Until rates do come down, some business owners are feeling the pinch and are thinking twice about new investment, say players in the agriculture sector speaking with Al Bora. They say the most recent rate hike (which sent rates up 200 bps) drove up their production costs by as much as 4%. Hesham El Naggar, Vice Chairman at Daltex, says his projected 15% annual rate of return on investment isn’t high enough to justify new CAPEX. Given the interest rates, El Naggar says, businesses need to be returning “at least” 25% each year — rates unheard of in the sector. He says the expected cost increases from the pending hike in fuel prices will put the agriculture sector under even more pressure. Rival producer Belco expects investors in the sector to refrain from borrowing at the current rates for the time being. Belco Chairman Sherif El Beltagui says the added costs are eating away any export advantages the sector might have had following the EGP float. Their concerns mirror those of manufacturers, as we noted earlier this month.

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