Will the Release of Detained Businessmen in Egypt Improve the Economy?

On Saturday, January 21, 2023, the Egyptian authorities released businessman and founder of Juhayna Food Industries, the largest dairy and juice company in Egypt, Safwan Thabet, 76, and his son Seif, 40, after more than two years of solitary confinement.

At the end of 2022, the Egyptian authorities had arrested the founder of Juhayna Food Industries, while his son was arrested in February 2021.

The Egyptian authorities made up a lengthy list of charges that included “participating in and joining the terrorist Brotherhood and providing it with funds to achieve its goals by changing the regime by force, attacking the armed forces and police.”

Interpretations have varied about the real motives behind the accusations made against them at a time when the Egyptian regime was waging a fierce campaign against a number of businessmen, which later resonated, and the country paid a very high price for it during the past two years in particular, leaving the question: Why did the state arrest Safwan and his son?

 

Regime Pressure

A source close to Thabet’s family said in media statements that during the past year, one of the Gulf sovereign funds sought to acquire a share of Juhayna, by negotiating with the parties that handle the file of businessman Safwan Thabet, so that they consequently transfer the offer to him while exercising a role closer to brokerage.

The source explained that Thabet confirmed he was in a circumstance that did not allow him to make a decision about the company, stressing that such deals are not discussed in prison cells, but are discussed elsewhere if that party is serious about investing within the structure of the group.

Thabet’s arrest was not the only case. During the past two years, the Egyptian authorities have launched a large-scale arrest campaign against businessmen, most notably: the owner of the famous chain of commercial complexes al-Tawhid Wal Nour, Sayed Ragab al-Sawirki, and the well-known businessman Salah Diab.

This stirred the disapproval of many experts, prompting many investors to flee outside Egypt, including businessman Mamdouh Hamza.

In parallel with the wave of arrests, investors’ funds were seized and prevented from being disposed of under the pretext of belonging to terrorist groups and financing their activities.

This happened with businessman Mohamed Mansour Abdel Rahman Abu Auf and his brother Mustafa, where their multi-million company for cosmetics, one of the largest companies operating in the Egyptian market in this field, was seized.

These authoritarian practices distorted the image of the Egyptian investment market externally, and turned it from a destination for investments for many decades into a repellent market, not only for foreigners but for the people of the country as well.

This cost the Egyptian national economy heavy losses, which increased the depth and impact of the crisis, so that the Egyptian people alone pay the price of their living standards, which are declining day after day.

 

International Pressure

The IMF called on Cairo to improve the work environment, provide a stable climate for investors and reassure them about their lives and capital, which has been suffering from the Egyptian economic arena during the recent period, which caused the exit of dozens of foreign companies and the flight of more than $30 billion abroad.

For its part, in light of the economic predicament that the Egyptian state suffers from, it was necessary to show flexibility and reconsider the policies followed, security, political and legislative.

The Egyptian government hopes to improve the economic situation and encourage foreign investments to inject their capital into the Egyptian market. This would not have happened without showing good intentions through the release of a number of businessmen, the last of whom is Safwan Thabet and his son.

Immediately after their release, their company, Juhayna Food Industries, rose 16% during morning trading on the EGX, hitting a 40-month high

The EGX suspended trading on Juhayna Food Industries for 10 minutes after exceeding 10%.

This came after the daughter of businessman Safwan Thabet posted y on social media about the release of her father and brother.

The opening price of Sunday, the first session of the week, reached 8.84 pounds to reach 9.73 pounds, a change of 10.07%.

Egypt’s main stock index rose on Sunday, driven by broad buying by Egyptian and Arab investors.

Juhayna’s share price had been damaged since late 2020, after Safwan Thabet and his son were detained, before the stock resumed its activity last year, with Qatar’s Baladna buying about 12.6% of Juhayna’s shares on the stock exchange.

Today, Juhayna’s shares traded at EGP 10.29, up 16%, while the market’s main index rose 0.9% to 16,214 points.

 

Regime’s Predicament

The release of the businessman and his son, who came suddenly, is the result of a complex of factors. Egypt is going through very bad economic conditions, and in the recent period, many businessmen transferred large parts of their wealth and investments outside the country to be safe.

The way of dealing with Juhayna has been raising the concerns of the Egyptian business community and investors throughout the past period.

In addition, the recent period has witnessed repeated requests from international parties to the Egyptian government to clarify the position of Safwan Thabet and his son. These demands came from international parties whose governments own investments in the Juhayna Group.

The IMF called on the Egyptian government to release Safwan Thabet and lift the hand of the security services from the company.

Moreover, the names of businessman Safwan Thabet and his son Seif were on a list of names that US President Joe Biden advised his Egyptian counterpart, Abdel Fattah el-Sisi, to release as a step towards improving the human rights situation in the country and restoring confidence in the investment environment.

During the meeting of the Egyptian and American presidents on the sidelines of the climate summit held in Sharm el-Sheikh, last November, and in the context of talking about the crisis in Egypt, Biden took out a paper with names.

Sisi expected that Biden would talk to him about political activist Alaa Abd el-Fattah, but the US president surprised him that in addition to Abd el-Fattah, there are other important names, including Safwan Thabet and his son.

Despite repeated US demands for the release of Thabet and others, the Egyptian regime responded only when the economic crisis became complicated, and criticism of investors, especially the Gulf, escalated. The Egyptian regime believes that this will restore confidence to the Egyptian market.