Keeping Egypt cool: Business Advisory Service signs first project in Egypt

If you have ever experienced an Egyptian summer, you will have been grateful for some air conditioning to cope with the ferociously high temperatures. And it’s just possible that the control panel used to give you that much-needed blast of coolness came from Pharaoh-Tech.

This fast-growing local company specialises in designing, installing and maintaining power panels and motor control centres for air-conditioning systems, security and fire alarm apparatus and factory machines. Established in 2007, Pharaoh-Tech has two production lines for assembling components made in other factories. Now the firm is looking to build its own plant so it can make specialised products for the electromechanical sector itself.

“Pharaoh-tech will work hard to fulfill its dream of growth,” says Mohamed Mourad El-Zayat, the company’s founder and CEO. “The major challenge for us will be ensuring a sustainable improvement in quality, service and productivity and that will be only be achieved through continuous effective planning and training for our team and staff.”

Essential step

To help Pharaoh-Tech finance its expansion plans, the EBRD’s Business Advisory Services (BAS) team assisted the company in finding a local consultancy firm to produce a feasibility study on the proposed new factory – an essential step in order to attract any investor interest. BAS activities in Egypt are supported by the EU Neighborhood Investment Facility (NIF).

“As well as helping Pharaoh-Tech to identify the best consultant for them to work with, we made sure the terms of reference were very clear and that the deliverables from the contract were very measurable,” says Reem El Saady, head of the BAS team in Egypt.

“The consultancy, Archer Consulting, began work on the feasibility study in early August and is going through Pharaoh-Tech’s financials, as well as its marketing strategy, HR policies and corporate governance, so that when the company meets with potential investors, it will be ready to answer any questions,” Ms El Saady adds. “We will have regular review meetings to make sure that they are working very closely with Pharaoh-Tech and that there is a real transfer of knowledge going on.”

Good timing

This is the first project in Egypt for the BAS team, and it could not have picked a better time to start working in the country. The political upheaval of the last two years has led to a slow-down in investment in the Egyptian economy and the small and medium enterprise (SME) sector has been particularly badly hit.

As a result, many SMEs have little money to spare once salaries and working capital costs have been paid, which means they either use very inexpensive and sometimes poor-quality consultants or end up not getting any advice at all. In the long term, this can have a very detrimental effect on their business as almost all entrepreneurs require professional guidance at some stage of their company’s development.

As in other countries where it operates, the BAS team works in Egypt on a cost-share basis, meaning clients like Pharaoh-Tech pay only a portion of the cost of hiring a highly-qualified consultant such as Archer.

“By doing this we are hoping to encourage SMEs to approach the right consultants and get the best advice,” says Ms El Saady. “Our service is not totally free: if an SME is paying at least part of the cost, that means they are more anxious to get a good service from the consultant. But we don’t want to overburden them with costs either.”

Improving quality

The BAS programme focuses on working directly with businesses, helping them to select and contract capable consultants. Negotiating the terms of reference of any contract with a consultant and ensuring that implementation follows best practice are especially important for the success of BAS projects.

Although long-established, Egypt’s consultancy sector has developed with little regard for client satisfaction or quality of service in recent years. The BAS team aims to rectify this situation by supporting models of business advisory assignments that are economically viable for both SMEs and consultants, thereby contributing to the development of the advisory services market.

“At the moment, the EBRD is an important catalyst for Pharaoh-Tech’s growth,” says Mr El-Zayat. “We are very confident and motivated about this cooperation and are looking forward to seeing its results on our business.”