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Environntental QualitY International in Siwa

0412009-5607

T,1is case was written by professor Jonathar story, Emeritus Professor of International Political Economy at INSEAD' It

is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of

an administrative situation.

To oRDEtCOPIS OF INSEAD CASES, Sff DFTAIIS ON THEBACK CO\Itr. COSES MAYNOT BEMADEWTIHOTI| PENMISSION.

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WhenMounirNeamatalla,PresidentofJheprivatenrynjia.nfirmEnvironmentalQuality International (EeI), hrst set eyes on ihe !ilya'oasis

in iq9s, itt the Matrouh region of Egypt

inthesaharadesert,hewasenttrralr9{.Neamatalla,aconsultantwhohadstudied environmentul -urrug"Lent at

columbiu urriu*rity, ru".ritit-g the oasis on a project for the

Canadian Development Agency. He was ttt.,illitn" iact that'-with a few anachronisms' the

community he was visiting could easily have blen the one described by Herodotus

2'500

years earlier. Here *ur-urria"ut fit wittrEQI',s mandate to promote sustainable development

projects wherever th;;;;rt-ity.beckoned. where others saw poverty and isolation'

Neamatalla saw riches: u "ott*", traaltion urrJ h"ritug" untouched by the

passage of time'

overtheyearsthatfollowed,EQldesignedandimplementedanumberofcommercial venturesaimedatpromotingeconomico*.r.op-""tin'Siwa_lnethatwouldbeinharmony with Siwa's

"nuiron-"n1t"""? ift* would t"ultu't" it' unique cultural heritage' EQI's

approach

was to draw on trr" or,l^*lrJo,o, traditional tiilit

""o "t*ti"lty of the local community' and

complement tt"- *it -odern know-ho".;;;;;"p Siwa into a model of sustainable

development that could serve as a source "il"tplt*i"n for other communities around the

world. Some of tt "r" ""rrt"r"" ur" .,r.r"n fr^ i"iig ."pr*ated by EQI in other parts

of the

region.

Egvpt

The past few decades have seen Egypt move from a pan-Arabic, largely socialist state

at war

with Israel, to an increasingly market-ori"rrt"J ur"hoi of stability in a troubled region' As

one

of two Arab countri", ifrut"ftut" forged p"u""-*ittt ittael' Egypi has played an important

role

in promoting dialogu"e;;;;"" tsralt ana lrr at"u-""igtruolurs'rne North African country is

one of the largest recipients of American "ia. irioog,It *u, slated to receive $1'3 billion in

military aid and u"oTft". $415 million in economic' assistance' With a population of 80

million, it is home to one in four Arabs'

ThepopulationofE,gyptisconcentratedalongtheNileriverbanksandisurbanizingfastas rural inhabiturrt, pooi'iiioihe -air, "iti",

oftiito and Alexandria' From 43 million in 1980 to

nearly g0 million - ioos, it is estimat"i ;; il ul'{ to reach 100 million by the 2020s'

population density i, ""t "g it

" world's fgli"J The

urban p-oprrlation accounts for 42o/o of

the total and is growing at a rare of l.g./i per annum. _F1Ttng.t".pre.11nts 79%^",^o!^GDP'

industry 22o/o, andr"*["' 4goh.Per.upitu rin"o-e is $1,200 uttd th" literacy rate is 57o/o'

water scarcity is a prime concern- R"";;t^-96% of Egypt's land mass is made up of

desert. The only arable regions in EgIpJ i."'rrt" g.""r, nJodplains that line the Nile basin'

urbanisation i, "utinfirrto-r*" araile land and pitting the environment under

great stress'

Politically,Egyptisstillahighlycentralisedrepublicanstateinthemidstofaprocessof political urrd

""orroriric iiueralilatiorr. rt rru, uri""iv L*tm""ed from a single

party to a multi-

party political systeml ;;til; a socialist lo a market oriented economy' Extensive powers

are vested in the president, who is ""-i""*J ty a twothirds majority of the *::tl::

Assembly ""d

rh"":;;;;&;*.qt r-.i*odrr- ftr a six-vear term' Since the assassrnatron

of president Muhammad Anwar "l-suaurirr-is8t, ,n" office has been held by Mohammad

Hosni Mubar"k, *h;;;; b""rr r"-"l""ted frve times. tlte Sadat, Mubarak had a distinguished

former career in Egypr,s armed forces. Th;';t;;id*rln_r:$t the governrnent and enjoys the

support of the dominant National O".o"ru,i.-p""V tNOpl, which has secured a majority in

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the directly elected People's Assembly. The govemment is reported to be facing demands for

political ,Lfor- from toth secular and liberal opposition parties and from the officially Lanned fundamentalist Muslim Brotherhood. President Mubarak's crackdown on opponents

has led to calls for restraint from the United States'

The Muslim Brotherhood, the strongest of the opposition groups' has spent most of its history

debarred from politics because of the country's secular constitution Elections in 2005 were

marred by allegations of intimidation and ballot rigging. Israel's Ariel Center for Policy ResearchlonctuOed that Cairo had no choice but to engage in a degree ofreform in order to

keep resentment at bay. Most intemational analysts and research institutions agree that Cairo

would benefit from engaging in significant reform'

The threat from rnilitant Islamic groups re-emerged after a lull from the late 1990s until2004,

when a series of bombings in the southem Sinai peninsula highlighted the exclusion of the

local population from the-mass tourism development of their region' Despite sympathy for the

plighi oi the Bedouins, the attacks were unpopular amongst Egyptians' not least because of

the damage to Egypt's valuable tourist industry.

The armed forces of Egypt are the largest on the African continent. The military and security-

related budger is ,rot iutti" informalion but most published sources put Egyptian military expenditurJatlYs to iOy" of GNP. In addition to the armed forces, Egypt maintains a large

paiamilitary force around 350,000 strong, known as the Central Security Forces, under the

ilAinirtry oi ttre Interior. The National Guard and border securiry forces come under the control of the Ministry of Defence and are reporled to number 60,000 and 20,000 respectively.

Administratively, Bgypt is divided into 28 govemorates, each headed by a govet1lor who is

appointed by the presi<lent. Within their districts, local government units establish and

*unug" all pubiic utilities, provide ser',,ices and designate indr'rstrial areas' Local popular

councils are elected bodies ihat rvork closely with local govemment administrative units at

various levels.

Economically, the country is in midst of shaking off a socialist past whose heritage owes as

much to the bureaucratii tradition of the Byzantine empire as to any regard for workers'

rights. Fiscal reforms introduced in 2005 have lowered unernployment and attracted record

fo"reign investment. Customs --once famously comrpt and inefficient-have been strearnlined'

Tariffs have been cut and simplified. The Egyptian pound has been floated' in 2007' the

country achieved growth of 7 .lu/o, mostly due to $ I 1 .1 billion in foreign direct investment'

Yet the Egyptian economy, while growing, is weak' Although non-oil and gas exports

increased 45Yo in the 2006-2007 fiscal year and were expected to rise fiom $i4 billion in 2007 to $18 billion in 2008, total exports, at$,2J billion, remain sma1l when compared

similarly-sized countries. Turkish "*pottr, for instance, run at over $120 billion a year' Most

of Egypt's growth has been constrained to energy-intensive industries -cement, chelnicals

and fertllizers-that take a<lvantage of high energy subsidies. The country continues to run a

$16 billion trade deflcit, importin! most Jf its meat, wood and grain, as well as much needed

capital goods equipment.

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That the World Bank ranked Egypt first in a list of countries introducing investor-friendly reforms in 2007 , reflected both the progress achieved and the distance left to travel. Red tape, a proliferation of regulations and regulatory agencies, bogged-down courts, and a sometimes

whimsical decision-making system, makes operating in the country difficult and unpredictable. The World Bank placed Egypt 126 out of 178 countries in terms of ease of doing business. Despite the recent growth, unemployment remains high at 9o/o. The median

ug" of the population is 24, compared to 39 in France, with only 43o/o of the employable labour force aged 16 Io 64 in work, against 62Yo in France.

Growth in manufacturing and industry tends to be capital rather than labour intensive. Labour productivity in agriculture and services is low. Inflation is around 8o/o and there is widespread

ion""* over rising income inequalities -{espite improvements recorded by the IIN Human Development Index over the past 30 years. According to the World Bank, one in five Egyptians can not meet their basic daily needs. Absolute poverty rose from 16.1% in 2000 to 19.6% in 2005.

Tourism provides the country with a major income stream, representing 20Yo of foreign currency

-arnings, despite the bombings in southern Sinai on the Red Sea. In 2007, Tourism

Minister Zrtheir Garana announced plans to boost tourist eamings by 26% to $12 billion dollars by 2011. Egypt aims to welcome some l4 million tourists in20Il, requiring a capacily of 240,000 hotel rooms, compared with 11 million in 2007. Besides catering to the mass market coming to visit the country's famed pyramids and beaches, the minister said Egypt aimed to attract private investors to develop eco-tourism and medical tourism. Niche, luxury and eco-projects such as EQI's Siwa development remain rare.

Siwa

The oasis of Siwa was first inhabited nearly 12,000 years ago, but only since 1986 has a road

made it accessible to the rest of the world. Siwa is part of an archipelago of oases dotting the Sahara. From its origins as a Berber village, the green grass and natural spring water of the

desert oasis served as an ancient stopover for caravans travelling from North Africa to the Arabian peninsula. Herodotus described it as a salt mine whose inhabitants built their homes from briCks of salt, and home to the powerful oracle of Ammon. When Alexander the Great entered Egypt in 331 8.C., he was received like a pharaoh. He rode through the blistering heat

of the desert to consult the oracle. The oracle welcomed him in a spectacular procession and it is said that he blessed his mission to spread his ideas worldwide.

Located in westem Egypt, not far from the border with Libya, the oasis is 80 kms long and roughly 20 kms wide, a swathe of palm and olive trees, natural springs and salt lakes surrounded by the sands of the Sahara. The abundant water is due to the presence of a large geological depression; most of the area lies around 20 metres below sea level.

In its centre, the crumbling Fortress of Shali dominates the village. Most of the local population used to live within its walls :untll 1926, when three days of continuous rainstorms washed the walls away, forcing the inhabitants to abandon their homes. Until recently, the fortress had not been restored. Rather, it has been ravaged by the dismantling of its buildings as residents abandoned them, taking with them doors, windows, and even supporting wooden

beams and cladding as they resettled on the plains around Siwa. The remains of the fortress

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continue nonetheless to serve as an example of Siwa's traditional construction techniques' The buildings were made of a mixture of salt and mud called kershef bricks, and rock salt

blocks, ,upport"d by palm logs. Some of the medieval structures stood up to five storeys high.

After 1926 the town was rebuilt around the fortress, but further rains in 1985 marked the general abandoning of traditional building techniques' For the reconstruction effort, mud and

palm gave way to cement blocks.

The oasis is home to between 20,000 and 30,000 residents, up from 5,000 in the 1970s' The

local population is divided into 11 tribes, whose sheikhs provide their people with a traditional approach to resolving disputes. The tribal judicial system is deeply respected by

the inhabitants. "We are all family," iays Abdallah Baghi, head of education in Siwa. Cairo is

happy to keep this arrangement. The sheiks receive a government salary, and the mayor-who

t u'[oue*-"nt appoinGe-heads the elected town council' The mayor is nominated by the provincial gou"*oi, to whom he reports. Mayors tend to be retired military officers' While

ttre tand oifiriully belongs to the siate, Cairo recognises the mosaic of historic ownership pattems administlred Uyltre tribes. Residents retain their own language, Siwi, related to the

Berber dialects which spa., the Sahara through to Morocco' The land surrounding the villages

is given over to agticulture, 300,000 date palms and 70,000 olive trees'

For rnuch of its history, Siwa's location isolated it from mainstream history'-From,the fall of

the Roman Empire, its independence went largely unchallenged until the 19'" century' Arabian conquerors of Egypt regarded its oases as rough, impoverished desert settlements'

Armies that might truoe triud" it through the desert were repelled by the central fortress or by

the paucity of rthes. The first European arrived in ll92 but the oasis was not brought into the

fold of modem states until 1840, when the Ottomans shelled its citadel and massacred its

chieftains. The first Egyptian ruler to visit Siwa was the Khedive Abbas Helmy iI in the early

y"".. "f

the 20th """ti-.y.

The Khedive laid the foundations for the Great Mosque' the first

public edifice built by the state. His grandson, Prince Abbas Helmy III, has retumed from the^Uf to build himself a house in Siwa. He makes a point of praying in his grandfather's

mosque.

Even then, contact with the rest of the world was limited mostly to the taxes it paid and,

briefly, to the passing armies of the World Wars. It wasn't unlll 1977, when President Sadat

took an interest in the oasis, that modernity began to intrude' As part of the Camp David

accords with Israel, the Egyptian arny evacuated the Sinai-which was later opened up to

modern mass tourism-ur-d *u, re-deployed to the westem Egyptian desert, guarding the frontier with Libya. In 1983, a militaryiantonment was set up in Siwa, providing the villages

with access to a helicopter for medical needs. Soon afterwards' the Egyptian state built the

asphalt road that ,"ached 300 kms through the desert to link the oasis with the provincial

capital on the coast.

With that connection came increased attention from the state: schools, health services and a

smattering of investment-enough to begin to wear away centuries of traditional culture' MotorbikEs, cars, television, intemet and mobile phones began rapidly widening the Siwis'

horizons to the rest of the world. Along with a glowth in westem tourist traffic, a strong

reform current of Islamic practices undermined the softer traditions of Siwan practice' The

proliferation of wells loweied the water table; ironically the pumpld water flooded the lakes'

pulling the salt towards the surface, endangering cultivation. and killing swathes of palm

gro,r"J. Traditional craftsmen found that fewer students were interested in learning their art'

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The older generation feared that ancient Siwi values were eroding as the young generation tunred its gaze to the world beyond the oasis.

Environmental Quality International

Among the new arrivals since the road was built was EQI, which first came to Siwa with a consulting capacity in the 1980s and began investing in the region in 1996. EQI's plan was to create a suite ofprojects that capitalised on the oasis' resources. By nurturing and polishing those aspects of Siwa that it identihed as marketable, the company would target the high-end of the value chain in global tourism. Because it would rely on the undisturbed nature of the oasis it would have to minimize its impact on the community. Materials and labour, wherever possible, would be local.

Practices would be sustainable with the aim of preserving the local culture, heritage and landscape. By valuing what was local, development would not come at the expense of traditional life. The oasis would present the world with an example of how poverty could be reduced by capitalising on local culture and safeguarding the environment. If all worked well, the road to the oasis's future would run through the riches of its past. Siwa would once again become an oracle, this time for sustainable development.

EQI's component projects, described below, attracted the attention of the Intemational Finance Corporation, which provided $880,000 in loans and $486,000 in technical support. They comprise three hotels, a line of embroidered products and traditional jewellery, and the export of organic agriculture. The company provides direct and indirect employment to more than 600 Siwans as suppliers, staff, craftsmen and women and builders. The projects at Siwa were the consulting company's first real investment: "a fotay" in the words of Neamatalla, "away from the world of advice and into the world of execution."

Adrdre Arnellal Oasis

EQI's Siwa centrepiece (and the only investment that did not benefit from the IFC loan) is the Adrdre Amellal Oasis, a desert lodge built at the foot of a mountainous outcrop overlooking Siwa's largest lake, some distance from the main settlement. The company wanted to build a luxury lodge in the traditional style, using palm logs and blocks made from rock salt and mud. But when it began to enquire, it found that the knowledge of traditional building techniques was conhned to a small group of old men. The ancient style was seen as archaic and expensive. New construction employed modem materials like concrete and cement, cooled (for those who could afford it) by air conditioning.

If EQI wanted to build in the Siwan style-and it did-the company would have to rescue a skill that was slipping away. They began with a team of three builders, with mixed results. After the first 20 rooms were built, the company discovered that the untreated palm logs they had used were infested with mites; the insects were dropping from the ceiling onto the beds, hardly acceptable in what was to be a high-end resort. Fumigation, besides being a departure from their vision, proved ineffective, so the company consulted the village elders, who provided the solution: if the logs were soaked in the salt lake for several days then baked in

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the sun for several days, the mites would be gone. The method worked, but the initial roofing

had to be tom off the first 20 rooms so that construction could begin afresh'

The construction was ultimately successful. Not only did it provide the lodge with the elegance and authenticity of tradition, it also revived a cJ:aft' at risk of being lost' The oasis

nori hu, 150 enterprises irained in traditional building techniques. Their revival reawakened a

pride in the oasis' cultural heritage. Increasingly Siwan builders choose to use palm logs and

rock salt blocks instead of more modern mateiials, and the state govetnor has decreed that all

new constructions are to be built in the traditional style. This has encouraged outsiders to

build tourist facilities along traditional lines.

The hotel, which took eight years to build, began small with eight units, but quickly expanded

through word-of-mouth publicrty to 24 rooms, with a maximum occupancy of 70 guests' pricei at a range of US$ 350-45b per night, it has achieved a level of appreciation, attracting

interesting nav-ellers from all ou"ith" world and from all walks of life including scholars, politiciani, artists, fashion designers and even young students. In addition, the lodge is environmentally efficient. Kept cool during the day by the thick walls, it uses no elecfficity'

Beeswax candles are used for lighting. Coal braziers provide heating when needed' The

ceilings are made from palm and the fixtures are made from olive wood' The swimming pool

is fedly natural sp.ings. Dinner consists of organic food, mainly grov/n locally '

The lodge's staff is also predominantly local, providing employment and advancement to 60

members of the siwan community. Iieeping salaries at local levels are key to the lodge's

financial success. Partly becaut* it t "pt expensive international staff to a minimum-

primarily in a consultini capacity for the kitchen-the hotel was profitable after just five

years.

In 2005, the eco-lodge was ranked second by Conde Nast Traveler on the magazine's list of

"Green Resorts". ln 2A07, Trave! & Leisure listed it among its top 20 "Favorite Green Hotels'". It has also received the magazine's 2006 "Global Vision" award. Most importantly perhaps, the lodge serves as the flagship for EQI',s business model, proudly displaying

Siwa's

past and culture like roughened gJmstones that, properly cttt and set, provide an experience

that can be found nowhere else.

Shali Lodge and .Elbabenshal

The company's second project, which was built concurrently, was another hotel, Shali Lodge,

set in a palm grove ,r"- th" village of Siwa. Built once again in the traditional mud and salt brick faihion, th" hot"l offers eigit rooms furnished in the company's simple' plush style

travellers who may not have the iuclget for the luxury lodgc in the desert' Thehotel provides

employment to 2ti Siwans. The IFC loan allowed EQI to add a plan for its extension that

would double that number.

Shali Lodge is a five-minute walk from the oasis' prime archaeological attraction, the Fortress

of Shali, and the surrounding, largely crumbling traditional village' Albabenshal' another more recently built 1l-room hlritag-e hotel, is located at the foot of the Shali Fortress, raised

from the resttrecl ruins of derelict houses abandoned during the rains of the 1920s'

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In addition to offering the company's services to a different category of traveller, both lodges

provide the company with a presence in central Siwan life, and serve as reminders that EQI is

not an aloofproprietor ofan hotel set apart from the rest ofthe oasis. The company also hopes that its restoiation efforts will serve as an example for Siwans looking to rebuild their old town.

Siwa Greations

In 200i, soon after EQI had built its first two lodges, the company realised that all its employees and partners were men. Siwan culture is very conservative and there is a strict ,"p-uiion of men and women; women refused to work in the hotels or anywhere adult males *"r" pr"r"nt. Seeking to expand the company's impact, Mounir Neamatalla tumed to his sister, Laila, a jewellery designer, who after some research, decided she would tap into Siwa's

tradition of embroidering. Again, EQI was faced with reviving and adapting a craft that was fading from local memory. Siwan's fine stitching was unique, but few members of the younger generation knew how to do it.

Laila Neamatalla began an initiative whereby grandmothers were asked to train young women

artisans in the ancient tradition, and the eco-lodge began offering local products embroidered

in the traditional sfyle to its discerning clientele. As the work flourished, she realised that quality conkol would be easier if she moved her workers from their homes into a workshop.

The project took off quickly. Beginning with 50 trainees funded through a grant from the Briti;h Embassy, within a year Neamatalla had 300 women stitching for her. Girls work in the

workshop learning the basics of quality control until they get married, after which they continue to work from home. Traditional motifs are embroidered onto blouses, gowns, shawls, sarongs, towels, sheets and tablecloths. Necklaces are made from buttons and semi-

precious stones. Embroidered leather is set in silver to make rings and bracelets. The products

are sold not only in the lodge but in high-end outlets in Egypt, Italy, France and England. In

2004, the Florentine haute-couture fashion house Ermanno Scervino began incorporating

Siwan embroidery into its collection. Material is sent from Florence to Cairo, shipped to Siwa,

where it is stitched and sent back to be assembled in Italy'

In addition to reviving a fading art, the project has been an economic success for the Siwan artisans. Fearing that if she paid her workers too much she would upset the male-dominated economic order and trigger resentment-Laila set her initial piece rate at a level slightly less than what a man could earn in a day. Nonetheless, payment is based on production and a productive embroiderer can easily out-earn the men in her household-

Siwa Organic

The success with the women led to demand for something similar for the men, more lhan'7}o/o

of whom worked in agriculture. EQI responded with an effort to boost local attempts at organic production. The biggest obstacle facing the farmers, the company found, was a lack of tiquiOiry-. Farmers would finance their agricultural inputs by selling their crops before they were planted, sometimes with disastrous results: if the harvest fell short they might be forced

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to sell their land to pay their debts. To hedge against these risks, Siwan fanners had begun to

use chemical fertilizers to maximise their yields'

Recognising this as a problem, and using funds provided by the IFC' EQI began offering to

prr-b;y the" crops for 40o/o to 50% moie than the market price, provided the harvest was

lro-n'orgunicaliy. The company also started acattle financing project to supply a source of

alternative fertllizer, as well as milk: it rvould buy cows for farmers to raise, after which the

lwo parties would split the profits. The schemes were expected to benefit 200 to 300 farmers

and presewe the region's production of organic produce'

Thecompanyalsobeganprocessingandmarketingtheregion'sproductswitha'line.that included olives, dates ind iocal p.odl.rce such as olive tapenade, sycamore

jam' and hibiscus

syrup. This heiped to add value to traditional practices and.also.served the global market'

Si\vun, traditionally harvested their olives by stripping them directly from the branch' leaving

the fruit scratched, bruised and unsuitable for sale in Europe. So EQI asked the farmers to

begin hand-picking the olives. A local recipe for brining the olives involved much more salt

thin is customarily used elsewhere, the."*ult of the mineral's abundance as well as a means

to preserve supplies for lean years. EQI's recipes use a lnore conventional amount of salt,

designed to last one season and please the intemational palate'

The project reflects the premium the company puts on its image. Its benefits aren't only

economic and don't only'uc".u" to the farmir - they are critical to bumishing and preserwing siwa,s image as a place of tradition, purity and environmental awareness.

Challenges Going fonrnard

The biggest challenge EQI faces is helping the community in which it is located to balance

traditioir"against modemiir. rn" "o-puny has tied its brand as much to the locale in which it

operates as to the enterprises it has launched. With its business model designed to introduce

guests to the ancient culture and heritage, it can't afford to 1et the elements that make Siwa

unique slip away.

With its nafural heritage, its geographic remoteness and historical uniqueness, Siwa has

attracted low impact toiJsm un,t u ""ttuitt profile of visitor, from backpackers to jetsetters'

the latter being EQI's target market. They tend to form an emotional connection with its

Saharan charm and make repeated trips to the oasis'

But while the company's founders would very much like to see.the oasis preserved as it has

been for millennia (tl offer clients "an opportunity to travel tack in time"), they also recognise the irnpact of thc modem world ott to"at customs and mores'

Motorcycles have

begun to muscle out donkeys on the village roatls. For villagers looking to expand their

homes, modern construction is "heupe.

and iaster to put up; only foreigners building vacation

homes can be relied upon to use exciusively local maierials and traditions, as the price of local

expertise and materials is beyond the reach of the local population'

EQI has been very careful not to engage in practices that are unsustainable-it rejected

introducing an espresso machine after ii discoveied that it would consume as much electricity

as the rest of the lodge. But its influence is limited, not least because it is but one amongst

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many outsiders operating in the oasis. Just as tourism has raised living standards, television

has raised awareness ofthe rest of the world, and along with it people's expectations. The introduction of indoor bathrooms in many homes has put a stress on the water supply' literally

the lifespring of the oasis. Protecting the way of life may mean preserving the absence of

electricity arid street lighting in Siwa as an asset-a chance to see the stars and connect with

the universe but there is little indication that residents agree'

Nor is it clear that Siwa's traditional lifestyle can be scaled up to handle the area's booming population. An oasis is like an island; its natural resources are limited. There are only so many

puirn t ee, that can be cut for roofing importing them from outside is forbidden for fear of introducing new pests. A debate is raging about the sustainability of Siwa's water resources.

Even befoie the introduction of bathrooms' the water table was dropping; the growing number

of farmers had simply dug too many wells. Four plants have been built to bottle the oasis'

mineral water (some operated by the Egyptian armed forces) and sell it nationwide'

.,Siwa is now literally at a crossroads," says Neamatalla. "It can evolve to become just another

village, where the measures of progress are strictly financial, very much related to whether

yor, f,urr" paved streets, sidewalks and the like. Or Siwa can literally be nourished by its past,

nourished by its unique nature'"

EeI helped to put the oasis on the tourism map and others are beginning to connect the dots.

Thire has been a proliferation ofhotels and restaurants in the last year. Children have started

running after tourists, begging for pens, candy or money. The oasis has a small landing strip,

allowiig those who "un

hir" i plane to land, and there is talk of expanding it into a full-scale airport t"o facilitate the introduition of package tours. Egyptian businessmen talk of building

400-room hotels catering to the mass market.

With only 600 families, in a community of 23,000, working with or for the company, EQI

doesn,t have the leverage to decide the path the oasis will take. EQI may be able to restructure

a hotel or two in the old town, but oniy the state can choose whether to set up a system of incentives to ensure the rest of Siwa develops along those lines' Govemment policy is set largely in the Matrouh provincial capital, 300 kms away, where the tourism perspective is

focused less on sustaina^bility than on volume. In the battle between tradition and modernity

on which the future of the company's business model depends, EQI's needs allies. Organising

them to help shape Siwa's future is a further challenge'

Questions:

1. What are the key components of EQI's business model as applied to Siwa?

2. Evaluate the impact of EQI's activities on Siwa'

3. What are the local, national and global forces driving change in Siwa?

4. Going forward, what advice would you give Mounir Neamatalla?

Strayer University-Virginia Beach, "BUS 51 9: Risk Management", "Fa\|2012"

04./2009-5607

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