Summary of Proposed Investment
Project Number
11322
Company Name
Sekem Holding Company
Date SPI Disclosed
Jan 28, 2002
Country
Egypt, Arab Republic of
Industry
Health, Education and Life Sciences
Projected Board Date
Mar 7, 2002
Status
Completed
Sector
Pharmaceuticals and Medicine
Department
Gbl Ind, Manufact, Agribus & Services
Environmental Category
B - Limited
Previous Events
Approved : Mar 28, 2002
Signed : Jan 16, 2003
Invested : Apr 9, 2003
Project Description
Sekem, a privately owned holding company, was established in June 2001 to rationalize the activity and organization of six existing companies of the group which are now wholly owned subsidiaries. The companies are:
Company Products
- Atos Phyto-pharmaceuticals and health
products production and marketing.
- Libra Organic Organic fresh fruit, vegetables and herbs processing.
- Hator Packaging and marketing
Libra Organic products.
- Conytex Manufacture of organic textiles.
- Sekem Organic herbs and spices processing.
- Isis Organic foodstuff and herbal teas.
The group has approached IFC for a corporate loan to implement an expansion, re-organization and financial restructuring plan encompassing four of the above-mentioned companies. This project would be IFC’s first investment in the phyto-pharmaceutical sector. The entire cultivation is achieved using bio-dynamic methods. Based on the premise that organic cultivation does not produce any unusable waste, all products of the system can be either sold or re-used in cultivation, thereby creating a sustainable process. The group also exemplifies the view that profit making can go hand-in-hand with an integrated socioeconomic business model, providing employees and suppliers with assistance in developing the educational, social, and health aspects of their lives.
Impact on labor: Although the project has limited direct impact on job creation (possibly up to 200 additional jobs), it is expected to have a considerable indirect impact on employment generation in the agriculture sector. Seven hundred and fifty farm holdings are expected be members of the Egyptian Bio-dynamic Association (EBDA), of which almost 400 will be supplying products to Sekem. Assuming around a 30% increase in the number of farms joining the EBDA in the future, with Sekem’s expansion, an additional 120 farms will become direct suppliers to Sekem. This will result in significant employment creation in the agriculture sector, especially for women, as well as in other sectors in the supply chain (e.g., processing, packaging, transportation, storage etc.). In addition, the direct employees of Sekem, especially women and working mothers, will benefit from very favorable labor conditions and non-wage benefits (e.g., paid maternity leave, non-exposure to hazardous work, flexible work hours for mothers with young children, schooling benefits/vocational training for children of employees and households in the neighboring rural areas, medical benefits etc.).
Impact on suppliers: The project will result in a transfer of technology and bio-dynamic farming methods across different levels: (i) from Sekem to supplying farm holdings; (ii) from international Demeter certification, to Sekem; and (iii) from Sekem to farm holdings in other parts of the world.
Impact on customers: Egyptian consumers will benefit from the project as they will have greater access to (i) phyto-pharmaceutical products derived from organically grown components, (ii) organic fruits and vegetables and organic herbs and spices. In addition, part of Sekem’s marketing strategy is an effort to enhance awareness amongst consumers on the benefits of organically grown food products and phyto-pharmaceuticals.
Impact on the overall economy: Pharmaceutical products and cotton textiles are import export commodities in Egypt, and Sekem’s expansion will contribute to improving Egypt’s export performance and foreign exchange earnings.
IFC Role: The group has already approached local banks unsuccessfully for long-term financing of its expansion and restructuring. IFC can therefore provide much-needed term funds. IFC''s advice on corporate governance will assist the group in improving the effectiveness of its organizational and management structure, and in formulating an investment policy that will enable it to achieve both its profitability and its social objectives.
Company Products
- Atos Phyto-pharmaceuticals and health
products production and marketing.
- Libra Organic Organic fresh fruit, vegetables and herbs processing.
- Hator Packaging and marketing
Libra Organic products.
- Conytex Manufacture of organic textiles.
- Sekem Organic herbs and spices processing.
- Isis Organic foodstuff and herbal teas.
The group has approached IFC for a corporate loan to implement an expansion, re-organization and financial restructuring plan encompassing four of the above-mentioned companies. This project would be IFC’s first investment in the phyto-pharmaceutical sector. The entire cultivation is achieved using bio-dynamic methods. Based on the premise that organic cultivation does not produce any unusable waste, all products of the system can be either sold or re-used in cultivation, thereby creating a sustainable process. The group also exemplifies the view that profit making can go hand-in-hand with an integrated socioeconomic business model, providing employees and suppliers with assistance in developing the educational, social, and health aspects of their lives.
Impact on labor: Although the project has limited direct impact on job creation (possibly up to 200 additional jobs), it is expected to have a considerable indirect impact on employment generation in the agriculture sector. Seven hundred and fifty farm holdings are expected be members of the Egyptian Bio-dynamic Association (EBDA), of which almost 400 will be supplying products to Sekem. Assuming around a 30% increase in the number of farms joining the EBDA in the future, with Sekem’s expansion, an additional 120 farms will become direct suppliers to Sekem. This will result in significant employment creation in the agriculture sector, especially for women, as well as in other sectors in the supply chain (e.g., processing, packaging, transportation, storage etc.). In addition, the direct employees of Sekem, especially women and working mothers, will benefit from very favorable labor conditions and non-wage benefits (e.g., paid maternity leave, non-exposure to hazardous work, flexible work hours for mothers with young children, schooling benefits/vocational training for children of employees and households in the neighboring rural areas, medical benefits etc.).
Impact on suppliers: The project will result in a transfer of technology and bio-dynamic farming methods across different levels: (i) from Sekem to supplying farm holdings; (ii) from international Demeter certification, to Sekem; and (iii) from Sekem to farm holdings in other parts of the world.
Impact on customers: Egyptian consumers will benefit from the project as they will have greater access to (i) phyto-pharmaceutical products derived from organically grown components, (ii) organic fruits and vegetables and organic herbs and spices. In addition, part of Sekem’s marketing strategy is an effort to enhance awareness amongst consumers on the benefits of organically grown food products and phyto-pharmaceuticals.
Impact on the overall economy: Pharmaceutical products and cotton textiles are import export commodities in Egypt, and Sekem’s expansion will contribute to improving Egypt’s export performance and foreign exchange earnings.
IFC Role: The group has already approached local banks unsuccessfully for long-term financing of its expansion and restructuring. IFC can therefore provide much-needed term funds. IFC''s advice on corporate governance will assist the group in improving the effectiveness of its organizational and management structure, and in formulating an investment policy that will enable it to achieve both its profitability and its social objectives.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Nehal El Mofty
Sekem
1 Belbeis Desert Road
P.O. Box 2834
El Horrya, Heliopolis, Egypt
Fax: + [20] (2) 656-4123
E-mail: info@sekem.com
Sekem
1 Belbeis Desert Road
P.O. Box 2834
El Horrya, Heliopolis, Egypt
Fax: + [20] (2) 656-4123
E-mail: info@sekem.com