or the fastest broker. We are staying focused in investment management in Egypt where we have a relative advantage.

You’ve had some of the most successful funds in the world. What’s your secret behind the success? Is it just being focused?

The investment philosophy, approach and implementation is the same wherever you are, and you have to apply the same basics. The problem in our industry is that when we step out of our own borders, we are like babes in the woods. The question is whether to reinvent the wheel or follow a hair-brained scheme? There is no reason to. The fundamentals are there.

When you look at some of the other big investment banks here, they are operating throughout the region. Why have you chosen to only invest in Egypt?

Because we know Egypt better and there is a real market here. It is the only country in the area that has a big population with enormous economic demands. There is no point in going to Kuwait or Saudi Arabia. I have nothing to offer there, so we stay focused on Egypt. We’ve been asked by lots of people to do joint ventures in Kuwait and Saudi Arabia, but we don’t add anything to it except the name, but that is not enough. We want to be a strong and important factor in this market.

If you put the populations of the Gulf countries together (other than Saudi Arabia), they are smaller than Cairo. They are like villages with one industry, oil, and no domestic market of any size. Others look at Egypt and think that it is a poor country with no resources except very nice beaches, nice markets, and a very enterprising population. People don’t use critical thinking in looking at those things.

It seems that you are looking at more consumer based industries. The recent transaction with Kellogg was a very successful endeavor for you.

It was a great turn-around situation with an old, dying company. We didn’t have any magic formula for a secret cake or anything else. We just used the normal disciplines of marketing, hygiene, and some more marketing. There are dozens of opportunities like this in Egypt. There is tremendous demand in the area for consumer products. Fifteen years ago, if you were building a hotel like Four Seasons, 90% of the input into the hotel was imported construction materials. Today it is less than 10%.

Driving to the present site of the American University in New Cairo, I noticed the similarities to Hong Kong with buildings and shops everywhere. It used to be desert 6 years ago.

There has been a massive increase in population, and all of those people need to be fed and sheltered. The population is still 50% illiterate, which is a huge number of people. We have 17,000 schools and the Ministry of Education employs 3.5 million people. Mubarak created a law that every Egyptian had to be educated and it had to be free up to college.

How can the education sector be reformed?

The system has to be changed. You cannot guarantee a place in a school for every child in Egypt.

How do you see regional instability affecting Egypt? There’s a lot of terrorism in the region at the moment. Do you think that this is a threat to Egypt’s success going forward?

If you look at both Islam and the Christian religion, both have been around for approximately the same amount of time. Of course there have been disputes and fights between the religions. However, in all my life until I finished college here and went to the US, I never heard the word Shiite. It was not in our vocabulary because most of the country is Sunni, although Egypt was Shiite in the 17th or 18th centuries. Suddenly, there is agitation between Shiite and Sunnis. This has been fostered and encouraged, but what happened to the peaceful precedence of the last 2,000 years?

On a list of all the companies in Egypt in 1941, many of the same companies are in existence in Egypt today. Now examine the heads of the companies, and most of them are British, French, Italian, Greek, or American. There were Muslims, Christians and Jews. This gives a real sense of what the country was about up until Nasser came. When I went to New York in the 1960s and wanted to join a club, I was asked about my religion. For us, it was so alien; I’m Muslim, and I went to a Catholic school and no one asked my religion. I just didn’t go to Mass, that’s all. The make-up of the classes were Muslim, Christian and Jews. It was inconceivable to ask about religion. We had Prime Ministers who were Jewish or Christian; we were very open in those days.

It changed with the war in 1948, when the King decided to be rid of the State of Israel. Until then, there was never an issue which is very hard to comprehend coming from the US where you are a Christian country. To us, it was inconceivable to go on a course so grotesque.

How are you going to capitalize on this special moment in Egypt’s history with this investment flooding in? What are your medium-term strategies, goals, and priorities?

We are going to expand our management business and try to gain more funds. At present, we have about half a dozen funds, some Egyptian and some foreign, both in private equity and balanced portfolios. We are looking at joint ventures here with Egyptian companies. We will continue to be focused on keeping our businesses in Egypt. Currently, we have just below 2 billion in assets.