“Despite the crisis, Africa remains a country of investment opportunities” – Jeune Afrique

Founded in the 1930s, the Egyptian company Elsewedy Electric has now completely changed its size and business: from a local dealer of electrical equipment, it has become a manufacturer of wires, cables and other electrical products. It also provides a wide range of services and solutions in the fields of engineering, construction, digital services and infrastructure.

>> Read in The Africa Report – CEO of Elsewedy Electric is focused on African markets, despite the risks

Present throughout the continent, it operates in Ghana, Nigeria, Tanzania, Algeria, Ethiopia, Zambia, Angola, Burkina Faso, Côte d’Ivoire and Madagascar and others. In his Cairo office, its Director-General, Ahmed El Sevedi, discusses the aspirations of African societies in the context of the war in Ukraine and climate change.

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The Africa Report: How are you going to contain the effects of the war in Ukraine on your business?

Ahmed El Sevedi: This war is affecting our prices, especially logistics and the supply chain. But we have been accustomed to dealing with force majeure for two or three decades, we know how to absorb such a shock. In the local Egyptian market, where we account for 50% of our turnover, we transfer the cost differential to our customers. In addition, we operate in 50 countries and export to 110 destinations, so I think the devaluation of the Egyptian pound works in our favor. Weaker currency means that our products are offered to importers at the best prices, which allows us to remain competitive worldwide and improve our export margins.

How do you manage the risks in African markets, which are often threatened by political and macroeconomic disruptions?

We have been working in Africa for over 30 years. Are there any risks? Yes, of course, but we insure almost everything before we start working, including projects and delivery. We are used to working like this and there have been no problems for the last two years. We have many projects in Burkina Faso, where the president has changed [par un coup d’État militaire en janvier]. But nothing has changed about our activities there.

You work all over Africa. Which of the continent’s markets do you think has the greatest potential?

Currently, our operations in Africa account for 7 to 8% of our total portfolio, with the exception of Egypt – with Egypt we reach 60%. There are so many African countries with great industrial potential, I think of Côte d’Ivoire, Senegal, Ghana, Kenya, Nigeria and Angola. But one of the best places for the future of the industry is Tanzania. It is a large regional center from which we can supply eight other countries around it.

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How has your business in Tanzania developed since the opening of your industrial complex last year?

The first phase of the Elsewedy industrial complex is already operational after a $ 35 million investment. At the end of this phase, we will be at the level of $ 50 million. When the project is completed, it will create 1,000 jobs. In a few months, a transformer plant with a capacity of 1,500 units per year will start operating. The complex will also produce 15,000 tons of copper wire and 100,000 electricity meters per year. With the production of conductors and insulators, the project aims to make Tanzania a center of production and export.

Since COP27 will take place for the first time in Africa, in Sharm el-Sheikh, Egypt in November next year, the development of renewable energy on the continent will accelerate. Did you anticipate this request?

Sustainable development will be paramount in the next 100 years. COP27 is a great opportunity for Elsewedy Electric. We have installed charging stations for buses and electric cars in Sharm el-Sheikh (to become the first green city in Egypt). We also started building bus charging stations together with the General Nile Company for Construction and Roads [entreprise publique]. The pilot project will start on September 30 and will be able to accommodate 140 buses. Renewable energy projects are currently being studied in 10 countries for a total of $ 1.5 billion. Three of these projects are due to start in 2022, but nothing concrete at the moment, we do not have a budget yet, but I would welcome any opportunity presented at COP27.

Elsewedy Electric reported net income of $ 186.7 million in fiscal 2021, up 16.7% from a year earlier. Profits for the first quarter of 2022 also grew by 9%. Will the war in Ukraine affect your profitability?

We have two years of projects ahead of us, which makes me very optimistic. I don’t think we will be affected. This may affect profits, but I am also very confident in our results this year and next.

The Egyptian government seeks to promote business. Did these efforts stimulate your local activities?

The President and Government of Egypt are working to attract foreign direct investment in all industries and increase exports. They provide us with tax benefits and help us obtain the necessary permits. All this will be of great importance over the next two years.

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Why are you talking about the next two years?

Because costs in Europe have risen sharply, and the availability of labor there is declining every day. Egyptian investors can provide labor during the status quo in Europe, which is expected to remain for the next two years.

Let’s talk about your city project “Sokhna 360”. How will it differ from similar projects? What is the progress of work?

It is expected that this project, located in the economic zone of the Suez Canal (SCZone), will unite production units, educational centers, housing and recreation facilities. SCZone has already approved the master plan for the project, but has yet to approve the environmental impact study. The location of Sokhna 360 near the Suez Canal and the port of Sokhna will allow us to ship products to the Persian Gulf during the day. In general, the cost of production in Egypt gives us an advantage, in addition to the geographical location of the country, which allows you to get to Europe in three days. Thanks to the Greater Arab Free Trade Area (GAFTA), our supplies to the Persian Gulf and the League of Arab States are duty-free, as is Africa through the Common Market Agreement of East and South Africa (Comesa).

Construction of the 1st stage of “Sokhna 360” is already underway, and our flagship plant, Pivot irrigation plantis scheduled to open by the end of 2022. The total area of ​​the first stage is 3.7 million square meters and is planned to be completed by the end of 2025: it includes the administrative and commercial center of the industrial zone, the main gate, basic leveling and landscaping, access roads and municipal infrastructure.

Is Elsewedy Electric planning to develop a portfolio of digital solutions?

The digitization of Egypt has been very rapid over the last four years, exceeding what has been achieved in this regard over the last 50 years. The transition to digital technology is 100% the future, and we want to be a part of it, making our operations in different areas smarter than before. We are already working with many Egyptian companies in this direction.

Elsewedy Electric is already listed on the Egyptian Stock Exchange (EGX). Are there any plans for double listing or initial public offering of any of Elsewedy Electric’s subsidiaries?

We are currently researching other markets for the possibility of double listing Elsewedy Electric, but we are not currently planning to host any of our subsidiaries on EGX.