What does it take to become an entrepreneur in Egypt? Persistence, courage and, according to Mostafa Ghaly, a little bit of insanity.
“The way government organizations handle entrepreneurial ventures…is completely irresponsible and I would say immoral,” said Ghaly, managing director of Palm Paper.
Recounting his entrepreneurial endeavors in an interview with Daily News Egypt, it was clear that Ghaly had overcome numerous obstacles, driven only by the success of his family-run businesses.
In 2007, Ghaly founded Palm Paper, a joint stock company operating in pulp and paper production using local raw materials. Their main products, carton board packages and sacks for industrial purposes, are mostly used by export companies.
Another one of his companies, Smart Paper Tech, allows Ghaly and his team to use their experience and international exposure to build and operate paper mills.
Entrepreneurial spirit
After graduating from the American University in Cairo (AUC), Ghaly juggled his work as a teaching assistant at AUC with serving in the army and doing a master’s degree in advanced mechanical engineering and design.
“The AUC education is a flexible education that lets you try things. The willingness to try new things, the acceptance of failure and the feeling that you can still go on to do it is very important for entrepreneurship,” Ghaly said.
“My father was the main influence on me, and the initiator of many of my ideas. He was a key figure in the electricity sector in Egypt, yet he had the ambition to carry out a social role, trying to bring new technology into the sector to improve things. I think I have inherited the same character and intentions,” Ghaly explained.
He continued his studies while working in the US for three years, and then decided to come back to Egypt and start a private business with his wife, Heba and his brother, Ahmed.
Ghaly looked into agri-fiber waste utilization and decided to get into the paper industry as his brother had a master’s degree in paper technology. It so happened that at the same time there was a business finance competition in Dubai for which they set up a business plan to use agri-fiber waste to develop paper products.
Ghaly and his team won the competition in September 2006 but faced several setbacks starting up. “The prize money came in the form of majority shareholding which was not clear at the time of the competition,” he said.
The fund of $1.55 million money was delayed one year, with the company claiming that legal work had to be done. The funds gave the company the right to a non-negotiable 75 percent share in the company, which according to Ghaly, they did not know beforehand.
“Most of the money came in 2008, when prices were three times as high as at the time of completion. Nevertheless we managed to start the company relying on our own funds,” Ghaly said.
“For that we had to refocus the project and shrink it down. We had to focus on things that were immediately achievable without putting in more investment and time so we focused on making products out of recycled paper and started a carton production facility,” he added.
They received the land for the project in February 2008 and by January 2009 it was fully operational except for utilities — they had no water, electricity, sewage or natural gas, even though the contracts stipulate that utilities be installed.
“The focus of the government is to attract FDI [foreign direct investment in large sums but people like us are ignored, though you can have a billion dollar oil refinery that employs 50 people whereas I employ 50 with my $1.55 million,” Ghaly explained.
Even though entrepreneurship does not get much support in Egypt, he says, “we did not give up.”
“We had no choice but to buy our own water, generate our own electricity and find a way to get rid of our sewage,” Ghaly added.
They needed around LE 4 million to purchase the land, receive permits, complete fencing and acquire utilities on the land before beginning operations, he said.
Along with Ghaly and his wife, his brother and his brother’s wife are also involved in the business. “Success unites people and difficulties make them work together. We are progressing and we have already expanded our operation to Saudi Arabia,” said Ghaly.
Ghaly explained that they had built 50 percent of the machine here in Egypt and assembled the other 50 percent from Indian components.
“You do work hard and the government doesn’t reward you, but God rewards you,” Ghaly concluded.
This article is part of a monthly series on promising entrepreneurs published in Daily News Egypt in collaboration with Endeavor Egypt. Endeavor is an international non-profit organization promoting high impact entrepreneurship in emerging countries as the leading force for sustainable economic development.
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Fifty percent of the paper machine was built in Egypt and the rest was assembled using Indian components.
