Contractors abandon businesses in Egypt due to sharp recession

About 60 per cent of the registered contractors in Egypt's Federation of Construction and Building Contractors (FCBC) have terminated their businesses within the last two years due to the sharp recession in the local market, FCBC head Hassan Abdel-Aziz told Ahram Online.

Abdel-Aziz stated that 24,800 contractors – both individuals and companies – had failed to renew their FCBC membership within the past two years due to declining business, forfeiting their work licences in the process.

"Those contractors who have recently terminated their businesses are currently owed a combined total of LE13 billion by the government," Abdel-Aziz told Ahram Online.

Before Egypt's 2011 revolution, explained Abdel-Aziz, the FCBC had boasted a total of 41,500 member companies.

He added that those contractors who had retained their membership were now looking for business opportunities abroad – especially in Qatar, Libya, Saudi Arabia and Algeria – to offset recent losses in the Egyptian market.

An official at the state-run Arab Contractors, considered among the most prominent construction firms in the region, told Ahram Online that Egypt's construction sector had dwindled dramatically since the 2011 uprising.

"Our company is looking for markets abroad, especially in Africa and Asia, until the domestic market recovers," said the official, who preferred anonymity.

He went on to point out that the company's modest 2012 financial results represented a good indicator of the sector's weak overall performance. Arab Contractors realised some LE505.4 million in net profits last year, compared to LE1.2 billion the previous year.

"Investors have lost their appetite for building projects in Egypt, so contractors aren't finding much work," Cairo-based contracting consultant Hani Milad told Ahram Online.

Milad went on to explain that investors and contractors were also suffering from recent price hikes on building materials, including cement and steel rebars.

Even banks were reluctant to offer loans to contractors, he added, because of the ongoing recession plaguing the local construction sector.