Egypt Spending 20% Less on U.S. Goods Prompts Trade Trips

Intermittent blackouts strike Cairo several hours a day, with no warning for 11 million residents. That’s exactly where FirmGreen Inc. of Newport Beach, California, wants to invest.

“For a company like ours, it’s actually a good fit,” Dena Elbayoumy, general counsel for the company, which develops renewable-energy projects, said by telephone from Egypt’s capital. “We hope to improve stability in the country.”

FirmGreen is among nine businesses including Google Inc., Raytheon Co. and MEMC Electronic Materials Inc. that will participate tomorrow in the U.S. government’s second trade mission to Egypt since September. The delegation is heavy on providers of basic services such as energy and water. The U.S. is seeking to boost exports to the Arab nation after a 20 percent decline since shortly before the ouster of former leader Hosni Mubarak in February 2011.

“There’s an actual attempt by the U.S. government to encourage American businesses to invest in Egypt,” said Bessma Momani, a Middle East expert and a nonresident senior fellow for the Brookings Institution, a nonprofit research organization in Washington. “They’re really taking companies there on a ‘Team USA’ kind of approach,” to allay investment-climate concerns, she said by telephone.

Economic Turbulence

Political and economic turbulence have beset Egypt, the most-populous Arab nation with 87 million people, since Mubarak stepped down during the populist revolution known as the Arab Spring. Foreign reserves are more than 60 percent below their December 2010 levels and the value of Egypt’s currency has plummeted against the U.S. dollar.

The government of President Mohamed Mursi is seeking a $4.8 billion loan from the International Monetary Fund as fuel shortages and an aging power network hobble development.

“I’m optimistic, even with the political uncertainty right now, there will be a fair amount of need for infrastructure investment,” John Robak, chief operating officer of Greeley & Hansen LLC, a Chicago-based firm that consults on engineering for water and wastewater projects, said by telephone.

Robak and others participating in the April 13-15 trade mission will meet with senior Egyptian government officials, potential business partners and clients, Mary Trupo, a Commerce Department spokeswoman, said by e-mail. The trip is being led by Kenneth Hyatt, the agency’s acting deputy under secretary for international trade. He wasn’t available for comment.

Solar Power

“Egypt is about to experience a significant shortage of energy,” Christos Mimikopoulos, general manager for the Middle East and North Africa at MEMC’s SunEdison unit, which builds solar farms, said today in an interview. With plenty of sun and open desert space, Egypt is well suited for solar power, and his goal is to assess whether the country is stable enough to invest in renewable projects. MEMC is based in St. Peters, Missouri.

“That’s actually one of the reasons that I am attending the mission, to try to understand a little bit better what exactly the situation is and what that means to solar energy,” he said. “I think solar is a good fit in the long run for this market. I’m not convinced at the moment that there are utility scale projects that are ready for prime time.”

Trade Relationship

“This trade mission reiterates the United States’ commitment to deepening our long trade relationship with Egypt and to growing the already strong connections between our respective business communities,” Hyatt said in a statement released when the trade mission was announced April 8.

Last year, U.S. exports to Egypt were valued at $5.5 billion -- less than 0.5 percent of America’s 2012 exports of $1.5 trillion. Egypt, a longstanding ally, is a strategic partner for the U.S. in the Middle East, however. It controls the Suez Canal, a vital shipping route for oil and other goods.

Since the turmoil wrought by the Arab Spring, American exporters have faced challenges doing business in the country and Egyptian consumers aren’t buying as many U.S. luxury goods because of the economic malaise, Brookings’ Momani said.

“It’s a bureaucratic mess,” she said. Logistics have been complicated since the populist revolt because the rule of law is less firm, customs officials seek higher bribes and the purchasing power of the Egyptian pound has fallen significantly over the past two years, she said.

Opportunity Beckons

Companies that provide basic services -- such as sewage, water and electricity -- say the environment is ripe with opportunities.

“Their population is booming, their economy is starting to grow,” Steve Wilburn, FirmGreen’s chief executive officer, said by telephone. The company is in talks with a government-owned utility to feed power from solar and natural gas-fired sources to the electric grid, a $500 million project, he said.

Other participants on the trade mission are Mabey Inc. of Elkridge, Maryland; Rapiscan Systems of Torrance, California; Pioneer Solar of Irvine, California, and Vanguard Defense Industries LLC of Conroe, Texas.

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