A Syrian waiter serves diners outside Rosto’s, one of the most popular Syrian restaurants in 6th of October City. (Photo: Shadi Bushra)

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Syrian Refugees Are Finding Solace—and Good Business—in Cairo

Entrepreneurs escaping conflict at home employ thousands of Egyptians, but the host government doesn’t seem to appreciate their contributions to the economy.
Dec 4, 2015· 7 MIN READ
Hisham Allam's investigations have led to six prosecutions in Egypt. A founder of the newspaper El Watan, he is an award-winning member of the International Consortium of Investigative Journalists.

NEW CAIRO, Egypt—Drinking Turkish coffee in his well-appointed home in the upscale residential development of Al Rehab City here, 15 miles from Cairo’s center, Abdel Hady Fahmy thinks back to three years ago, when he decided to leave Syria for Egypt. With his wife, Faten, and daughter Mariah, 23, beside him, he recalls the misfortunes that war wrought upon his life and livelihood.

Fahmy owned a large textile factory, Cotton and More, outside Damascus. About a year into the war, which started when President Bashar Assad violently crushed peaceful demonstrations against his despotic rule, the area where some similar factories stood became a critical zone of conflict between the army of Syria and the rebel Free Syrian Army. The FSA erected a security fence between the factories and the capital, cutting them off from access to the raw materials they needed to operate. One day, Fahmy’s friends were among the biggest clothing manufacturers in the country; the next they were trapped in their country and unable to earn a living.

But that wasn’t what motivated him to leave. Neither was it the bomb that fell on the building next to his warehouse, destroying it. In the end, it was his own frailty. Fahmy, 65, was diagnosed with kidney dysfunction in 2010 and not long after the war began he was unable to safely reach the hospital where he had been undergoing dialysis three times a week. Beirut was an option, but the frequent 100-mile round-trips, he knew, would be arduous. Around the same time, the yarns and dyes Cotton and More needed became unavailable. So Fahmy went to Cairo to see if he could run his business there. “The environment was perfectly suitable to continue my work,” he said. “Raw material prices were good, rents and workforce wages were reasonable—all production costs were close to those in Syria.” Fahmy moved his family to Cairo, arriving in May 2013. The family photo albums had to be left behind.

About 15,000 Syrian business owners—representing almost 30 percent of the total in Syria—have come to Egypt since 2011, with value of investments ranging between $400 million and $500 million.

Omar El-Dabea, Egyptian Association for International Investment

Businessman Abdel Hady Fahmy at his home. (Photo: Shadi Bushra)

Only when Fahmy tells of what became of his business does his thin brow become knotted and his face begin to turn red. The factory that had been his family’s lifeblood for 30 years needed to be sold; moving the equipment to Cairo would be too costly. The only buyer he could find happened to be a businessperson, as Fahmy describes it, “in close relationship with the Syrian Army.” With little leverage in the situation, Fahmy was forced to sell the machines for less than half of what he estimated to be their value. Shortly after he was settled in Cairo, Fahmy learned that the new owner was mysteriously able to get his hands on the raw materials that had eluded Fahmy, “and the factory was operating once again."

FULL COVERAGE: The Global Refugee Crisis

At least 10 million Syrians—nearly half the country’s population in 2010—have left their homes and become refugees or been forced to move within Syria. Fahmy’s family is among the estimated 350,000 who fled to Cairo between 2011 and September of this year, according to Egypt's Ministry of Foreign Affairs (though some reports put the number as high as 500,000). Thousands have started businesses there, employing tens of thousands of Egyptians. They have poured money into the stock market and filled important niches in the manufacturing sector, reducing reliance on imports and lowering the trade deficit. Unlike other countries in the Middle East, Egypt has not required that Syrians live in refugee camps. The decision to engage Syrians with the community instead of isolating them in camps has empowered them to contribute to the Egyptian economy, said economist Sherif El-Diwany, director of the Egyptian Center for Economic Rights. Yet Egypt’s government so far seems hostile to Syrian refugees, failing to recognize their economic contributions and instead throwing up obstacles to residence and entrepreneurship through outmoded policies, new visa requirements, and corruption.

A Syrian-owned café opposite apartment buildings in 6th of October City. Construction of housing in and around Cairo has increased recently, in part to keep up with rising demand from the Syrian refugees who have made the area home. (Photo: Shadi Bushra)

Not all the refugees have found success like Fahmy’s. The United Nations High Commissioner for Refugees, in coordination with Egypt’s government and U.N. specialized agencies, provides those in need with medicine, education, and nutrition assistance. About 32,000 of the registered Syrian refugees in Cairo receive monthly stipends, and about 25,000 students are on educational scholarships. UNHCR also provides legal assistance, professional training, and community activities for refugees of various age groups.

Owing to much of Egypt’s $3.3 trillion economy being unlicensed and hence officially illegal, there is no definitive figure on the volume of Syrian investments in Egypt and their contribution to GDP since the war broke out in 2011. Nevertheless, economic observers agree that they have increased greatly since the conflict started. Omar El-Dabea, external relations coordinator at the Egyptian Association for International Investment, said, “About 15,000 Syrian business owners—representing almost 30 percent of the total in Syria—have come to Egypt since 2011, with value of investments ranging between $400 million and $500 million” (averaging between about $26,000 and $33,000 per business launch).

Indirect investment by Syrians, through Egypt’s stock market, is easily tracked thanks to reporting requirements of the Egyptian Exchange: It surged to a traded value of $32 million in 2012, up from $12.6 million in 2011, according to Medhat Nafei, the general manager of the Egyptian Exchange—during a period when the EGX 30 Price Return Index was off by half. The value of Syrian money in the EGX dipped slightly in 2013 before nearly doubling in 2014 to $57.6 million, again outpacing the index. Syrian investments were mostly allocated to real estate, financial services, and telecom.

Khaldoun Al-Mowaqaa, director of the Syrian Businessmen’s Group–Egypt, said Syrian investors are boosting employment in Cairo by starting labor-intensive small- and medium-size enterprises that rely on technical expertise rather than heavy industry with its smaller labor force relative to output. Egyptian labor law requires that 90 percent of employees at any business be Egyptian citizens.

Khaldoun Almouakeh, a Syrian refugee who has launched a successful business in Egypt, in his Cairo home in December. (Photo: Shadi Bushra)

The coalition, founded in 2013, brings together Syrian investors in the country to help refugees, especially entrepreneurs, Al-Mowaqaa said. It developed a trademark, “Made by Syrian Hands in Egyptian Lands,” which, he said, “has become something that consumers look for.” He cited Egypt’s broad market, proximity to other markets that understand Syrian industries, and the long historic ties between the two countries, which from 1958 to 1961 together formed the United Arab Republic, as reasons Syrian businesspeople choose to relocate to Egypt. As much as 80 percent of Syrian investments overseas are in Egypt, he said. When market research indicated that Egypt imported millions of pairs of women’s shoes per year, Syrian investors filled a niche and have since opened 36 footwear factories in the country.

“Syrian investors have a great experience in entrepreneurship with a high quality in their technical education,” said El-Diwany, and “depend on strong communication channels with other Syrians based in Africa and Europe to strengthen their external trade and open new markets for their Egyptian products.”

Fahmy echoed that thought, citing “the abundance of Syrian labor in Egypt, the quality of Egyptian cotton, and the support of some old Egyptian friends” as reasons for opening his textile factory in the Cairo area.

With the help of his elder son, Khaled, Fahmy launched Flowery Readymade Garments in Obour City, a suburb northeast of Cairo, in late 2012. It wasn’t easy going. Syrians didn’t need a visa to enter Egypt when Fahmy first started traveling to Cairo to get his factory going, but by the time his family arrived in May 2013 the rules had changed. Once, on the way back to Cairo from a business trip, he was denied entry and had to return to Kuwait, where he stayed two months before paying a $5,000 bribe to an immigrations official who could grant him entry. He had to apply three times for a “residence permit for pursuing investment activities” and was rejected each time without explanation. He keeps his business in the “informal” economy, away from the prying eyes of authorities, even though he employs 70 Egyptians. Despite their struggles, Fahmy and his wife, who says she enjoys her new life as a businessperson, have doubled their capital in less than three years.

Syrians in Egypt live mainly in newly developed suburban cities like 6th of October City, New Cairo (where the Fahmy family lives), 10th of Ramadan City, and Obour City. Density is low, and the pace of life is slower than in Cairo; refugees there have opened restaurants, cafés, bakeries, and clothing businesses. At El Hosary Mosque in 6th of October City, many Syrian vendors and shops offer customers traditional grilled chicken and shawarma. Narrow paths are full of pastries and desserts like baklava and maamoul.

An outdoor market in 6th of October City that is dominated by Syrian merchants. (Photo: Shadi Bushra)

Yet for Syrians, the regime of Abdel Fattah el-Sisi, who ousted the elected government of Mohamed Morsi in July 2013, has been outright hostile. State media channels initiated a campaign against Syrian refugees in Egypt, accusing them of taking part in pro-Morsi demonstrations and receiving payments from Morsi’s political group, the Muslim Brotherhood, in return. At least 85 Syrian refugees were arrested in June and July 2013, according to UNHCR (none is currently detained). The arrests sparked concern outside Egypt, especially as many of the arrested Syrians were minors and others were registered as refugees with UNHCR. As a result, Al-Mowaqaa’s business group advises refugees to stay out of politics.

Many Syrians could not find jobs and struggled with obtaining official documents, so they fled to Europe.

Rassem Al-Atassy, former head of the Arabic Network for Human Rights Information

The move also had an effect on the Syrian investment landscape in Egypt. Rassem Al-Atassy, a Syrian and the former head of the Arabic Network for Human Rights Information, said that in 2013 there were 650,000 Syrian refugees in Egypt. “But due to media attacks, many of them could not find jobs and struggled with [obtaining] needed official documents, so they fled to Europe by sea,” he said. Fahmy said four of his own employees were among the refugees who crossed the Mediterranean to take up residence in European cities.

Many Syrian investors could not sustain their Egyptian businesses after 2013 and smuggled their cash out of the country. Others obtained business licenses through Egyptian friends, Al-Atassy said. Even for those who managed to secure legal residence, the number of banking transactions they are permitted to conduct and the amount of funds they may save in Egyptian banks are limited, Fahdy said. “It has become impossible to stay in Cairo for any reason without official permission unless your spouse is Egyptian,” Fahmy said. After the uprising that toppled President Hosni Mubarak in February 2011, the Central Bank of Egypt restricted foreign currency transfers abroad to a single transaction of up to $100,000 for a three-year period.

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There are signs Sisi’s government may be easing its stance toward Syrian refugees. In January, the Central Bank eased the foreign banking rule, allowing individuals a onetime transfer of up to $100,000 per calendar year. In March, the Ministry of Investment proposed changes that would facilitate investment by foreigners. The new amendments are pending review by Parliament, and they do not address small businesses like Fahmy’s or Syrian refugees working in the informal sector. “This has left many refugee seekers with limited opportunities for livelihood,” Marwa Hashem, assistant public information officer for UNHCR in Cairo, said. Relegated to the informal markets, they are often exposed to exploit and abuse.

Syrian vendors have set up food and trinket stands outside El Hosary Mosque in 6th of October City. (Photo: Shadi Bushra)

Fahmy said he is committed to staying in Egypt—as long as he is a refugee. After all, he said, “restrictions imposed on Syrians have become a common occurrence in all countries and not just limited to Egypt.” His daughter Mariah is comfortable studying media at Al-Azhar University. Looking around his home, he apologized for the appearance of the place. The furniture is expensive by most standards, but, he said, “it is not furnished as it should be. We feel that our stay here is only temporary, and we are dreaming to return one day back home.”

Al-Mowaqaa, of the business group, has the stats to back that up. “Syrians investors took out only 10 percent of their capital and left the rest in Syria,” he said, “which means there is no doubt they will return back someday.”