The second crossing

By Ibrahim Nafie

Some LE200 billion has financed the reforms that have seen Egypt's infrastructure become one of the best in the Third World, making investment in Egypt an attractive proposition both locally and abroad.

Infrastructural developments in the 80s and 90s have included a number of massive but necessary programmes. Between 1952 and 1981 the number of telephone lines increased 5.6 fold while between 1981 until today they increased 14 times. Since 1981 Egypt has built an additional 24,000 kms of paved road, 4,800 kms of railway track as well as four new airports to cope with more than double the number of passengers.

Electricity production, an important gauge of industrial and agricultural development, has increased from one billion kilowatt/hours in 1951 to 7.5 billion in 1973, to 18 billion in 1981. This year, it is approximately 102 billion. Water purification plants have seen a similarly impressive increase in output. In 1981, 75 per cent of Egyptians had ready access to potable supplies of water, a figure that has now increased to over 90 per cent. The waste water system has seen an even greater expansion and now serves 88 per cent of Egypt's inhabitants. All these infrastructural improvements have been vital in ensuring that the local economy becomes integrated with the international economy.

While pursuing this programme to improve the infrastructure Egypt's leadership simultaneously implemented policies to alleviate poverty and illiteracy and further educational and scientific development.

A recent UN report on human resource development cites Egypt's human development index as being 21 per cent in 1960, 27 per cent in 1970, 36 per cent in 1980 and 61 per cent in 1995. In addition, the daily per capita rate of calorie intake increased from 2,352 in 1970 to 3,315 in 1995, a major factor in the increase in life expectancy from 46 years in 1960 to 65 today.

If Gamal Abdel-Nasser laid the foundations for economic autonomy and Anwar Sadat instituted the reconstruction of the 70s in addition to inaugurating the deregulation of the economy, it is President Mubarak who has presided over the great leap forwards that has seen Egypt emerge from the developmental bottleneck. And by pursuing the goals of economic development without undue haste or recklessness, Egypt has been able to secure improved living standards for all the population.

Per capita share of GNP rose steadily in the 80s and 90s and now, after weighting, stands at $1,228 as opposed to $590 in 1980. Indeed, between 1960 and 1995 the purchasing power of the average Egyptian increased from $557 to $3,829. GNP itself rose from $22 billion in 1980 to $74.8 billion in the year 1997-98. Growth in GNP, and in its per capita share, indicates an expanding local market which, in turn, indicates an increasing capacity to attract investment both domestically and from overseas. Egypt is at last realising its potential within the global economy.

These substantial improvements in GNP, in the infrastructure of the nation and in developing its human resources, pursued with an overriding sense of social responsibility, have become the cornerstone of Egypt's economic "crossing".

The success of this programme may be demonstrated by reference to other sets of statistics. In 1997-8, GDP grew at a rate of 6.2 per cent, a marked increase on the 4.3 per cent growth achieved in the previous financial year, and an even greater achievement when we remember that, in 1992-3, during the period of strictest restructuring, GDP grew at the miserly rate of 0.5 per cent. The current GDP indicates a level of healthy and sustainable growth, underlining the wisdom of Egypt's determination not to rush into policies that would have only short-term, statistical benefits.

Hand in hand with steady economic growth has been the astonishing success story in the fight against inflation. While inflation had reached over 21 per cent in 1992, dropping to 9.4 per cent in 1995, the IMF predicts it will be less than 4.5 per cent in the current fiscal year. The fall in inflation, naturally, has important social implications. High levels of inflation strike low- and fixed-income groups such as pensioners the hardest. Reducing inflation to acceptable levels protects these vulnerable groups, and therefore became an important policy objective.

In the 80s unemployment rose due to a number of factors -- including the decrease in the price of oil and the return of many Egyptians working in the Gulf because of war. The beginning of the present decade also saw rises in unemployment as the economy restructured and attention was focussed on the necessary task of bringing down inflation. As these policies paid off, resulting in the increase of growth, it became possible to relax monetary restraints and thus encourage the creation of new jobs without the danger of economic over-heating. Unemployment has fallen from 11 per cent in 1994 to 9 per cent of the labour force now.

Reducing unemployment has been a primary political objective and the government has used all the means available to encourage the private sector in the creation of new jobs. The government has itself assumed responsibility for job creation directly, distributing land to graduates and instigating mega-projects in both the industrial and agricultural sectors outside the Nile Valley.

Throughout the turmoil of recent years the Egyptian pound has maintained its strength to the extent that it was capable of withstanding the chaos that afflicted currency markets in the wake of the East Asian crisis. At the same time Egyptian foreign currency reserves now stand at some $20 billion, adding to international confidence in our country's economic performance. Unfortunately exports have not grown at a commensurate rate, and remain disappointing in the light of all the other positive indicators. Let us be in no doubt, though, that the government is pursuing a range of initiatives to improve the situation.

We have, then, successfully passed a large number of the hurdles placed in the path of sustainable economic growth and our success in doing so has been lauded by international institutions such as the IMF and the World Bank. International companies have more confidence than ever in Egypt, something reflected in levels of investment.

The crossing of the Suez Canal in 1973 was the result of precisely the same traits of self-reliance, self-confidence and faith in our capacity to realise a better future that we are witnessing once again, today, as President Mubarak leads the country not across a physical barrier such as the canal, but to the shores of a brighter economic future, as we transform ourselves into a fully developed nation, fully integrated in the global economy.