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  • Friday ,09 November 2012

New voice for Egyptian business

by the Financial Times

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Friday ,09 November 2012

New voice for Egyptian business

His father was no businessman. During Osama Farid’s formative years, he was a political prisoner, jailed as one of the founders and leaders of Egypt’s Muslim Brotherhood. In the 1960s, Mohamed Farid was fired from his job as a scholar and shut out of his family’s life.

The younger Mr Farid avoided his father’s path. He buried his head in his studies as a civil engineer and dived into business ventures, which expanded rapidly over the decades. He launched a consultancy, then a real estate development business, then a textile business and a small airline.
But he kept up his strong ties to the Brotherhood, which had supported his family during his father’s imprisonment, and taught him the ethics that he feels helped him succeed in the business world.
Now, following Egypt’s 2011 revolution and a series of elections over the past year that elevated the Brotherhood to power, the 59-year-old finds himself more or less at the pinnacle of a new commercial elite poised to inject new blood into what critics decry as an ossified business culture.
“Most of the businessmen are remnants of the former regime from bef­ore the revolution,” says Mr Farid, co-founder and head of international relations of the Egyptian Business Development Association, a potential­ly contentious new trade group with strong ties to the Brotherhood and Mohamed Morsi, Egypt’s president.
“We need a new programme, new ideas, with our values and ethics. We bel­ieve in mixing ethics and values in economic,social and political ref­orms,” he continues, speaking in the lobby of a five-star hotel in central Cairo.
The rise of the EBDA, led by Hassan Mal­ak, a Brotherhood member and businesspeople such as Mr Farid, represents the emergence of a new business class closely identified with the Islamists now taking hold of Egypt’s institutions. It has injected novel possibilities and perils into Egypt’s post-revolutionary economic course.
Mr Farid says the EBDA can serve to draw newer, younger and smaller entrepreneurs into a revitalised business culture. But scholars and other businesspeople worry that it could become a new channel for the type of cronyism that characterised the relationship between Hosni Mubarak, the former president, and the old business elite.
“I don’t think we can judge one way or the other now if they [EBDA] will be an expression of pluralism in the business or neo-cronyists,” says Ibrahim Awad, a professor of political science at American University of Cairo. “Of course, pluralism is a good thing. There is a call for freedom of association to apply to workers as well as businessmen. However, what we don’t want to see is favouritism [by the government] for one organisation representing business.”
Trying to take Egyptian business global
President Mohamed Morsi has made drumming up international business a priority during his first few months in power, with high-profile trips to China, Turkey and Europe.
But many international businesses are sceptical. During a recent high-profile meeting between French industrialists and the newly formed Egyptian Business Development Association, which is close to Mr Morsi’s Muslim Brotherhood, foreign businesspeople hammered away about their doubts over the new government’s ability to turn round Egypt’s economy, clarify rules and trim costly subsidies that weaken the economy.
Still, Egypt under the Brotherhood has attracted some international interest in the country’s key sectors. Financial services companies from the Arabian peninsula have been gobbling up Egyptian banks; Malaysia’s Petronas has voiced interest in investing in Egypt’s electricity generation infrastructure; and Turkey’s national air carrier has added new flights to Egyptian resort destinations and vowed to double bilateral trade.
However, perhaps the biggest potential international partners for Egypt sit across the border in Libya. The country directly to the west is flush with oil money but suffers from dilapidated infrastructure and lacks both Egypt’s technical expertise and cheap labour.
Mr Morsi has yet to plan a trip to the country of 6m but Osama Farid says that Egypt plans to dispatch a delegation soon.
Mr Farid is well aware of the worries about EBDA, which has been modelled at least in part on a business association in Turkey close to the country’s moderate Islamist Justice and Development party. EBDA members have accompanied Mr Morsi on trips to China, Turkey and Europe, as have members of other trade groups, including the powerful Egyptian American Chamber of Commerce. But he denies the group gets special perks.
“You don’t need to come to us first to do business in Egypt,” he says. “We can’t even say we have the ear of the government. Some [members] may have close relationships with the government.
“But sometimes government officials have hundreds of proposals. They have taken some of our proposals.” He notes that there are about 1,000 business associations in Egypt, some of them bigger than the EBDA.
But Mr Farid claims his group represents a different face of Egyptian commerce, as they are hardy entrepreneurs who built businesses from scratch without favours or concessions from government. Meanwhile, they kept up strong ties to the community, giving generously to charity.
About 400 businesses belong to the EBDA, with 300 applications pending. Members are spread across Egypt and a third are small businesses. They include Christians as well as the Muslim majority. “It’s not just for the rich businessmen,” he says.
Mr Farid himself estimates his own net worth at about “a few million” Egyptian pounds.
In contrast, he says, perhaps two dozen people around Mr Mubarak and his son Gamal controlled more than two-thirds of the economy, with strang­leholds over industries such as cement, steel and aluminium.
“The spirit of the EBDA is different because it was established after the revolution,” he says. “Values have nothing to with the ideology or religion. The values have to do with how to benefit the country, to invest in human capital and resources.”
Bubbling with ideas about how the government can help improve the economy, raise revenues and create jobs, Mr Farid has himself shown not only a willingness to take risks but also impeccable timing.
After his studies at Cairo University, he worked as a consultant in construction and real estate. He began his own construction company in the late 1970s, just as Egypt’s housing industry was starting to boom. “There was a lot of opportunity for people who work hard,” he says. “I was working 16 hours a day for quite a long time.”
In the 1980s, he went into textile manufacturing, producing lingerie just as the consumer market became a pillar of the Egyptian economy. In the 1990s, he and a partner launched Orca Air, a small, regional airline that suspended operations in 2003.
Throughout his business career, he always stayed close to the Muslim Brotherhood, al­though he never be­came one of the formal members who give it a percentage of their income to the organisation.
More than anything, Mr Farid is filled with passion about building a new Egypt, and eager to talk about ideas to develop the Suez Canal region. He urges the launch of initiatives to jump-start housing construction and create jobs for the country’s youth. Though he denies that he or his association have any special relationship with those with power and influence, he talks with the conviction of someone who speaks for a clique of people whose ideas and experiences suddenly matter.
“In this new atmosphere, we’re going to grow bigger,” he says of the EBDA and the legion Muslim Brotherhood businesspeople now on the rise. “We have to introduce new potential entrepreneurs and people who have the quality and belief that they can contribute to the economy in a better way, to serve their own interests but at the same time serve the interest of the Egyptian people.”