 |
Al-Ahram Weekly 6 - 12 January 2000 Issue No. 463 
|
||
Published in Cairo by AL-AHRAM established in 1875 |
| ||
|
Al-Ahram Weekly 6 - 12 January 2000 Issue No. 463
|
||
| Published in Cairo by AL-AHRAM established in 1875 |
| ||
Egypt Region International Economy Opinion Culture Heritage Millennium Features Profile Living Travel Sports People Time Out Chronicles Cartoons Letters Private prospects
By Niveen Wahish
Almost a century ago, in 1920 to be exact, Talaat Harb set up Egypt's first private sector bank. At that time and for several years to come, the Egyptian private sector was in full-fledged growth. But all this came to a halt with the 1952 revolution and nationalisation. Today, 80 years after Harb's pioneering venture, the private sector is taking its first steps toward putting Egypt's economy back on track and enabling it to compete in the international arena.
"There is no other way [to go] than to go for market forces," said Peter Gopfrich, executive director of the German-Arab Chamber of Industry and Commerce. But this is a situation that is not unique to Egypt. What may be unique is that the private sector in Egypt has only started in the past decade to regain its status. As Gopfrich put it, private enterprise is "quite young".
"A huge responsibility falls on the private sector to contribute to the overall economic development," said Philip Corich, project manager of the EU-funded Private Sector Development Programme (PSDP). But to become the driving force of the economy, the private sector cannot work alone. It needs to expand its role in the Egyptian economy, while keeping in line with government policy.
"A greater role for the private sector does not mean that there is no need for the government," said Gopfrich. But the role the government needs to play is that of a frame-setter, rather than owner and manager of everything.
Corich believes that the government needs to establish a pro-business environment; to "make it easier to start a business and stay in business." This type of restructuring involves the long-standing issues of providing better infrastructure, reducing customs and removing common impediments to doing business, like the cumbersome bureaucracy that beleaguers the private and public sectors today. But this is not all. The government must set out a clear-cut framework for how it intends its private sector to develop. To begin with, medium-sized companies need to be developed. Says Gopfrich, "They are the core of the economy".
The informal sector also poses a considerable challenge in Egypt's growing economy. "Get them out of the shadow," says Gopfrich, recommending that members of the informal sector be incorporated into the economy -- made more "transparent" and "more dynamic". This involves being integrated into the banking system and being able to apply for credit facilities -- something they cannot do at the moment.
Not to be ignored is the situation of Egypt's tax system. "Taxes are not just a means of collecting money, but can be used as incentives," Gopfrich commented, suggesting that tax breaks be given to companies that train a certain number of individuals beyond their staff. Additionally, companies that abide by environmental standards should be rewarded with tax deductions.
Giving up control to the private sector is not easy, though. Medhat Khalil, chairman of Raya Holding (a holding company of seven information technology companies), put it most succinctly: The government has to "let go."
"The government has realised that it needs to depend on the private sector to achieve economic growth. Now it needs to take action and release what it has kept in its hands for a long time," Khalil said.
Information technology (IT) will be a major factor in the new millennium. "IT is part of the infrastructure without which the economy will not develop," Khalil said, explaining that without a modern telecommunications and information network, no institution or industry will grow. "The development of electronic commerce, industry and exports will depend on our ability to acquire accurate, updated information speedily."
The government is not only targeting an IT infrastructure, but also an IT industry that is capable of exporting. Khalil says that with this goal in mind, cadres in the field must be developed through training and education. "Egypt has a very good relative advantage in this sector," he said, "because it is an industry that depends to a large extent on minds." The IT industry relies on a small number of geniuses and a large number of individuals who need not be very bright, but can be trained to do certain tasks of an overall operation.
Philip Corich of PSDP reiterated this point. He said that not only does the government need to provide the educational facilities to produce the type of skills needed by the private sector, but the private sector itself has an obligation to invest in people through training. The role of the PSDP is to help companies develop business strategies by recognising their shortfalls and proposing solutions to the various problems the private sector faces in today's economy.
Egypt is a dynamic developing economy and things happen fast. With increasing liberalisation and openness in the Egyptian economy, Corich believes that the private sector needs to recognise and start planning for what is going to happen; to start adapting to the coming economic trends rather than look the other way.
A somewhat underemphasised issue that the private sector needs to bring into perspective is social awareness. "Being in business is not all about making money," said Corich, suggesting that business people have a social responsibility to the conditions in which their fellow countrymen live.
