Beware, the pharaohs are waking

When we speak of emerging countries, the most common reflex is to think of China, India, Brazil or even countries in the Persian Gulf of South-East Asia. There are nevertheless countries that offer interesting and promising development prospects in other regions of the world. This is the case of Egypt, where the GDP growth ratehas exceeded 4 % since 2004, and 7 % since 2006! “Egypt offers astounding economic performances which are still little known, in a country which is – contrary to general belief – remarkably stable,” explains Guy Poupet, managing director of the NSGB (National Société Générale Bank), a subsidiary of Société Générale in the country. Holding significant gas reserves – 10 % of gas consumed in France originates from Egypt –, the country of the pharaohs has also witnessed impressive developments in other domains, starting with tourism, with over 10 million visitors welcomed per year. Other priority sectors: construction, the supermarket sector as well as transport and port activities, with the maritime trade of the Suez Canal where traffic has fully benefited from the multiplication of global exchanges, notably originating from and towards Asia.Foreign investment is therefore flourishing in the country: proof is found inthe projects to create eleven electric power stations in the Cairo area between now and 2012, as well as those for ten cement works in the next three years. It is the French company Lafarge, recent buyer of the Egyptian Orascom, that is behind a number of these cement works projects. Aside from a considerable domestic market – 75 million inhabitants in the country –, Egypt benefits from a geographical position which naturally makes it a regionaldevelopment platform for the world’s major groups, geared towards the Gulf countries as well as those in the Maghreb. Another example: glass industrialists – including Saint-Gobain –, have announced important projects to set up in the country, so as to fully benefit from an abundant and inexpensive gas flow. In the financial domain, investments have also flourished in recent years, in particular in the Cairo Stock Exchange, taking advantage of the stability of the Egyptian pound and high interest rates considered very interesting. “Current development also benefits from the input of a large diaspora spread out in numerous near or distant countries,” explains Guy Poupet.Previously a common subsidiary of the Société Générale and the National Bank of Egypt, presently 77 % in the hands of the Société Générale, the NSGB has been present in Egypt since 1978: it is currently defined as the second private bank in the country and the first for foreign capital. Since 2004, the year when banking services were liberalised in the country, the NSGB has become a universal bank that offers an enlarged offer for individual clients as well as companies of all sizes. With 140,000 new individual clients in 2007 and deposits rising by over 16 % in 2007 and 22 % in 2006, the bank now has a total of 520,000 clients who benefit from its services in over 120 local agencies in the country. “This national coverage has led us to develop our offer for small and medium-sized companies who now make up 25,000 of our clients, namely a growth of 15 to 20 % per year,” explains Guy Poupet. In a country where the rate of banking is still weak – only 15 % of households have access to a bank account –, development potential is considered very strong. It is this prospect, in the context of a privatisation policy in the sector since 2004, that has led NSGB to put itself forward as buyer, in 2005, of MIBank, the number three Egyptian private bank, bringing the market share of the NSGB up to almost 6 %, compared with 2.7 % in 2004.In a general context of modernisation in the country’s banking activities, withthe establishment, for example, of a market of inter-banking exchanges and the launch of around fifteen investment funds in the space of two years, the NSGB is counting on the development of its activities to remain a major player, therefore contributing to the global strategy of the Société Générale, for which emerging countries constitute an essential axis of development. In order to supplement its range and to appear, more than ever, as a universal bank, the NSGB has therefore launched life insurance and car fleet management activities. Similarly, consumer credit offers have been boosted and an investment fund launched under the name of Themar has raised one billion euros in share purchases.The development of products, the development of the number of branches throughout the country, and the development of clientele – 100,000 new clients are expected every year –: these are the axes of development of a bank where the overall balance (deposits and transactions) rose to 5 billion euros in 2007 and where market capitalisation – 1 billion euros – is ranked twelfth in the country. Key figuresSurface area: 1 million km2 / Population: 75.4 million inhabitants / GDP (2006): 108 billion USD (around 72 billion euros) / GDP per inhabitant: 1,800 USD (around 1 200 euros) Rapidly growing foreign investments
According to the OECD, direct foreign investments (DFIs) reached unprecedented rates in 2006–2007, making Egypt the prime beneficiary of DFIs in Africa and the second amongst Arab countries following Saudi Arabia. The efforts of publicpowers to improve the business environment have moreover been recognised:in 2007–2008, the World Bank classified Egypt amongst the most rapidly reforming countries. According to the indicators of business practice, it has jumped from 167th out of 175 countries in 2006 to 126th out of 178 in 2007. In July 2007, it became the 40th country to adhere to the OECD declaration on international investment and multinational businesses, a sign of recent progress in policiesaiming to improve the investment climate there.(Source: OECD)