May 13 (Bloomberg) -- As angry protesters rampaged through Cairo in early 2011 and fought with police, Hesham Samy was dispatched with fellow naval commandos to guard upscale residential compounds. In what he saw as “awful” security, Samy spotted an opportunity.
The officer, who had spent more than a year training with U.S. Navy SEALs, quit last year to set up Firewall Security Consultants. Clients include Paris-based cement maker Lafarge SA, which equips vehicles with Firewall’s cameras, he said, adding he’s also in talks with U.S. companies. His khaki-suited guards, all former paratroopers and commandos, also secure hotels such as the Fairmont Nile City.
Private security is one of the few growth markets in a country where revolution was followed by the deepest economic slump for two decades, and a crime wave. Leaders haven’t been spared: cars carrying the prime minister and central bank chief were attacked.
“Before the revolution, we had to convince companies of the need for security, now we get a lot of requests,” said Ahmed Emam, Egypt president for Swedish security firm Securitas AB, who lists Europe’s biggest builder Vinci SA, part of a consortium extending Cairo’s metro lines, among clients. “We’re negotiating for 20 new contracts and getting a lot of individual requests for bodyguard services.”
The metro was targeted last year by armed robbers seeking copper cables. It’s vulnerable because stations are near protest hot-spots such as Tahrir Square. Plain-clothes guards are sometimes sent to gather intelligence ahead of planned protests, according to a security adviser to Vinci, who asked not to be identified as the operations are politically sensitive.
Securitas, the world’s second-biggest guarding services company, targets a 33 percent increase in Egypt revenue this year to as much as 40 million pounds, Emam said. G4S Plc, the world’s largest security company, cited a “double-digit” jump in revenue from Egypt last year.
An explosion of violence at the Nile City Towers in August helped Firewall win a contract, and illustrated the strains on security in Egypt. The skyscrapers back onto a slum, whose residents demanded payment for what they say was an informal agreement to provide protection during the uprising. During a dispute over the claims, 32-year-old Amr al-Bunni was shot dead by a tourism police officer. After the incident, Firewall guards were installed at 6,000 Egyptian pounds ($865) a month each, triple the average family income.
Protests and clashes involving political groups, religious believers and soccer fans, as well as the spread of crime, have tested Egypt’s ability to enforce the law since the uprising that ousted President Hosni Mubarak.
Critics blame his successor, Mohamed Mursi, elected in June, for failing to restore stability. Police officers are dissatisfied too. Hundreds went on strike this year in part to protest what they said was a lack of adequate equipment.
Fear is helping security companies make “billions of pounds a month,” said Adel Soliman, executive manager of the Cairo-based International Center for Future and Strategic Studies. “There is no building, small or large, that doesn’t have private security, even supermarkets. And whoever didn’t have it before, has it now.”
Nile City Investments is setting up its own protection squad and plans to complement that with a detachment of guards provided by the Interior Ministry, for which the company will pay, according to a December stock exchange filing. They will help protect the Nile City Towers, two office blocks whose clients include the World Bank’s International Finance Corp.
“It took four months to get the approval from the Interior Ministry’s department of guards for important buildings, because there’s a shortage of police with all the security incidents,” said Tarek El Halawany, security manager at the company.
Under the proposed accord, guards will be located outside the towers and the adjacent Fairmont, along with the complex’s own security personnel and Firewall guards, El Halawany said. Mohamed El Nady, head of the media department at the ministry in Cairo, said by phone that he wasn’t aware of such an agreement.
Not everybody can afford protection, even when they see the need.
Ragab Al-Attar, a wholesaler of spices, oversees 5,000 traders in Cairo and says they risk death, kidnapping and theft. When one of them goes from Aswan to Cairo, or any part of the country, “there’s a chance he won’t make it,” El-Attar said.
Traders have been kidnapped from their homes and held for ransom. Still, El-Attar said he can’t afford to hire more guards because his business is suffering.
“If I used to sell at 100 pounds before the uprising, now I’m selling at 40,” he said.
Post-revolutionary expectations are proving hard to match as the government struggles to lure investors, and meet demands for jobs. The economy will grow 1.4 percent this year, the slowest pace since 1992, analysts at HSBC Holdings Plc estimate. The benchmark EGX 30 stock index has slumped about 20 percent since the start of the revolt in January 2011.
“Demand for private security is huge, but people don’t want to pay,” said Sameh Seif Elyazal, chairman of G4S in Egypt. “Everyone’s worried about their assets; at the same time, the country is going through a lot of financial difficulties.”
The Suez Canal city of Port Said has been among the worst-hit areas because of clashes after a court sentenced soccer fans to death for violence last year. The Suez Canal Container Terminal joint venture suspended a night shift in February because of roadblocks.
“Shipping is an international business and has opportunities to go to other countries,” the company said in a statement at the time.
Investment Minister Yehia Hamed has asked the Interior Ministry to secure industrial and investment areas throughout the country, including in Port Said, the state-run Middle East News Agency reported today.
Hiring private security entails its own risks. Karim Ennarah, a researcher at the Egyptian Initiative for Personal Rights in Cairo, estimates there are more than 200 unregistered private security companies.
“When public security is so unaccountable, when there’s weak oversight from parliament on the police, you can imagine what it’s like with private security,” he said.
Private Security Law
To regulate the industry, the government has drafted a new private security law that requires all firms to obtain licenses from the Interior Ministry, and have capital of at least 300,000 pounds. Guards would have to pass a course, according to a copy of the law obtained by Bloomberg News.
Firewall only hires people with military experience because the quality of guards elsewhere is “poor,” Samy said. “There are no standards or rules.”
The Fairmont hired 30 Firewall guards after August’s violence. It has spent more than 3 million pounds on equipment so the building can be isolated within 30 seconds, said security director Tarek Raslan.
Increased spending comes even as the number of visitors to Egypt’s pyramids and temples drops.
Arrivals averaged 961,000 a month in 2012, down 22 percent from 2010, according to official data. In a study of tourism opportunities by the World Economic Forum, Egypt ranked last in terms of security and safety, and 138th out of 140 for the business costs associated with crime, violence and terrorism.
The Fairmont has a 30 percent occupancy rate, down from 85 percent before the revolt, Raslan said. A few hundred meters along the Nile riverfront, the Semiramis Intercontinental Hotel has been running losses since the uprising and occupancy is 13 percent, said Raymond Khalife, an adviser to the chairman. Protesters have repeatedly clashed with police in the area. On Jan. 28, the hotel itself was the target when dozens smashed their way into the lobby.
The Semiramis, which also hired guards from Firewall and boosted its own security, has no plans to close, Khalife said.
“Our hotels have been through worse, like the Gulf war, and we still didn’t close,” he said. “We’re hoping for better days.”
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