Sustainability Report 2016 – Economy

The past three as well as the ongoing devaluation of the Egyptian Pound led to a weak overall economic development and resulted in a consumption decline in Egypt. Hence, SEKEM faced challenging times in 2016 and could not achieve all economic targets, like in the former post- revolution years. The majority of SEKEMs produced goods, 79 percent, were consistently sold in the local market. The initiative kept its strategic focus on financial recovery and debt relief in order to strengthen its resilience. Dealer networks, nationally and internationally, have been extended and new customers were acquired. In addition, SEKEM has begun to strengthen export activities, which helps to counteract the devaluation of the Egyptian Pound (EGP).

However, SEKEM could achieve improvements in terms of its economical dimension. SEKEM increased the minimum basic salary to 1‘300 EGP and improved the ratio of the highest to the lowest annual full-time salary from 1:36 in 2015 to 1:31 in 2016, for instance. Furthermore, due to the positive operational performance, SEKEM was able to invest 10 percent of its annual profit into community development. SEKEM raised the sales value of certifiable products, which have a Demeter certificate (from 43 percent in 2015 to 53 percent in 2016) as well as of products with an Organic certificate (from 56 percent in 2015 to 73 percent in 2016). The challenge to successfully certify the remaining 27 percent of possible organic sales is mainly driven by product quality from SEKEMs suppliers that fight with an immense pesticide pollution via water and air that cause residuals. Another reason is the mandatory transition period for conventional farms that want to become organically certified from which we are committed to take the produce during these three years of transition. Otherwise SEKEM would not be able to convince farmers to enter in an organic production system that usually comes with an initial drop in productivity. Of course, SEKEM is 100% committed not to use any chemical fertilizer or pesticides for its natural raw materials and striving for a fully certified organic product portfolio over the coming years.

Together with Heliopolis University’s Carbon Footprint Center SEKEM continued with assessing its product portfolio and increased its share of sales of products with known product carbon footprint from 56 to 80 percent. The carbon footprints of SEKEM products are based on categories, such as herbal teas, organic baby garments, organic textile dolls, herbs and spices, juices etc. What is not included yet are product categories such as animal products, seeds etc. Furthermore, all product for ATOS Pharma, natural medicines and healthcare products are not applicable for carbon footprint calculation.