Hany Tawfiq, chairman of the board of directors of Union Capital Company for Direct Investment, which manages the stumbling factories Fund, said the establishment of the fund will be completed within a few days. Specific criteria will be set that will allow non-performing factories to submit for a fund, following the formation of the board of directors.
He added in an interview with “MEO”, that “Long live Egypt” Fund is one of the leading contributors, in addition to Industrial Modernisation Centre (IMC) the owner of the idea of establishing the Fund. He noted that only the financial stumbling, not technical or marketing problems, will be a prerequisite for the restructure of the factories.
Have you accomplished the establishment of non-performing factories Fund?
The founders of the Fund submitted the articles of association to Sri-eddin office for Legal Consultants. The Fund’s establishment is in progress at present as the procedures take some time.
Who is behind the idea of establishing the fund and who is the most prominent contributor?
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Industry Modernisation Centre (IMC) is the owner of the idea. The most prominent shareholder is ‘Long live Egypt’ Fund; it will contribute with a big share to the fund.
What are the main conditions which are expected to be set by the board of directors for the restructure of factories?
The criteria will be set following the formation of the board of directors for the restructure of companies and factories by the IMC. Among these conditions, the factory’s activities shall not be based on importing raw materials or depending largely on US Dollar.
In addition, the factory must be aiming for the exportation and its production shall substitute the import, in order to alleviate the pressure on US Dollar. Furthermore, the factory’s activity must depend on many workers to take into consideration the social aspects. Besides, the stumbling shall be for financial aspects, not for technical or marketing ones.
How many factories are stumbling in the Egyptian market?
IMC has a list of numbers of stumbling factories. According to latest statistics, the number of stumbling factories reaches 800 factories.
How do you see the fear of some investors regarding the Fund to own shares in the factories?
The Fund will not lend companies or factories, because it is not a bank, and therefore the Fund has to join as a shareholder in the factories, so as to provide a loan in the form of aide. Moreover, the board of directors will be represented in the fund by establishing it in the company, to participate in the decisions making that will be agreed upon concerning restructure.
It is inconceivable that a stumbling company does not want anyone to share in its capital. Owing to that, it needs to restructure, which require that the fund shall have one of its members to be a representative in the Board of Directors.
Does the Fund intend to own a controlling stake in the stumbling factories?
The Fund does not have or seek to have a majority stake in the stumbling factories, but the fund has to own a stake in these companies to be around 10-25%, so the fund can pursue the plan of the company’s reform.
How can the Fund assess these factories?
The Fund will not buy the company’s assets, nor will be evaluated through the re-valuation of assets, but the evaluation will be done by future cash flows which are recognised in the world, so as not to oppress anyone. It is a fair and acceptable way. The fund aims to finance the stumbling companies one by one. It means that the fund will direct later the funds to other factories.
In conclusion, whosever has are not satisfied with the evaluation, will not accept restructure. We look for justice for both the factories and the founders of the fund, because the purpose is to recover the money again and pump into the stumbling companies. The Fund goal lies in entry and exit, and financing other stumbling companies.
What is your comment concerning all what the various sectors of the economy pass by?
What happens in most economic activities in Egypt now, whether (Real Estate – Cars – durable goods and so on), is a usual matter in periods of transition and economic restructure. But, it is even a stage experienced by all countries of the world at the time of the deterioration of their economies, which forced them to take steps for painful economic reform as well as sharp austerity procedures.
As a matter of fact, this year will continue to witness economic slowdown and deterioration of the standard of living, such as recession and inflation accompanied by an increase of the unemployment rate as due to stumbling of many factories.
It is certainly that these setbacks were not to reach this limit of sharpness, except through the succession of many presidents of the republic and heads of the government who work for maintaining their positions on the expense of working according to the proper economic principles. Thus, they have postponed taking financial, monetary and legislative decisions through due gradual and in acceptable manner, which led to imposing these decisions as a whole at end of 2016.
When will the situation and conditions improve in Egypt?
It could be 2018 following absorbing the shock and bitterness of this huge economic transformation, and supposing a progress in the rest of factors such as security, tourism as well as the commencement of the development project of the Suez Canal and explorations of gas and oil. In addition to strengthening political ties with the Gulf countries, eliminating corruption and activating the role of the National Council for the Payments, besides implementing comprehensive tax reform and attracting foreign investments and so on. It is according to similar international experiences, the image will be better as inflation, interest rates, and unemployment rates will be reduced. Hence, all economic activities will regain normal growth rates, but we will even behold the emergence of new industries and projects as a result of change in the competitive situation of the state; therefore, we must be assured and work for better years to come.
How do you perceive the importance of economic planning and its role in determining the priorities of national goals?
Ministry of planning shall have a large role in determining the priorities of the national objectives as well as the priorities of governmental expenditure. The new minister Hala Al Saed, shall combine theory and practice. She must use the scientific methods in planning; namely, the establishment of a matrix-style linear programming, where maximising the function of the national objectives at the level of all ministries and economic bodies under the available determinants of the natural, financial and human resources.
It can also rearrange the priorities of governmental spending, according to specific criteria, such as spending efficiency or internal economic return rates, not the financial one, for each programme, rather than launching them for inconsiderable political goals and purposes. Thus, the prior approval of the Ministry of planning would become a pre-requisite before the announcement of commencing any new project.
It is necessary to integrate the academic side of the ministry and utilise scientific minds and the neglected research papers in the research centres for the rectification of the ministry’s plan until the year 2030 as it will be very successful step taken by the new minister.
