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Al-Ahram Weekly 27 Jan. - 2 Feb. 2000 Issue No. 466 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 27 Jan. - 2 Feb. 2000 Issue No. 466
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Features Profile Travel Living Sports People Time Out Chronicles Cartoons Letters Economic cohesion
By Ibrahim Nafie
Under Egypt's predominantly liberal economic policies, private domestic and foreign investment has become the primary determinant of economic growth. Maintaining and promoting an attractive investment climate has, therefore, become of paramount importance.
Clearly, one of the most important constituents of this is political and social stability. Egypt has a relatively solid record in this regard. For over two decades it has been free of major popular disturbances, while externally it has maintained peaceful relations with its neighbours. This is not to say that certain serious incidents have not shaken investors' confidence in the Egyptian investment climate. However, such incidents were largely temporary aberrations, often exploited and blown out of proportion by certain foreign parties with a vested interest in deterring investment from Egypt and damaging its regional status. Nevertheless, it should be stressed that the machinations of these parties are easily forestalled as long as we in Egypt safeguard our social and political cohesion.
Certainly Egypt, more than any other country in the region, possesses the essential ingredients for social and political stability. The centre of one of the oldest civilizations of the world is also the home of a homogenous populace and the seat of a moral and humanitarian legacy derived from both Islam and Christianity. Moreover, Egypt is thankfully free of the racism that plagues other countries of the region, Israel above all.
Of course there are still many areas in which we can improve social cohesion. Above all, we must lift the quality of life in Egyptian society as a whole through educational reform, the eradication of illiteracy and the elimination of poverty and unemployment. It is also important for us to reaffirm the principle of citizenship as the fundamental binding value in society and government, regardless of religious or other affiliations.
In addition, Egypt possesses a stable government, founded upon a solid base of institutions. This government has a reputation for reliability, bolstered by Egypt's lengthy history and its prominent regional and international diplomatic role. The momentum of the Egyptian economy, moreover, has been spurred by the democratisation process set into motion many years ago. Indeed, Egypt stands out in the region as possessing the most democratic order, surpassing in this quality Israel, whose very constitution stipulates that it is a "Jewish state", to the exclusion of other peoples. It should be remembered, however, that Egypt's democratisation process is still in progress.
A second vital constituent of an attractive investment climate is a cohesive legislative structure conducive to investment. In this, too, Egypt is well poised, with a legal and judicial infrastructure that furnishes guarantees for private property and investment. In addition, since the beginning of the reform programme in 1991, a range of legislation added impetus to privatisation and the liberalisation of economic and political processes have combined to boost the private sector. The overall thrust of these measures has been to reduce the direct involvement of the state in steering the economy, increasingly giving the lead to domestic and foreign private investment.
The performance of the Egyptian economy is the bottom line in assessing the investment climate. And all the indicators are that the Egyptian economy over the past few years has been robust. According to the latest World Bank report Egypt's nominal GDP for 1998 stood at $78.1 billion, up $55.2 billion from its 1980 level, while its real GDP climbed to $192.5 billion. Equally encouraging for private investment is the growing purchasing power of the average Egyptian, as indicated by the World Bank figure for real per capita share of GNP, which stood at $3,130 for 1998.
Numerous other indicators attest to the current dynamism of the Egyptian economy and its potential for rapid growth. According to World Bank reports, Egypt's GDP for 1997, 1998 and 1999 rose incrementally by 5, 5.4 and 6 per cent respectively, following uninterrupted growth since 1994.
This constant upward trajectory indicates that the Egyptian economy is one of the few national economies not to have been shaken by the international financial crises that began in 1997. Moreover, it tells us of a broader distribution of income in conjunction with an increasing demand for goods and services and, hence, a growing demand for investment in order to supply these goods and services.
Investors looking for a stable and growing market should also take heart from steady reductions in inflation and unemployment. According to IMF figures, inflation in 1999 stood at 3.7 per cent, down from 3.8 for 1998 and 6.2 for 1997. Unemployment, meanwhile, has dropped from 11.3 per cent in 1995 to less than 8 per cent in 1999.
Beyond all these facts and figures, Egypt has many other benefits to offer investors. Among these are a large and diversely skilled labour force, 10 to 20 year tax exemptions on investments, new industrial cities, mega projects like Toshka and West Suez, as well as a modern infrastructural base meeting the various needs of production and marketing. Through Egypt's vast network of international economic relations, investors also have a gateway to a panoply of other markets. Egypt's participation in several free trade zone agreements, within the Arab world and COMESA, not to mention its membership in the WTO, underscore Egypt's potential as a conduit for investment and marketing.
It remains to be said that although Egypt possesses a large supply of businessmen capable of becoming excellent partners to foreigners seeking to invest in Egypt, it is vital that we develop a contemporary business culture to sustain the role of our business community over the long term. Such a business culture is one that favours continuity over fortune hunting, planned growth in profitability over haphazard trial and error, and a respect for legal regulations and restrictions intended to safeguard the interests of business and society. Above all, our business community requires a sense of united purpose. If the private sector is to take the lead in economic development, it must rise above its immediate interests to serve society at large, for in the long run greater social cohesion will enhance the investment climate and stimulate further growth. In short, it is through the development of our communal sense of responsibility and joint commitment to a higher purpose that we will continue to enhance the Egyptian investment climate and make our economy work miracles.
