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Posts Tagged ‘Egypt’
GIM Releases New Case Study on Affordable Housing Solutions in Egypt

About the author

Pascale Nader is an independent market research consultant, specialized in consumer knowledge management in emerging markets, across the Middle East and North Africa. She consults with a network of local and international organizations to influence their business strategy and processes. As Director of qualitative research (2006-2008), she led a regional business unit that excelled in translating consumer insight into viable and competitive strategies for product, communication and systems development. Since 2008, Pascale is also a freelance business writer in Egypt, contributing articles on trends such as SME development and microfinance. She holds a BA in Economics from the American University in Cairo.

About the case study

As a result of neglecting construction codes in informal areas, more than half of Egypt’s housing stock has been built without monitoring or assistance. Unplanned housing and public spaces have left a mark on the country’s architecture, infrastructure and environmental sustainability, creating a demand for urban planners that look at both environmental factors and affordability in building real estate for a growing mass-market. ADAPT (Appropriate Development, Architecture and Planning Technologies) is a local architecture consultancy firm that examines how to meet the opportunities of building, upgrading and renewing urban real estate in Egypt’s informal economy. The company uses innovative applications of planning technology and locally available construction material to turn inadequate low-income housing into good quality, environmentally-friendly, affordable homes. ADAPT has more than three decades of experience in this approach in rural, urban and desert locations throughout the Middle East and North Africa.

The main actors involved in the business models include government municipality, master builders, local community and specialized associations or networks, as well as Ashoka. In terms of economic results, ADAPT has upgraded areas encompassing over 10,000 affordable housing units, and out of a total of 21 projects from 1983 to 2004, it has reported a gross volume result of US$20 million. Furthermore, ADAPT has trained and aided 100,000 people, and contributed to community and women empowerment. By using locally available resources instead of traditional pollutant construction materials like cement, ADAPT is also contributing to environmental sustainability.

To download the ADAPT case study from the GIM database, please click here.

 
Q&A with Samir Youssef, author of case study: Kheir Zaman in Egypt

Samir Youssef is currently Professor of International Business and Organization at the American University in Cairo. He teaches in the fields of international business, organization, and business ethics. His publications cover the areas of IT outsourcing, cross-cultural relationships, business strategies, business-government relationships, and business social responsibility. His preferred research approach is using cases from the Egyptian environment.

Kheir Zaman is supermarket chain of the Mansour Group.

To download the Kheir Zaman case study from the GIM database, pleaseclick here.

What is Kheir Zaman’s basic value proposition and what makes its financial model sustainable?

The company sells at a lower price through using unbranded items, efficient supply chain method and mass volume. In addition, the company capitalizes on common resources for its high-end and low-end products. Sustainability is achieved through maintaining a decent profit margin, searching for more suppliers and spreading its stores to other locations in the country where population is dense and real estate is relatively cheap. In upper Egypt, due to high poverty, the company is considering using mobile sales vehicles owned and operated by independent vendors in order to reach remote aeas.

How does Kheir Zaman’s retail trade impact lower income communities in Egypt?

Lower income people used to rely on cooperatives, informal open markets and street venders to get their needs. With the creation of this lower-income retail chain these people can buy their needs from modern hygienic facilities, enjoy different choices and reduce their buying trips, an important element as many women have entered the labor market and they need to use their time more efficiently.

What have been the biggest challenges hindering Kheir Zaman’s growth?

Rising cost of food items, logistical problems due to crowded streets which slow down delivery of items and spread of informal production methods which could be once regulated be a good source of low cost products. The company handled these problems by having its own vehicle fleet which is shared by its high-end supermarkets, the Metro Chain. In addition, the company through requiring suppliers to abide by its standards has encouraged many of them to enter the formal economy. Rising prices could keep out some of the low income people but as the economy is becoming more competitive in the field of internal trade and new informal suppliers enter the formal market Kheir Zaman, with its hygienic standards, economies of scale and modern supply chain management can keep its prices at a reasonable level.

 
Q&A with Samir Youssef, author of case study: Orascom in Egypt

Samir Youssef is currently Professor of International Business and Organization at the American University in Cairo. He teaches in the fields of international business, organization, and business ethics. His publications cover the areas of IT outsourcing, cross-cultural relationships, business strategies, business-government relationships, and business social responsibility. His preferred research approach is using cases from the Egyptian environment.

Orascom Housing Communities (OHC) is part of t Orascom Hotels and Development (OHD); a developer of high-end housing communities.

To download the Orascom case study from the GIM database, please click here.

What is Orascom’s basic value proposition and what makes its financial model sustainable?

The value proposition is based on selling a large volume of units with a small margin. This is facilitated by the large size of the Haram City project. This large volume of sales requires a large effective demand which is facilitated by the mortgage scheme established by the government. Also ,the mass scale of producing units will facilitate providing services to the community in exchange for a small fee. Sustainability will be maintained so long as there is a large volume of units sold which is dependent on the success of the mortgage scheme. This is dependent in turn on the interest rate and acceptance of the idea by a largely Muslim population which views interest as a form of usury. The Egyptian economy is still largely a cash-based economy.

What are the main challenges in terms of providing housing for the poor in Egypt?

The government should full heartedly support the model of a private-government partnership scheme based on the Orascom model in order to increase competition and lower prices. The government is still heavily involved in playing the role of a developer itself by directly supervising or building housing units for the poor and displaced people and experience has shown the inefficiency of the government in this regard.

What are the main benefits of public-private partnerships such as this one in contributing to more inclusive markets?

The private sector can more quickly respond to market needs than the government. It is better equipped to synchronize construction stages with building the internal infrastructure of these communities. The government should stick to the role as a regulator and a subsidy provider for the land and the buyers of units. Since the government has limited resources it should have a coherent strategy to fully utilize private sector capabilities and not to spread its resources too thin by attempting to continue play the role of the developer itself.

What are the main challenges of scaling up this model?

  • Inadequate effective demands due to reluctance to buy on mortgage basis either because of high interest or religious reasons
  • Rising prices of inputs which forces prices up especially that prices are market-controlled and not government-controlled
  • Government bureaucracy which raises obstacles or creates de facto situations like forcing the company to provide housing units for displaced people from shanty towns which turned off potential buyers for a while