Ahmed El Fangary, DHL Express Egypt Country Manager, revealed that the Egyptian investment climate has improved significantly in the past few years.
Sitting down to an interview with Daily News Egypt, he noted that following the novel coronavirus (COVID-19) pandemic, Egypt remains on track to becoming one of the largest economies in the world within a decade
What is your vision for investment opportunities in the Egyptian market during the current period?
The Egyptian investment climate has improved significantly in the past few years. The government has embarked on an ambitious programme and made great strides already on economic reforms. The political leadership and the government have undertaken several structural reforms starting with the Egyptian Pound flotation in November 2016, which enabled it to access a $12bn loan from the International Monetary Fund (IMF).
Since then, Egypt has also made regulatory reforms, by: passing a new investment law in 2017; followed by a new companies’ law and a bankruptcy law in 2018; and finally a new customs law in 2020. These laws aim to improve Egypt’s investment and business climate and help the economy realise its full potential.
Prior to the coronavirus pandemic, Egypt was one of the fastest growing emerging markets in the world. Investors are now more confident in the Egyptian economy and continue to invest in the country.
Foreign Direct Investment (FDI) inflows grew 11% between 2018 and 2019, from $8.1bn to $9bn, according to data from the Central Bank of Egypt (CBE). The United Nations Commission on Trade and Development (UNCTAD) has ranked Egypt as the top FDI destination in Africa between 2015 and 2019.
But even after the pandemic hit the world, Egypt remains on track towards becoming one of the largest economies in the world within a decade. Even though the pandemic imposed new challenges, opportunities have arisen.
For DHL, we are now more focused on the growing e-commerce business in Egypt. We believe e-commerce can truly push the Egyptian economy forward and integrate the informal sector into the formal business sector.
The digitisation strategy pursued by the government is also a huge investment opportunity. The country is getting a complete makeover and stepping into the modern world, which would require new investments across all sectors.
Finally, the unique geographical position of the country can allow it to become a vital part in the pharmaceutical industry supply chain.
What is the volume of investments that DHL has allocated for the Egyptian market?
We are working to develop our supply chains and improve our operations in support of Egypt’s Vision 2030 aimed at transforming the country into a major destination for foreign direct investment (FDI). We have been keen to develop our business in the Egyptian market due to the prosperity of the investment climate and business performance in Egypt.
DHL has been actively raising its investment in Egypt to keep pace with the country’s growing economies and even-developing needs. Even in the toughest of times, we remained confident in the country’s potential. In 2013, for example, DHL continued its expansion plan in Egypt and invested EGP 350m, as part of our total EGP 500m investment, in the new cargo terminal at Cairo International Airport.
DHL Express has been working on a plan to establish six new branches since 2020, which would join our existing 33 branches. This would contribute to providing more job opportunities for Egyptians and support the company’s activities in Egypt. Over the past five years, we have invested over EGP 1bn. We also plan to invest EGP 130m in 2021.
What are the main features of the company’s plans for Egypt during the coming period?
DHL is active on two fronts, developing the community and improving our operations.
In terms of developing the community, we have been sponsoring several events in Egypt recently. Since launching in Egypt in 1980, DHL Express has played a vital role in promoting Egyptian products abroad, by putting our intensive experience as a logistics and transportation service provider.
As part of our mission, we have been, proudly, ensuring seamless exports operations for products bearing the ‘Made in Egypt’ brand, and boosting Egypt’s position as a logistics hub in Africa and the Middle East. Last year, we were partners in the 12th edition of Cairo Fashion Nights to support Egyptian designers, entrepreneurs, and artists showcase their work to the world.
As for improving our own operations, we will continue focusing on the growing e-commerce business and support further growth of the Small and Medium Enterprises (SMEs). DHL Express is strengthening its air and road transportation capabilities, where we have added 99 new cars to our vehicle fleet.
We also plan to buy two or three new aircrafts in the first quarter and at least one or two more before the end of the year, which is in line with our commitment to support economic growth and facilitate commerce.
We also combine both aspects by investing in Egypt’s most valuable resources: its people. DHL already depends on a local workforce of direct employees and workers. We plan to double the number of indirect employees and provide them with vocational training to support their career advancement. This stems for DHL’s core belief in the importance of investing in its human capital to achieve growth and success.
How has the development of road infrastructure affected the activity of shipping companies?
We see the huge potential that Egypt enjoys, and our courier vehicles’ drivers roaming all Egyptian streets have been eyewitnesses to the unprecedented developments underway in Egypt.
The roads are now better than ever before connecting every part of Egypt to the other easily, which has helped DHL smooth operations, and provide efficient courier services with more speed and at less costs, whilst reducing the carbon footprint.
That said, infrastructure projects go beyond roads. Public and private free trade zones have been built nationwide. There are currently nine public free trade zones in operation in Alexandria, Damietta, Ismailia, Qeft, the Media Production City, Nasr City, Port Said, Shebin El Kom, and Suez.
This grants companies and factories there more freedom on transactions, especially export-oriented factories, while being exempted from sales taxes or taxes and fees on capital assets and intermediate goods.
Most importantly, the Suez Canal Economic Zone has become a major industrial and logistics services hub since it was announced in 2014 thanks to the comprehensive ports upgrades and renovations.
Has the growth of e-commerce affected the growth of the shipping sector business?
The state’s attention to the process of digital transformation and e-commerce has hugely proven both ambitious and successful in helping companies and individuals alike.
As a result of the government’s efforts, DHL Express has realised an all-time high record in e-commerce trade globally thanks to Egypt being an integral part of the global supply chain.
We also have already overseen around 35% e-commerce volume growth during 2020 in our network. There has also been further acceleration during the peak season, during November and December 2020, which means that we should be expecting higher shipment quantities above 50% this year.
What is the company’s vision for developing shipping and delivery services in Egypt?
We are focusing on helping our clients grow both locally and on the international front. By opening new channels for local SMEs, we help them utilise e-commerce and digital transformation to ship their products faster to local clients.
And, at the same time, they can use our services and solutions to raise their exports abroad and go global. Our ultimate goal is to introduce the world to products made in Egypt and help the national economy by raising the volume of exports.
How can Egypt be transformed into a global e-commerce centre?
Egypt already has what it takes to become an e-commerce hub regionally and internationally. But it has only recently paid attention to this goal. The infrastructure revolution in the roads and railways/ river transport can all play an integral part of Egypt being a global e-commerce centre and improve our logistics performance index.
Now, more than ever, Egypt is truly unlocking the potential of its prime geographical location. Egypt intends to capitalize on its location bridging the Middle East, Africa, and Europe to become a regional trade and investment gateway and energy hub.
Moreover, Egypt is also a party to over 100 bilateral investment treaties. It is a member of the World Trade Organization (WTO), the African Continental Free Trade Agreement (AfCFTA), and the Greater Arab Free Trade Area (GAFTA).
In addition to bilateral investment agreement, Egypt is also a signatory to a wide variety of trade agreements, such as the Common Market for Eastern and Southern Africa (COMESA). Other such trade agreements include the Agadir Agreement with Jordan, Morocco, and Tunisia, and a free trade agreement with Turkey and the Mercosur bloc of Latin American nations.
Are there plans for the company to cooperate with Egypt Post to provide integrated services?
We have a long history of working with government entities, including Egypt Post. We are working with Egypt Post to provide new and innovative services to stimulate rapid shipping traffic to and from the African continent, by making best use of Egypt’s position as a major hub for development.
DHL is working with Egypt Post to develop the e-commerce operations and use the post offices around Egypt as parcels collection distribution hubs.
Are there plans to offer more innovative shipping and delivery services or with new tools like drones inside cities?
Innovative shipping goes way beyond using drones in delivering parcels. While this would certainly help, there are ongoing developments across all aspects of the delivery business supply chain.
DHL Innovation Center has been on the forefront of the first wave of automation using intelligent robotics in the logistics industry. Using the rapid technological advancements and combining that with greater affordability, robotics solutions are entering the logistics workforce, supporting zero-defect processes and boosting productivity.
Robots, both mobile or stationary, are adopting more roles in the supply chain, assisting workers with warehousing, transportation, and even last-mile delivery activities. Logistics robots are diversifying and achieving proficiency that matches and exceeds human capabilities.
Upgraded with enhanced hardware and developments in AI, new devices have human-like dexterity, improved vision, and quick, agile movement. With better robots and more use cases, partnerships are being forged throughout the logistics industry. Pairing traditional automation providers with a new wave of startups, they aim to achieve next-level value with intelligent automation. In addition, engineers at DHL’s Innovation centre in Germany, designed a smart drone to handle some deliveries.
The EHang Falcon smart drone, with eight propellers on four arms, is designed with multiple redundant systems for full backup, and smart and secure flight control modules. Its high-performance features include vertical take-off and landing, high accuracy GPS and visual identification, smart flight path planning, fully automated flight and real-time network connection and scheduling.
As a fully automated and intelligent solution, the drones, which can carry up to 5kg of cargo per flight, take off and land atop intelligent cabinets that were specifically developed for the fully autonomous loading and offloading of the shipment. The intelligent cabinets seamlessly connect with automated processes including sorting, scanning and storage of express mail, and will feature high-tech functions such as facial recognition and ID scanning.
We have plans to bring all of these technological advancements to Egypt, including the smart drones, as we have been in talks with the Egyptian government to obtain the required licence to operate the drones locally.