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A Wild Ride

January 2010
Last year had a bit of everything: a high-stakes takeover attempt,a visit from the US president and a sensational murder trial. Oh yeah, and there was that global financial crisis thing.

January
Canal revenues fall
The Suez Canal Authority announces an indefinite freeze on transit fees as piracy and the global financial crisis take their toll on the shipping industry. The news comes amid a tough 12 months for the waterway, which will see revenues fall by 7% from the previous fiscal year.

Mobinil saga drags on
France Telecom weighs in on its long-running battle with Orascom Telecom for control of Mobinil . VP Olaf Swantee says the relationship between the firms, which each having a roughly 35% stake in Egypt's largest mobile operator, is "strong and productive." But the two companies will go through several rounds of legal proceedings over the next 12 months.

Obama breeds hope, skepticism
Egypt's business community has a mixed reaction to the inauguration of Barack Obama as president of the United States. Some expect America and the Middle East to place a renewed emphasis on economic ties, which languished underthe Bush administration. Others say the US will be too preoccupied with the domestic fallout of the global financial crisis to worry about foreign trade deals.

Capital good for business?
Cairo places #44 in a ranking of themost business-friendly cities in the developing world. That puts it behind Johannesburg (#11), Cape Town (#33) and Tunis (#40), but ahead of Ankara (#50). The list, compiled by Mastercard, tracks everything from economic growth to quality of life.

February
Jalopies on the way out
A government plan to modernize Cairo's aging fleet of black and white taxis kicks into full gear. The state offers preferential loans to taxi owners who scrap their ancient Lada 207s and Fiat 1300s in favor of new vehicles. The push follows a new law that will bar taxis more than 20 years old from the road by 2011.

Pyramid scheme comes crashing down
Egyptian tycoon Nabil Al-Boushi is arrested in Dubai following accusations that he ran a massive Ponzi scheme that swindled investors out of almost LE 350 million. Al-Boushi, who has been called the Middle East's Bernie Madoff, was a board member of Cairo-based Optima Securities Brokerage. He was arrested along with the company's chairman, Fekry Badr El-Din. The pair's alleged victims included movie stars, a professional football player and the brother of a government minister.

Anger mounts over Israel-bound gas
Dozens protest an administrative court decision that allows Egypt to continue exporting natural gas to Israel. The popular anger followed reports that Egypt, which had just cut back on domestic subsidies, was selling the gas at about one-third of its market value.

Rates fall, finally
The Central Bank cuts interest rates for the first time since April 2006 in an effort to spur growth. The move raises worries about inflation, which had been on the downturn.

March
Baby index makes debut
Officials open the Egyptian Stock Exchange 70 (EGX 70) index in an effort to provide investors with a broader view of the market. The indexcharts 70 of the most active companies not already listed on thebenchmark EGX 30. Its members include Delta Insurance, Lecico Egypt and Misr Chemical Industries.

America slashes aid
US President Barack Obama approves a plan to halve economic aid to Egypt to $200 million (LE 1.1 billion). The move comes as the US grapples with the mushrooming financial crisis. America's military support, however, is to remain the same at roughly $1.4 billion (LE 7.4 billion).

Pirates release sailors
Somali pirates free an Egyptian cargo ship after its owners reportedly pay a $1 million (LE 5.45 million) ransom. The crew members of the Blue Star were released on March 4, more than two months after the hijackers stormed the vessel in the pirate-laden Gulf of Aden.

Restrictions on rice exports continue
The Ministry of Trade extends a partial ban on rice exports in an effort to prevent the price of the grain from rising on the domestic market. The measure was introduced in 2008 as international prices skyrocketed, a byproduct of world-wide food shortages.

Capital 'a tough place to work'
Cairo is ranked the eighteenth worst place in the world for foreign professionals to work by a major New York-based human resources company. The firm, ORC Worldwide, says the city is blighted by air pollution, poor sanitation, sub-par medical facilities and state-sponsored repression. The capital is a better place to work than Bangalore (#17 on the list) but not as nice as Kiev, Ukraine (#19), ORC says. The worst place to be? Lagos, Nigeria.

April
Grub gets cheaper
Food prices fall dramatically as the global financial crisis puts a damper on commodity markets. Beef and beans drop 13%, eggs plummet almost 45% and rice dips 3%. It's a sharp contrast to eight months earlier when worldwide shortages caused prices to skyrocket, sparking near-runaway inflation in Egypt.

Fugitive, bank settle differences
Egypt's most infamous corporate fugitive, Ramy Lakah, announces he has reached a deal with Bank Misr to settle LE 1.2 billion in outstanding loans.A former member of the People's Assembly, Lakah fled to Britain in 2000 as his stable of family-owned companies faced the prospect of paying back mountains of debt. His deal to repay Bank Misr, which includes an LE 160 million cash payment, is one of several he will reach with Egyptian banks and regulators.

Gulf hemorrhaging jobs
The global financial crisis continues to take its toll on Egyptians working in the United Arab Emirates. Analysts estimate that up to 100,000 people have lost their jobs in the Gulf since the world economy took a nosedive in September 2008. Experts warn that the job losses could have a severe impact on the local economy; almost 250,000 Egyptians live in the Emirates, with global remittances accounting for about 6% of Egypt's GDP.

GPS restrictions lifted
In a surprise move, the government announces that it will end a long-standing ban on devices that use the Global Positioning System (GPS). Officials, who had long feared the technology could be used in attacks on government buildings, do not explain the reason for the change.

Opponents of the ban have argued that web-based software like Google Earth and the popularity of black market GPS-enabled phones had rendered the ban largely useless.

May
Pig cull begins
The government launches a controversial slaughter of Egypt's entire pig population, which numbers some 500,000 animals. Officials claim the move is designed to halt the spread of swine flu, but critics say the cull is meant to undermine the country's pig farmers, the vast majority of whom are Coptic. Under pressure, the government later admits there is no connection between pigs and the spread of the disease.

Talaat Moustafa gallows-bound?
Capping one of the most sensational cases in modern Egyptian history, Hisham Talaat Moustafa is sentenced to hang for ordering the murder of Lebanese pop star Suzanne Tamim. The property magnate and former National Democratic Party official vowed to appeal the verdict, which sent shock waves across the Middle East. Shares of Talaat Moustafa Group fall 15% percent after the decision.

Al-Boushi gets lengthy term
A Cairo court sentences Nabil Al-Boushi to 15 years in jail for running an international Ponzi scheme that bilked investors out of LE 350 million. His business partner, Fekry Bard El-Din, is handed a three-year sentence. Al-Boushi, who is serving time in a Dubai jail after being convicted in the emirate, was sentenced in absentia.

June
Government revives nuclear program
Engineering firm WorleyParsons lands an LE 900 million contract to be the main consultant on the long-awaited North Coast nuclear power plant. The deal comes after talks between the government and American multinational Bechtel, which had been in line for the contract, break down. The plant would be the first in the Middle East outside of Israel and is scheduled to open within a decade.

Obama offers olive branch
US President Barack Obama makes a landmark speech in Cairo widely seen as an attempt to improve America's frayed relationship with the Muslim world. Speaking at Cairo University, Obama doesn't shy away from his country's controversial role in the Middle East. "While America in the past focused on oil and gas when it [came] to this part of the world, we now seek a broader engagement," he says.

Glass half empty
Egyptians are among the most pessimistic people on the planet, a new survey reveals. The poll, conducted by American research firm Gallup, found optimism levels here among the lowest around; Egypt ranked at the bottom of a list of 142 countries, along with inflation-wracked Zimbabwe and flood-ravaged Haiti. "We have a traditional polarization towards sadness," says the head of psychology at the American University in Cairo.

July
OT reigns supreme
Orascom Telecom places first on the bt100, this magazine's annual ranking of the top 100 listed firms in the country. It's followed by industrial heavyweights El-Ezz Steel Rebars, Orascom Construction, MIDOR and El-Ezz National Iron and Steel.

Ukrainian corn found laced with weed
The Ministry of Agriculture confiscates 13,000 tons of Ukrainian corn after inspectors find it laced with cannabis and seeds of grass toxic to local soil. Following the seizure, the government moves to halt the import of all corn from the eastern European country.

Shoppers wrought with pessimism
A new study reveals that consumer confidence plummeted during the first half of the year, with close to 70% of Egyptians saying they are worried about the state of the economy.

Actis gobbles up stake in CIB
Private equity firm Actis shells out US $244 million (LE 1.3 billion) for a 9% stake in the Commercial International Bank, making it the lender's largest shareholder.

Web access gets cheaper
Internet companies slash their monthly fees in what some analysts label a government-backed move to make the internet accessible to more Egyptians. Heavyweights, like LinkDotNet and state-owned TE Data, cut prices up to 30% and double some connection speeds at no extra charge. The move was widely seen as an attempt to foster a more technologically-inclined society; despite having the cheapest internet rates in the region, just 17% of the country is online.

Massive Helwan development gets go-ahead
Plans are unveiled for an LE 25 billion residential and commercial development in Helwan that would include houses, office buildings and a shopping mall. The project, which would cover 5,000 feddans, is expected to be finished in 2013.

"No way" Egypt will bend on Nile
Egypt once again rejects international calls to re-examine the decades-old treaties that give it access to the lion's share of water from the Nile River. Following a meeting of Nile Basin countries in Alexandria, deputy foreign minister Mona Omar says there is "no way" Egypt will allow a reduction of its quota, which amounts to about 87% of the river's flow.

August
Pork business looks terminal
Egypt's pork industry is all but dead following the government's controversial decision to slaughter the country's entire population of pigs. Only a handful of restaurants, delis and butchers still offer pork in the wake of the cull, which claimed the lives of an estimated 500,000 animals.

Motorcycle dealer fined for selling lemon
In what consumer advocates call a major victory, a Cairo court fines a motorcycle dealer LE 50,000 for refusing to exchange a bike rife with mechanical problems. The fine was one of stiffest meted out under three-year-old consumer protection laws.

Holiday network launched
The country's largest advertising firm, Tarek Nour Communications , launchesa television channel that will air only during the month of Ramadan. Al-Qahira Wal Nas (Cairo Centric) is designed to capitalize on the huge evening audiences common during the Holy Month. One spot can reach up to 55 million people, or two-thirds of the country, the company says.

Trickle down evaporates
A study reveals that almost 90% of Egyptians saw no benefits from five years of strong economic growth. The General Authority for Investment says most of the money that flowed into the country went into non-labor intensive sectors like finance, leaving almost 70 million people out in the cold.

September
Borrowing a security blanket
Egypt borrows $1.2 billion (LE 6.6 billion) from the International Monetary Fund to shore up its foreign currency reserves. The loan is part of a $283 billion (LE 1.5 trillion) global liquidity package proposed in April by members of the G-20. While Egypt's banks had minimal exposure to the toxic assets behind the financial crisis, analysts welcome the loan, calling it a "security blanket."

Fugitive property magnate returns
After more than two decades on the run, one-time real estate mogul Hoda Abdel-Moneim returns to Egypt to face charges of embezzling tens of millions of pounds. Nicknamed the Iron Lady, the 62-year-old fled to Greece in 1987 following the collapse of her business empire.

TE: We're not monopolistic
Telecom Egypt dismisses concerns surrounding its potential acquisition of internet service provider LinkDotNet, a deal critics say will give it a virtual monopoly over web access in the country. TE, which owns TE Data, would have a 90% market share if it gained control of LinkDotNet.

State rebukes mobile operators
Tarek Kamel, Minister of Communications and Information Technology, chastises mobile phone operators for slashing rates during Ramadan. He warns the companies that he has the power to overturn the price reductions, which dropped rates to as low as LE 0.05 during the day. The threat is widely seen as attempt to prevent mobile operators from undercutting landline prices offered by state-run Telecom Egypt.

October
Trading scandal hits EGX
The Egyptian Stock Exchange suspends 26 firms following allegations of price fixing and insider trading. Officials say several small cap companies saw "unjustified" increases in their share prices in the months leading up to the scandal.

Lights, camera, action
Good News Company, one of the country's largest film studios announces plans for Egypt's first privately-run movie lot. Good News, which was behind hits like Haleem and The Yacoubian Building, says construction on the sprawling 14-studio complex in Sixth of October City will begin in January.

Privatization drive continues
The government resumes its controversial push to privatize state-owned companies. Investment Minister Mahmoud Mohieldin says roughly three dozen firms will go to the block in the near future, but he offers few details. The news follows media reports that the government has suspended a plan that would allow small investors to buy shares in state-run companies.

Suspected internet scammers nabbed
Forty-seven Egyptians are arrested in connection with an international email scam that fleeced scores of Americans out of more than $2 million (LE 10.9 million). It is a crime, experts say, that highlights the growing number and increasing sophistication of local cyber criminals.

November
Web learns Arabic
Egypt becomes one of the first countries in the world to apply for an all Arabic domain name, .misr. The bid follows the easing of rules that only allowed web addresses to be written in the Latin script used in English and French, among other languages.

Investment banks join forces
Beltone and Pioneers announce plans to merge, creating what would be one of the biggest investment banks in the Middle East. The all-share deal will see the firms keep their management structures and report to a holding company.

Yahoo gobbles up Maktoob
Internet giant Yahoo closes a rumored $75 million deal to buy one of the Middle East most trafficked websites, Maktoob.com . Yahoo co-founder Jerry Yang tells a Cairo audience that online advertising is just scratching the surface of its potential here.

OT Algeria lands in hot water
Algerian authorities slap Orascom Telecom 's Algeria arm with an LE 3.3 billion bill for back taxes. Algiers accuses the company of under-reporting earnings between 2005 and 2007. The company denies the allegations, calling them "unfounded."

Big-time IPOs announced
News reports say mobile provider Etisalat Misr and private equity firm Citadel Capital, which manages 8.3 billion in assets, are preparing share offerings. Neither company, though, offers much detail on their plans.

December
Mobinil saga takes another turn
In a surprising move, regulators approve an offer from France Telecom to buy up to 100% of Mobinil . The decision marked a major reversal by the National Telecom Regulatory Authority, which had previously rejected three similar bids by FT. Orascom Telecom , which is embroiled in a battle with FT for control of Mobinil , says it will challenge the ruling. The bid price was LE 245 per share.

Egypt weathers Dubai storm
Local markets are rocked by news that one of Dubai's state-run property companies cannot repay billions in debt. The rebound is quick though; within in three days the exchanges had returned to their pre-crisis highs.

Tourism stages comeback
The country's tourism industry, hammered by the global economic downturn, is on the rebound, government figures show. While revenues to November were down 3.1% year-on-year, that is a huge improvement over 1Q2009 numbers, which were off 13.2%.

The books are solid
Egypt's investment minister says foreign investment would likely hit the state's $10 billion (LE 54.5 billion) target for fiscal year 2009/10 and that the budget deficit could be well below the officially forecast 7% of gross domestic product. Mahmoud Mohieldin also tells reporters that GDP growth will reach an officially forecast 5%-5.5% and inflation will stay within the 6%-8% range.

By Andrew Raven

© Business Today Egypt 2010