Linda, Fazana, Yasmeen, Tony
Cairo, Egypt - Intercontinental Pyramids Park Resort

Today, our class visited three locations: the American Chamber of Commerce in Egypt (AmCham), American University in Cairo, and the American Embassy.  At AmCham, we met with Hanaa El Hilaly, Mohamed El Kalla, and Hisham Fahmy.

AmCham was started in 1981-1982 as the 44th location in the world.  It is run by a staff of 70 and a Board of Governor consisting of 13 governors serving 2-year term increments for a maximum of 4 years.  Its mission is to promote business between Egypt and the US.  It focuses on awareness, advocacy, and services.  It hosts 9-10 flagship events per year with 400-500 in attendance. There are over 1500 members. AmCham is a 4 million dollar organization with the following funding services: 49% membership dues and 51% services fees. Egypt’s strategic location at the junction of Europe, Asia, and Africa give it a natural competitive advantage.

Awareness is handled through events, publications, and online resources while advocacy is managed through 22 sectorial committees, conferences and dignitary visits. Project bids (Tenders Alert Service), B2B portal of global businesses, recruitment center, education/training, and web development offerings are provided under the services umbrella.  More than 2,800 were trained last year.

Executive Director of AmCham, Hisham Famhy, shared with us that non-Egyptians wishing to invest or start a business in Egypt must work with the General Authority for Investments - the organization overseeing for foreign investments.  However, the Authority deals mostly with corporations rather than individual entrepreneurs.  There are no residency requirements but new investments must create jobs. Thus, Mr. Hisham recommends pursuing a partnership with existing Egyptian businesses to minimize potential issues while recognizing that startups and LLC enterprises receive certain tax benefits not available to the rest of the business community. 

AmCham's logo includes a scarab which is symbolic of regeneration and life. It is seen in all ancient Egyptian drawings and artifacts found and is a very popular tourist souvenir. Our group with Mr. Hisham Fahmy.

Mr. Fahmy’s perceptions of entrepreneurship is that it is very, very difficult for small to medium enterprises however there is little competition when the enterprise grows in size.  He explained the old laws regarding bankruptcy and how business failure was handled. Today, the Egyptian government is exploring reform bankruptcy laws that will encourage entrepreneurship. 

Ms. El Hilaly is the Director General of the Social Fund for Development. The Social Fund is responsible for the development and growth of small and micro-enterprises while serving as a safety net for these businesses. A government decree in 1991 established the Social Fund. With an average of 700,000 unemployed individuals on a daily basis, the Social Fund has 2 main objectives: job creation and poverty aid.  The Social Fund is a quasi-government organization under the UNDP (UN Development Program).  It is neither public nor private.  The Managing Director reports to the Prime Minister yet the Social Fund is not included in the government’s budget, which provides it with the flexibility of the private sector.  The Social Fund was created as a phased organization to solve some of the unemployment issues but its success has led to a sustainable organization.  Its success has made it a role model to emerging Social Funds in other countries such as Yemen, Lebanon, Syria, Saudi Arabia, Kuwait, and Kenya. The Social Fund receives funding from international donors, WorldBank, Arab Funds, and the Egyptian government.  The government and the Social Fund each fund 10% to help start the small and micro-enterprise (SME) businesses. The remaining 10% is funded by a donor organization.  Also, 10% of government land is available for free to entrepreneurs as mandated by law.

Recognizing that Egyptians are not pursuing entrepreneurship due to the fear of risks, the Social Fund has launched aggressive marketing campaigns, used mobile services in the rural areas to market to individuals, advertised in sports club where the youth are, and currently helping to update the educational curriculum to include entrepreneurship. While entrepreneurship has recently been introduced into the university curriculum, the goal is to integrate it into the primary school education.

The main obstacles faced by SMEs are marketing, training, and access to financial capital.  To address these issues, the Social Fund has provided them with access to local and international exhibitions and websites.  Also, the SMEs receive best practices and non-financial services such as business incubators (which also provide mentoring programs) and free feasibility studies.   Finally, One Stop Shops were established to include all authorities responsible for licenses and assistance in one location in the major cities.

To help facilitate exports, industrial hubs were established in Egypt to import goods from China to move the goods to other countries in the region.  Finally, the Social Fund is playing a role in developing the Board of Directors to develop franchise programs and mobilize new funding for this area.  Currently, franchises in Egypt are food-focused with expansion into retail clothing, electronics, and textiles/fashion.

The Social Fund has focused on women micro-enterprises in the rural areas.  Its portfolio of start-ups consists of 62% of women-owned businesses.  It has had less than 1% of women-owned micro-enterprises default on loans and 3-5% default rate on small businesses.  The Social Fund is piloting a program for direct lending to shorten the lending approval process to 1-2 weeks to assist entrepreneurs with securing additional capital.

Mohamed El Kalla is also a co-chair of the education committee.  He discussed the competitive angle between Egypt and Dubai.  In Egypt, legal empowerment, education system, and government all impact the level of entrepreneurship when compared to Dubai.  The Egyptian education system has been directing students to work in government or corporations rather than entrepreneurship.  Further, the government cannot sustain the growing population so it has turned to the private sector to help with hiring.  There has been great difficulty in matching jobs with skilled labor due to a highly unskilled labor force.  Changes to the education system and introduction of training programs are intended to address the labor force’s skill set.  In contrast, Dubai has invested in infrastructure and incentive programs to offer attractive operating costs to investors and businesses.  Unfortunately, no details were provided on what Dubai was doing specifically. 

Overall, the meeting at AmCham was very beneficial in helping us to understand the nature of business in Egypt and more importantly the challenges faced by entrepreneurs and what programs were available to assist them.

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Today was the day we were all waiting for – going to the pyramids!  We started by visiting Memphis, the ancient capital of Egypt during the Old Kingdom (about 3000 BC). Here we saw a statute of Ramses II and an alabaster sphinx.  The statue was carved out of limestone.  We learned that he lived to be about 92 years old and had nearly 200 children.  The average life span during this time was 40 years.

Next, we headed to Saqqara. Saqqara is the largest royal graveyard in Egypt. The first and oldest pyramid structure, a step pyramid, was built here by architect Imhotep. This step pyramid is 196 ft tall and 91 ft deep. It contains the burial chamber of King Djoser.  The pyramid is surrounded by other structures mimicking the king’s palace.

Then, we headed to the Pyramids of Giza.  We saw the Great Pyramid of Cheops, the Pyramid of Chephren, the Pyramid of Mykerinus, and the Sphinx along with smaller structures.  We had been catching views of the pyramids (one of the Seven Wonders of the World) from our tour bus but today we got to experience the pyramids up close. It is an unbelievable site and to imagine how the pyramids were built without our modern-day equipment makes the pyramids truly remarkable.  We learned that contrary to popular belief, the pyramids were not built by slaves but instead by paid workers.  The pyramids served as burial grounds for the pharaohs of the Old Kingdom.  They were built to preserve the bodies of the pharaohs and to hold their treasures for the afterlife.

Before leaving the pyramids, we had the opportunity to ride camels through the area.  This turned out to be quite fun and memorable as we were at the mercy of the camels and their handlers.  Throughout our day, we experience various levels of entrepreneurship.  The entrepreneurs (street vendors) were the least aggressive toward the tourists.  We were able to enjoy taking pictures and viewing the monuments.  At Saqqara, we quickly learned how aggressive and tricky they could become.  For example, you could get on a camel for 5 Egyptian Pounds (about $1) but it might cost you a lot more, say 100 Egyptian Pounds ($20), to be let off.  Children as young as 10 years old were selling postcards at the Saqqara entrance.  The most aggressive were at the Giza pyramids and the Sphinx.  Some of the entrepreneurs were as young as 5 while others were much older.

Linda on camel at the Pyramids

In class, we had learned about necessity vs. opportunity entrepreneurship.  Necessity entrepreneurship means that a person is forced to become an entrepreneur to survive. The main question that was raised in our minds is if they are operating under necessity, because they must sell to tourists to make the money they need for food and survival, or the other assumption would be that they are simply acting on the opportunity they see in front of them in the form of rich tourists who are willing to drop lots of money on goods that the Egyptian people can obtain with almost zero capital cost.  All of the street vendors/entrepreneurs were absolutely amazing and relentless when it came to making a single sale. They are more cunning and “cheeky” with their customers than any salesperson in the States, even though most can only speak a little bit of English. They use tactics like saying “I give you a gift because you look Egyptian” and then as soon as you take it, they play on your guilt to get you to pay over some cash. Another time, we were approached by a very young little girl who came onto our bus to sell postcards. Initially, this works very well until the tourist becomes savvy to this technique or fed up with dealing with the vendors. Honestly, it does become quite annoying after a few hundred people approach you for seemingly endless different types of goods and services. From camel rides to simply taking your picture, everyone will ask for money for what seems like everything and anything. This is why it would make more sense to assume that they are more or less acting as opportunity entrepreneurs. Even though they might not be starting up a multi million dollar business, a man who sees that tourists love camel rides, then goes out and buys three camels and takes them to the pyramids every day to charge people 25 Egyptian Pounds (about $5) for a twenty minute ride is starting a business. He may even employ other men to lead some of his camels. But then again, the way that most of the vendors come across would make it seem as if they are almost begging rather than selling. So it might also be safe to assume that they are acting on necessity. It is really a puzzling situation. Depending on what factors you omit or consider, the conclusion could vary in both directions. Therefore it might just be the case that there are both types of people in both situations. Some people might not need the money as desperately as others but they are still selling because of the opportunity they see. And some might need the money in order to survive.

In the evening, we returned to the site of the Sphinx to watch a laser show. It lasted about an hour and told the story of the gods and pharaohs. We returned to the hotel all tired from a very long day in the sun.

Linda at IBM

Our day started with a trip to IBM Egypt which was opened in 1954 and currently has about 500 employees. The building is located in a very nice corporate complex with other fortune 500 companies. When we arrived we had to go through a security guard entrance where we were instructed that no pictures were allowed. Upon entering the building we went through very standard security procedures when entering large corporate offices in todays high security world. Each student went through metal detectors and received badges to identify each member of our party. Once inside, we were escorted to a conference room where we listened to three very interesting and insightful presentations, they were:

• Amr Talaat - IBM Egypt Territory Manager, who discussed the IT market in Egypt and what IBM has done in Egypt
• Mona Arishi - Quality Assurance Manager, who discussed what is quality assurance; working as a business woman in the Egyptian culture; and overall Egyptian culture
• Dina Galal - Governmental Programs Executive - discussed her role and responsibilities and the Egyptian Culture

The first presenter Amr shared with us that today the Egyptian economy is growing by 7 - 7.5% and one of the greatest challenges is inflation. Inflation is currently at a rate of 12.5% and this is attributed mostly to the declining economy in the U.S. However, tourism has increased 20% from six million to ten million visitors a year. Egypt's target is to have 20 million visitors by 2011. Amr also mentioned that the real estate market in Egypt has recently boomed and prices have doubled in the past few years.

Amr works with a variety of small and medium businesses in throughout Egypt and gave his perspective on doing business in the region. Fortunately IBM has a great foothold in Egypt having 25% of the market share. IBM Egypt generates over 100 million in revenue and is experiencing double digit growth. IBM Egypt is a great IBM success story and has received several accolades even being recognized randomly in an interview of Sam Palmisano, the CEO of IBM, as a success which is a great honor.

IBM Egypt is fortunately working with a Prime Minister who greatly cares about the advancement of technology in the region and is pushing forward great initiatives to build the IT infrastructure. The main challenge for IBM Egypt is finding skilled workers in the region to handle the technology interests and advancements. The latest major project completed by Amr and his team included a Voice Over IP project where they sold three major units and licensing allowing more capabilities and utilization of the internet. Several of the solution areas that Amr is focused on includes CRM or Customer Relationship Management, ERP or Enterprise Resource Planning, and Disaster Recovery. Some of the growth industry areas include Banking, Government, and Telecommunication Companies. IBM Egypt does utilize business partners to increase their reach and productivity in the region.

The second presenter, Mona Arishi, began with a discussion around how she evolved in her career at IBM leading her to take on the role of Quality Assurance Manager. She began her career at IBM over 20 years ago and will soon have her 25th anniversary at IBM. Mona started her career developing keyboards with Arabic writing. This proved to be a very difficult task because of the differences between the Arabic language and the Latin language, which the keyboard originally was structurally designed. The team had to figure what to put on the keyboard and how to structure it in accordance with new and existing keyboards. She worked with this team in 1986. Then she joined a team of coders and redevelopers. This eventually evolved into a quality assurance team around software development which grew from a team of 40 people including Mona as a member, to a team of 450 people. This is a highly skilled team that has a multitude of certifications as it is this team's responsibility to assure that products do not have any errors or glitches and are extremely functional before they go to market. For this reason the quality assurance team is not highly favored as their job is to find problems with another departments creation; however, the quality assurance team can potentially save the company millions of dollars by doing preventative maintenance and catching errors before consumers do, saving the company from having to correct the problems in the product that consumers have invested in.

Lastly, Mona and Dina Galal (during her presentation) discussed the privilege of working at IBM and its great record of creating a quality work/life balance. Mona has arranged to work certain days from home around some of the demands of her family schedule. Mona also discussed the cultural aspects of being a woman in Egypt working at such a prestigious company as IBM. Mainly women in business within Egypt are respected, supported and advanced in their positions just the same as the men. Mona was genuinely happy and thrilled with her successes and the nurturing, learning, supportive and dynamic environment that she experiences everyday.

The final presenter, Dina Galal, focuses on the public relations and communication through government programs. She mentioned some very interesting points with us about the Egyptian society. There have been several changes in Egypt's tax structure in recent years, which includes the following:

• Corporate tax cut was given and went from 42% to 20% which helps attract more corporations
• Personal tax was reduced from 32% to 20%
• Tariffs were reduced from 14% to 6%
• Lastly, when someone makes a purchase, consumers now have 15 days to return the product and get their money back and this was not always the case

She mentioned that in the past IBM described itself as a multinational company however as the world gets smaller IBM has established itself globally, IBM now refers to itself as a globally integrated company. She also discussed the movement of many Chinese and Indian companies into Egypt. Many of these companies arrive with infrastructures already in place and partnerships with other companies where they have had relationships prior to their arrival. This shift in structure is affecting the way Egyptians do business. The competition and price competitiveness is only increasing forcing Egyptian business owners to be more creative in their business strategies. Dina also described Egypt as the Northern Gateway into Africa for businesses and South Africa as the Southern Gateway into Africa. Overall Dina's presentation helped to paint a great picture of how the political relations and shifts in structure can greatly affect business decisions.

Linda: As an IBMer it was very inspiring and a highlight in my IBM career to visit IBM Egypt. The level of professionalism and quality of the IBMers we visited only confirmed my vision of IBM as an outstanding organization. I could identify with the calibre of their professionalism and genuine interest in conducting and providing quality to their clients. It was also very interesting to hear that the type of training at IBM Egypt was practically the same training I received in America. I truly felt that we spoke the universal IBM language and were educated to believe in the same principles and values of the company. It was an absolute pleasure to visit IBM Egypt and I know the visit clearly made an impression on some of my classmates, as several of them expressed an interest in working for IBM to me after the meeting. As an IBM professional this visit definitely heightened my respect and appreciation for the organization and increased my global perspective of the organization.

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We arrived in Egypt at 2 a.m. completely exhausted from the 30 hour trip across the world. We had some meetings during the day but we were fortunately able to get an immediate taste of the local culture with an Arabian night adventure.

It was the end of the day and it was finally time to wind down and get something to eat. The class all began buzzing about where they were going to go but no one had a true plan. After a little conversation with the hotel staff, we discovered some possibilities and decided we would venture out.

We decided to take a taxi down to the a local restaurant called Pyramids and you guessed it!!! The restaurant was right near the Pyramids. On the way there, our cab driver stopped off at a small grocery store in a neighborhood where the locals were hanging out. They had an exchange in Arabic and then a couple of the men headed down an alley as if to retrieve something. When the men returned, they came with some very interesting friends... camels. It was such a wonderful surprise, we were all very thrilled. We had our own picture party with the camels for about 30 minutes. Almost everyone took the opportunity to sit on the camel as it so gracefully lifted each person approximately 14 feet in the air. It was a wonderful and very random spectacle.

Once our surprising camel adventure ended, we were off to the restaurant. It was a very quaint and homely place and none of us knew what to expect as far as service or food. Much to our surprise again, we had a very enjoyable and delicious meal. There were a variety of wonderful dishes such as lamb kebabs and chicken kebabs, roasted eggplant, tahini, amd more. The food was fabulous! During the entire meal, everyone commented on how great the food was with every bite. One interesting tidbit was that a couple of people asked for beer or wine but since Egypt is a Muslim country, most people in Egypt do not drink alcohol as it is against their religion. The only place to find some alcohol is usually in places where Westerners are like the hotels.

After our absolutely delicious dinner, we were lead by our cab driver to take part in another very interesting experience. We went to a papyrus shop often called papyrus museums here in Egypt. While there, one of the sales agents demonstrated how papyrus was made. He started by cutting the plant into strips to prepare it to soak in order to remove all of its impurities. Next, the plant was placed into a lattice formation to dry. It was very interesting to watch this take place. We learned that it takes about 13 days to make a very light colored papyrus and 19 days to make a dark colored papyrus.

After going on our adventure, all of those who participated felt really good about the excursion we had just taken part in. As the organizer of our activity, I learned several things very early in our trip about how things are done here. First, the business owner must give a cut to any Egyptian that takes part in the organization of any arrangements where people are spending money with a business. So everyone is hustling to get business. We also learned that the Egyptians will ask you for 5 times what something is worth and you must negotiate. However, food and medicine prices are fixed. But when purchasing gifts or things, prices are very negotiatiable.

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As we left the hotel for the first time since our arrival in Cairo, we realized how close we are to the pyramids. In fact, it is about a 10 minute drive to get to the pyramids and sphinx. Check out our first glimpse at 2 of the most famous pyramids in Egypt. We are moving around town in a charter bus so the elevated view provides an even better scenery.

The Egyptian Museum was formerly known as the Cairo Museum. Today, it contains many artifacts of ancient Egyptian civilization. The first artifact the group saw was a copy of the Rosetta Stone. We learned that it was founded in 1799 during Napoleon's time in Egypt in the city of Rosetta (outside of Alexandria). The Rosetta Stone is unique in that it contains 3 scripts and started the age of Egyptology. The 3 scripts consist of hieroglyphics (sacred script), heuratic (cursive), and demotic (common). It was translated by Jean Francois-Champollion. The original stone is located in the British Museum. The stone is a thank you letter by a priest to Ptolemy V in 197BC. It is the oldest recorded written document in history.

We also got to see the tomb of King Narmer who was the 1st king of the 1st dynasty of Egypt. We learned that King Tut's tomb was found under Ramses 6 tomb. Today, Egypt requires that all artifacts found in Egypt must stay in Egypt. The museum contains over 120,000 artifacts on display. Photos were not allowed inside the museum so we could only take a few shots of the exterior.