Egyptian firms eye Libya but politics may be hurdle
Egyptians are eager to drum up business in Libya after the overthrow of Moammer Qaddafi, but countries which were swifter to embrace the rebels who seized power may have a head start in the race for deals. Egypt gave a lifeline to Qaddafi's opponents based in eastern Libya by keeping the border open to flows of food and medical aid. But Cairo waited until the rebels fought their way to Qaddafi's doorstep before officially recognizing them.
Leaders of Libya's National Transitional Council (NTC) have publicly said they will favor companies from countries which did most to support the rebellion. That could put Western countries such as France, Britain and the United States, which swiftly backed the rebels, ahead in the queue for business. Arab states such as Qatar, which provided early diplomatic, material and military support, may also get better treatment.
"I consider the opinion of the Egyptian government respectable and responsible," the NTC's delegate to the Arab League in Cairo, Abdel Moneim El Houni, told Reuters. "I of course would have wished something else as a Libyan." Hani Soufrakis, a Libyan businessman living in Cairo, noted that Egyptian authorities allowed Libya's opposition to operate in Egypt during the uprising, which was a big help to the rebels. But Qaddafi-linked businesses in Egypt, such as hotels and real estate projects, were also permitted to continue working with impunity, he added. "They allowed Qaddafi to keep doing essentially what he wanted and his investments here in Egypt were largely untouched," Soufrakis said. "It's still Qaddafi's men running them."
Analysts believe the new Egyptian government was distracted from Libya by other policy challenges after the overthrow of president Hosni Mubarak earlier in the year, or it may have wanted to avoid committing itself to the uncertain result of a conflict on its doorstep. Either way, said Ezzedin Choukri-Fishere, international relations professor at the American University in Cairo: "Egypt kind of pretended nothing was happening in Libya."
Firms lining up
Trying to make up for lost time in building relations with Libya's new government, Egypt said it was sending a high-level foreign ministry delegation to Libya days after Qaddafi fled into hiding in late August. Egyptian firms are already lining up. Among them is El Sewedy Electric, which has exported its cables to Libya since 1999 and agreed in 2003 to set up a $64 million factory in Tripoli, although the project has yet to be developed.
Chief Executive Ahmed El-Sewedy told Reuters that Egypt's government was supporting Egyptian firms, but he said they would find competition in Libya tough and could face a challenge getting into a market that many have not ventured into for years, if at all. "We thought Egyptian companies would have a lot of work with Libya. But I'm not sure. All the world is now focusing on Libya and most Egyptian companies have not been there in the last 10 years...For the new companies to go ahead it will be possible, but not easy."
He added that orders for his company from Libya, which had been put on hold during the civil war, would now go ahead. "For our manufacturing project there, we have to discuss with the new government to see what they want to do." Other Egyptian companies cited by analysts as possible contenders for business are Orascom Telecom and Orascom Construction. Both have a reputation for drumming up business in the toughest of emerging markets.
Libya took slightly over 4 percent of Egypt's exports of about $25 billion last year, before the civil war, Egyptian media quoted trade ministry officials in Cairo as saying. Officials on both sides say there is scope for trade to rise. Although the war has ravaged Libya's economy, reconstruction demand — for building materials, vehicles, machinery and other products — is expected to be substantial. It could emerge quickly; foreign lenders such as the International Monetary Fund are offering to provide short-term financing to Libya, and in the medium term it can expect to begin using an estimated $150 billion of sovereign assets that were once controlled by Qaddafi and his inner circle, and are now frozen abroad.
Before the war, petrodollars lured hundreds of thousands of migrant workers from Egypt, a country of 80 million people, to find jobs in Libya on farms and in factories and to work as carpenters, plumbers and mechanics. Many fled during the fighting, but others stayed and more are likely to return as Libya rebuilds.
Houni said Egypt had since March provided Libya with electricity to replace capacity destroyed by Qaddafi's forces in the conflict, and that further cooperation in the area of power was being discussed.
Egypt, which has government institutions that survived the uprising to overthrow Mubarak in February, might also offer expertise to a fellow Arab state seeking to rebuild institutions that are in disarray after Qaddafi's ouster. Libyan officials say Egypt could provide teachers, doctors and consultants to help revamp education, the police force, utilities and infrastructure.
Egyptian investment bank Beltone Financial, which set up an office in Libya before Qaddafi was overthrown, said the change of government would create business opportunities for it, because foreign investors would become more interested in the Libyan economy. "We expect from our own perspective that there will be plenty of mergers and acquisitions by European and Gulf entities in the Libyan market," said Khalid Helal, managing director at Beltone Securities International.
Foreigners were already interested before the rebellion in telecommunications, steel, cement and other assets in Libya. Beltone had been helping to manage planned initial public offers of shares by Libyan mobile phone firms Madar and Libyana, Helal said. But he added that Egyptian firms could not afford to wait to pursue such opportunities: "We in Egypt should start yesterday, because we will be in severe competition with Asians and Gulf states."
- Worth a gasp? Abu Dhabi’s inflation already up 2.1% in 2014's first two months
- What's the attraction? IIF says UAE’s economic stability wooing foreign capital investment
- Public-private partnerships may be key to take Gulf's economic growth to next level
- Blame it on the women: Why KSA businesses are saying govt feminization program costing them millions
- Kazakhstan calling: Astana looking to target $5 billion in investments from UAE