“Despite crises, Africa remains a land of investment opportunities” – Jeune Afrique

Established in the 1930s, the Egyptian company Elsewedy Electric has now completely changed in size and business from a local electrical dealer to a manufacturer of wires, cables and other electrical products. It also provides a wide range of services and solutions in the field of engineering, construction, digital services and infrastructure.

>>Read in Africa report: Elsewedy Electric CEO bullish on African markets despite risks

With a presence on the continent, it operates facilities in Ghana, Nigeria, Tanzania, Algeria, Ethiopia, Zambia, Angola, Burkina Faso, Côte d’Ivoire and Madagascar, among others. From his office in Cairo, its CEO, Ahmed El Sevedi, discusses the aspirations of African societies in a context marked by the war in Ukraine and climate change.

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The Africa Report: How do you intend to contain the impact of the war in Ukraine on your business activities?

Ahmed El Syudi: This war is affecting our prices, especially in relation to logistics and the supply chain. But we have been accustomed to dealing with force majeure circumstances for two or three decades, we are able to extinguish such shocks. In the local Egyptian market, where we make 50% of our turnover, we pass on the difference in price to our customers. In addition, we operate in 50 countries and export to 110 destinations, so I think the devaluation of the Egyptian pound is working in our favor. A weaker currency means that our products are offered to importers at better prices, which allows us to remain competitive in the global market and improve our export margins.

How do you manage risk in African markets, which are often threatened by political and macroeconomic turmoil?

We have been operating in Africa for over 30 years. Are there any risks? Yes, of course, but before starting work, we insure almost everything, including projects and delivery. We are accustomed to working this way and over the past two years there have been no problems. We have many projects in Burkina Faso, where the president has changed [par un coup d’État militaire en janvier]. However, as far as our activities there are concerned, nothing has changed.

You work all over Africa. Which of the markets of the continent, in your opinion, 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 mean 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 major regional center from which we can supply eight other countries located around it.

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How has your activity in Tanzania progressed since the opening of the industrial complex last year?

The first phase of the Elsewedy industrial complex has already been put into operation after a $35 million investment. At the end of this phase, we will be at $50 million. When the project is completed, it will create 1,000 jobs. In a few months, a plant for the production of transformers with an annual production capacity of 1,500 units will start operating. The complex will also produce 15,000 tons of copper wire and 100,000 electricity meters per year. The purpose of the conductor and insulator project is to make Tanzania a manufacturing and export hub.

As COP27 takes place for the first time in Africa, in Sharm El Sheikh in Egypt next November, the development of renewable energy on the continent will accelerate. Did you anticipate this request?

Sustainable development will be the most important in the next 100 years. COP27 represents an excellent opportunity for Elsewedy Electric. We have installed charging stations for buses and electric vehicles in Sharm el-Sheikh (which will be the first green city in Egypt). We have also begun building bus charging stations with the General Nile Company for Construction and Roads. [entreprise publique]. The pilot project will be launched on September 30 and will be able to accommodate 140 buses. Renewable energy projects are currently being explored in 10 countries for a total of $1.5 billion. Three of these projects are due to start in 2022 but there is nothing concrete at the moment, we don’t have a budget yet, but I would welcome any opportunity presented at COP27.

Elsewedy Electric reported a net income of $186.7 million in fiscal 2021, up 16.7% from last year. Profit for the first quarter of 2022 also increased 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 it will affect us much. This may affect profits, but otherwise I am very confident in our results this year and next.

The Egyptian government aims to make business easier. Have these efforts stimulated your local activities?

The Egyptian President and Government are working to attract foreign direct investment in all sectors and increase exports. They provide us with tax incentives and make it easier to obtain the necessary permits. All this will be of great importance over the next two years.

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Why are you talking specifically about the next two years?

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

Let’s talk about your city project Sokhna 360. How will it differ from similar projects? How is the work going?

Located in the Suez Canal Economic Zone (SCZone), this project is expected to bring together manufacturing facilities, education centers, housing and recreational facilities. SCZone has already approved the project’s master plan but is yet to approve an environmental impact study. The location of “Sokhna 360” next to the Suez Canal and the port of Sokhna gives us the opportunity to ship products to the Persian Gulf within a day. In general, the cost of production in Egypt gives us an advantage, in addition to the geographical position of the country, which allows us to reach Europe in three days. Our shipments to the Gulf and Arab League countries are duty-free thanks to the Greater Arab Free Trade Area (GAFTA), and the same is true for Africa thanks to the Common Market for Eastern and Southern Africa (Comesa) agreement.

The construction of the first stage of Sokhna 360 has already begun, and our flagship plant, Pivot irrigation factoryscheduled to open by the end of 2022. The total area of ​​Phase 1 is 3.7 million square meters. gates, basic layout and landscaping, access roads and engineering infrastructure of the plant.

Does Elsewedy Electric have plans to develop a portfolio of digital solutions?

The digitization of Egypt has taken place very rapidly over the past four years, exceeding what has been achieved in this respect over the past 50 years. Digital transformation is 100% the future and we want to be a part of it by making our operations across industries smarter than ever 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 plans for a dual listing or initial public offering of any of Elsewedy Electric’s subsidiaries?

We are currently exploring other markets for the possibility of dual listing Elsewedy Electric, but we do not currently intend to list any of our subsidiaries on EGX.