Qalaa Holdings (formerly Citadel Capital) is considering contributing to the Suez Canal project through logistics projects, according to Kareem Sadek, Managing Director of the transport sector of Qalaa Holdings.
During an interview with Daily News Egypt on the sidelines of the Economic Summit in Sharm El-Sheikh Saturday, Sadek discussed the company’s views on the Summit, as well as its future plans.
What are your views on the Economic Summit?
The Economic Summit is Egypt’s last chance for an economic launch by utilising the huge Arab and international support, which doesn’t occur often. But I have concerns regarding the administrative body’s capability of execution, as reforming it is essential, or else Egypt will not take one step forward. The Economic Summit succeeded in assembling international leaders of business and finance, but what’s next is execution, and it’s harder.
The Summit announced the general plan for the development of the Suez Canal Zone. Will Qalaa’s transport sector be present?
We are currently examining the general plan for the Suez Canal economic zone, to contribute with logistic projects that include cutting edge solutions for transportation, shipping and storage, and our investment allocations will be resolved by real opportunities. The transport sector of Qalaa is a main one and will not be exited, and Rift Valley, the investment arm of Qalaa in the transport sector and owned by it since 2010 will turn to profitability for the first time this year 2015, so its revenues witnessed a 30% increase during the first half of the current fiscal year, after years of restructuring and development.
What are the markets currently monitored by Qalaa. What about new investments?
Sub-Saharan African markets are under the group’s microscope for exploration of investment opportunities in them, to supply them with transport and logistics solutions that contribute to the development of the business and industrial environment there, and our current investments in the African transport sector amount to about $380m.
What about the Egyptian market?
The group has been present in the Egyptian market since 2007, in the sector of river transport, and it has a working river transport fleet. However, Egypt is suffering from an institutionalised partiality in favour of land transport, which caused great deficiencies in the market and made it lose a significant part of its attractiveness, due to energy subsidy and lack of oversight. Our expansion in the Egyptian market, by offering high efficiency transport solutions, is waiting for more governmental reforms regarding liberalisation of energy prices. What the government did lately in this field is very good, but we are expecting a lot from it.
The government should pave the way in front of investments in the transport sector, providing the country with developed river and railways transport services. It should also strengthen its oversight regarding land transport that witnesses huge violations by carrying extra loads, which causes road collapses, and decrease land transport cost against river transport and rail ways. But liberalisation of energy prices will increase transport cost, and the citizen will pay for it. This will definitely happen in the first phase; therefore, the government must move quickly and implement an urgent plan that includes finishing executing about six underground routes, in addition to developing the public transport system and linking it to all governorates. Moreover, it should execute a metro route in Alexandria. All of this will reduce the pressure of liberalising energy prices, in case it is accompanied by restructuring the system of railways.
Why does the African market control the majority of Qalaa Holdings investments, instead of Egypt?
The legislative and organisational framework in the transportation sector in Africa is a friend for the private sector and it facilitates its work. The law permits the private sector to control the railways sector, a possibility that did not exist in Egypt. Establishing railways requires unbelievable coasts, in addition to this, transportation in Egypt suffers a structural bias in favour of road transportation, so river and railway transportations do not enjoy the same benefits as land transportation does. After it had stopped, the river transportation activities have started once more in South Sudan two months ago, we expect high numbers, especially because this zone includes a massive number of refugees, for whom we are providing solutions.