World Vest Base (WVB) is a global finance intelligence institution that operates in several countries, including Egypt, to create comprehensive financial databases on businesses (specifically non-US companies), and distribute them to clients who need them. These clients range from investment banks to consulting firms, exchanges, government agencies, and specialised information re-distributors.
Daily News Egypt sat with WVB’s CEO Philippe Piette to discuss the financial challenges facing the company in Egypt and its expansions, and Piette’s opinion on Egypt’s economy.
Since your work is mainly based on research, what challenges does WVB face in Egypt in that regard?
Bureaucracy—it is killing this country. I actually feel sorry for your president, I really do. He gets criticised for everything, but the problems today date at least 50-60 years back. You are paying the price of the socialism that took place during the era of former president Gamal Abdel Nasser. It made things a lot worse, and no government has been able to solve these issues.
Coming from the outside, I cry for Egypt and for my staff. Bureaucracy is not only an Egyptian problem, but rather a global one. We currently have a bunch of international bureaucrats running things, and they think they know what the problems are. They also believe that if you can lure others with charts and big Powerpoint presentations, and check the boxes, the problems will go away, but it doesn’t work that way.
You have so many layers of bureaucracy here. I have been here for 15 years, and I have over 18 offices worldwide; all the countries are giving me work permits, visas, and access to come in and out of the country. Here in Egypt, I am struggling to receive my visa. Bureaucracy stands in the way of everything.
I was here during your revolution, and Egypt had a miniature construction boom going on. Everybody suddenly thought: “Oh, there is no government. I don’t need a licence. There is nobody there. I can improve my house. I can improve my apartment. I can do this and that.”
This eventually tells you that I am right and Egypt has a lot of potential. You have a well-educated workforce, and we all know what the fundamentals are. If they are there, you don’t need to recreate them.
If you remove the bureaucracy, and if you free the market, not all of your problems will disappear, but a great deal of them will.
Al-Sisi is a military man, not an economist. He is intelligent, but he has been relying on the advice of people who have never actually run a business. Maybe the Minister of Industry and Trade did, but all the other ministers have experiences outside the desired field.
What do you think can be done to reduce bureaucracy or improve the conditions right now?
Complete restructuring. We are accumulating so many laws. Some of them are irrelevant and some need to be banished. Additionally, the number of ministries needs to be reduced and the ministers need to be consolidated. To an extent, we have been seeing duplicated ministries that could be merged, and this indicates that each piece of bureaucracy tries to expand itself.
It is the nature of bureaucracy to do so. There is nothing wrong with it. It is just the way it is. Why do you need so many ministries when you can streamline them? This is not an overnight job, but that’s what really needs to be done. Everything needs to be reset.
You need to basically look at the whole structure of the government, and specify what needs to be eliminated, where the duplicates lie, and get rid of all of that. This does not only concern Egypt, but a lot of other countries as well.
What are the financial challenges WVB is facing in Egypt?
We don’t face a foreign currency problem because we bring US dollars into the country. For example, we buy information in India to process it here in Egypt. It could be considered a raw material purchase, if you want to perform a business operation, and that is a problem.
We usually need to use our credit cards from other offices outside Egypt, in order to purchase what we need for our office here. From an accounting and a procedural perspective, this creates all kinds of headaches that shouldn’t exist.
The foreign exchange issue is a really big challenge for everyone in Egypt. The little devaluations don’t work. On the other hand, let us say that you go from EGP 9 to EGP 18 against $1—that would actually be a very positive shock for the system, because it would start breaking informal markets, and let the market clear.
There is a worldwide phenomenon today which is problematic, and it can be summarised in the governments trying to micromanage the market. Yes, it will be chaotic for a while, for a couple of months, maybe even very painful for a longer period of time, but it will clear the market.
Once these bottlenecks scour out of the system, it will become much smoother, and much more efficient. It will allow Egyptian businesses to start competing internationally, especially with an underpriced currency. By then, you can export your textiles and all materials produced here, and compete with other countries, just like India.
There are some positive long-term development projects that the government had been working on, like the New Suez Canal. It was an absolute must. If Egypt hadn’t done it, somebody else would have created a new canal for bigger ships to pass. You need the capacity.
Regardless, Al-Sisi is facing a very unfortunate situation. Global trade is contracting because of the global financial situation, and oil prices are suddenly collapsing. By combining both, the value of a ferry going through the canal is reduced, and it is a question of time before things go back to normal. He was absolutely 100% correct in doing that.
The second is the discovery of natural gas in the Mediterranean sea, and the fact that Egypt did not sign an agreement with Israel to supply Egypt with gas. It was a deal that fell through, and in two to three years from now, it will incur huge benefits. When the time comes, Egypt will be able to process chemicals out of that gas, and export it—hence, the country’s balance of payments will start going the other way.
So in the long-term, there are a lot of benefits for those two conditions in particular. If combined with a cleanup of all regulations and freeing up the markets, Egypt will be in a much better place than it is today.
How many clients do you have in Egypt?
We have around 4,000 clients worldwide.
How do your financial databases help the business community in Egypt?
Egypt is a relatively small country operating in a very large world. There are a lot of people that are just looking at the domestic market, but more and more people are starting to look at the global market. So if a company is focusing on petrochemicals, it will look to Germany, the US, or the UK, and assess the industry as a whole to find the place that provides the highest returns. The business community will look at a place like Egypt and Abu Dhabi and compare them—that is what we can facilitate.
In terms of private companies, we have been working on creating massive databases containing names, activities, and ownership data of businesses for compliance purposes for the last couple of years. Let’s assume that I am a German retailer, and want to buy linen cotton from Egypt. I will need to find a supplier. You have services that can help you with that, but once I find the suppliers, how do I make sure these people are real? Now, I need to make sure that they are not involved in any criminal activities and that they are legitimate, because—as a financial institution—I can be held liable. Basically, we bear the whole process of verification of the businesses’ reliability.
In Egypt, we have the data of 13,000 businesses online, but we don’t have financial data. We don’t know how big they are, how many people they employ, the situation of their solvency etc. When foreign businesspersons, who are thinking about investing in other countries, look at Egypt, they think: “I don’t know these guys in Egypt. They exist, but will I get my goods at the end of the day? I am not so sure about that. Well, you know what; I am going to turn to India, because I know that the companies there are solvent”, and so on and so forth. It is a competitive world in terms of information and customer knowledge. That’s what we are providing, or trying to provide.
On another note, we are going to launch a public relations service—a wire service of nothing but company announcements. It is going to be free for the companies and the users in the whole MENA region, and we are thinking about including Turkey and Iran as well.
I think that the main problem in the region is a blockage of trade routes. After the Turkish common market fell apart, the trade suddenly stopped. We are trying very hard to establish the infrastructure to enable the flow of information so that companies across the region can spot their competitors, potential partners, or interesting products. Information is becoming much more important and of high value.
When are you going to launch the service?
We have an approximate time, which should be in December. We are basically waiting for the programming staff to finish the interface. Now, we have businesses who are sending us their press releases via email, and we want to automate that. We want to enable companies to register themselves, and automatically upload new data whenever they need. The service will be available in both Arabic and English languages.