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
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.
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.
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.”