African Continent: Promising Market Needs to Overcome Obstacles

Eng. Medhat Khalil, Chairman and CEO of  Raya Holding, has pinpointed the key obstacles to making investments in the African continent as lack of security, political instability and the inflexibility of some certain economic regulations.

In an interview with ‘Amwal Al Ghad’, Khalil explained that from an investment point of view, the African continent is a major, promising market, but it needs to overcome these three key obstacles if Africa is going to make the most of its investment potential. In fact, certain African markets, notably Zambia and Guinea, have great investment opportunities, Khalil noted.

 The CEO of Raya Holding has tackled other obstacles in the way of making investments in certain markets in Africa, notably Algeria and Nigeria. In Algeria, Khalil said that Raya’s branch has posted losses of around EGP 50 million, due to the tough financial regulations and the intransigency of certain entities in the country. As for Nigeria, Khalil noted that the country is one of the most attractive markets, but it is suffering from a growing state of insecurity.

 Moreover, he added that the markets of Central and East Africa are currently the most lively, notably Zambia and Guinea. Despite the small size of both countries, they enjoy many opportunities, particularly in the fields of agricultural expansion and power stations.

Khalil pointed out that Raya currently has branches in a number of African markets such Ethiopia, Nigeria and Libya.

In Ethiopia, Raya has signed a contract with the United Nations for a project to offer networking and infrastructure services in the country. For Nigeria, Raya has its subsidiary Raya Holding Nigeria, working in the field of trade.

In Libya, Khalil said that Raya has recently signed a contract with one of its Libyan partners to establish a branch in the country for technical support operations. The new branch in Libya will start with modest investments ranging between EGP 3 million and EGP 4 million, as Raya is waiting for the current situation in the Libyan market to get better, he stressed.

 Furthermore, Khalil stated that Raya is still assessing the Ethiopian market, in preparation for finding further investment opportunities in the country, bearing in mind the obstacles and developing methods to overcome them.

 As for Raya’s investment strategy, Khalil said the company targets increasing its volume of business to exceed EGP 2.5 billion within the coming year, by implementing its expansion plans and creating a strong presence in Saudi and GCC markets in the field of information technology.

Raya’s expansion plans in the GCC markets come in the wake of the IT sector’s weak performance in the Egyptian market, in which the projects are based on cooperation with the public sector, he added.

Khalil also said that Raya is currently present in some of the GCC markets such as Qatar and Abu Dhabi, entering into partnerships with some locally based firms.

The CEO of Raya said the company’s strategy also includes focusing on the banking sector and developing the call center sector. It hopes to increase the number of its call centers to around 1,000 within the coming period, while taking into account the sector’s obstacles – the volatile security situation and the theft of communication cables.

 Meanwhile, Khalil has unveiled new contracts with local and international entities. Raya is still studying some of these contracts; while it plans to carry out others within the coming year. He said there are new contracts with local and international entities in the fields of telecommunications, social networking (international entities only), electronics and technical support.

 Khalil further revealed that the company is currently mulling starting Phase II of its plastic recycling plant project, worth around EGP 100 million. Raya has successively completed Phase I with investments of EGP 120 million and a production capacity of 13 thousand tons per year, he added. Raya is now exporting around 50% of the total products of Phase I.

 The CEO of Raya explained that the company, in order to finance its diversification, it has relied on self-financing and the banking sector, with a 50% contribution from each of them. He added that Raya’s total accrued loans hit around EGP 430 million – EGP 180 million from the National Bank of Egypt (NBE) and EGP 250 million from foreign banks.

Khalil explained that Raya is planning to negotiate, within the coming period, an agreement for another loan, whose value has yet to be determined. He said the loan will from one or a consortium of the banks, alongside the financial leasing firms which the company deals with: Crédit Agricole, HSBC, Incolease and Ahli Financial Leasing.

 He also asserted that smart buildings are going to be one of the most important sectors for growth. Raya’s total investments in the smart buildings sector exceed EGP 400 million, including Raya Plaza, its own first smart business complex for companies, as well as recently established buildings in Sheikh Zayed and New Cairo.