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Al-Ahram Weekly 6 - 12 July 2000 Issue No. 489 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 July 2000 Issue No. 489
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region Focus International Economy Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Here's looking at you
By Sherine Nasr
For the past twenty five years, USAID has focused at implementing market liberalisation. Its critics say that USAID programmes have consistently ignored production sectors which engage in value-added activity. This bias, they charge, has hindered the creation of integrated self-sustainable growth. Thus, despite the influx of American investment capital, growth continues to be dependent upon US imports and few Egyptians derive any benefit .
American aid agency officials, however, say that they recognise that its development strategy needs to change in the direction of fostering more equitable income distribution. Although, the USAID programme is now entering its final stage, with funds depleting progressively over the next nine years, the agency has set out an ambitious agenda. The "strategic plan" announced last April purports to focus specifically on the issue of equitable development.
In an interview with Al-Ahram Weekly, USAID director in Egypt, Richard Brown, acknowledged that the economic benefits of liberal reforms have yet to reach large portions of the Egyptian population. "Villagers, for example, have not been able to benefit as much from the development that took place," he said, adding that 700,000 people are expected to enter the labour market over the next ten years. Unemployment will continue to pose a serious problem unless current levels of investment and trade are increased. According to Brown, this requires greater co-operation between the government, the private sector and labour. He believes that if the government is to obtain its target of sustained seven per cent growth, greater attention needs to be paid to small and medium enterprises.
Brown said that in the next phase USAID intends to advise the government regarding changing its policy priorities. Egypt needs to "translate growth into good jobs for those who need them," said Brown. "We have launched a number of programmes to encourage small and medium size enterprises (SME) to help people access credit and technology so that they can develop projects," he said.
Through its SME program, USAID is extending $540,000 worth of loans to more than 260,000 entrepreneurs, an initiative which is expected to generate over 165,000 new jobs. Furthermore, explained Brown, USAID plans to foster "facilities which will allow [the private sector] to perform more effectively and to get involved in development-related projects; since when this happens, it is more likely sustainable." The objective is to shift the governmental role from a major stake holder to one that is primarily regulatory.
The shift from large government to SMEs, as economically wise as it may be, is also being driven by fiscal necessity. Simply maintaining current commitments will be a challenge. "It is difficult to define the number of projects carried out by USAID in Egypt, since many sub-projects branch out from the main projects," said Brown. Currently, there are about 40 USAID funded projects covering a wide range of economic, educational, health and environmental activities.
Brown, (far left) with small investors in Qena
The Egyptian market must also be made more "hospitable" to foreign direct investment. The requisites for more investments, Brown said, "are strong infrastructure, consistent investment and tariff policies, an established commercial legal system ensuring contract and IPR laws, efficient customs and transport systems and investor-friendly tax and banking systems."
Consequently, the USAID programme will focus on strengthening the Egyptian environment for export, trade and investment. An initiative with the Egyptian Exporters Association (Expo-Link) is helping Egyptian exporters link up with potential investors and markets. Brown said, "We are also encouraging closer linkages between Egyptian and US firms, such as the recent IT trade mission and visits by Egyptian firms to the US."
However, USAID recognises that measures need to be taken to redress the current trade imbalance between Egypt and the US. Past programmes such as the Commodity Import Programme have created a substantial deficit. Recent export figures indicate that Egyptian exports to the US show no signs of strengthening. Yet, Brown argues that the issue should be addressed by increasing competitiveness. He said, "All our efforts in trade and investment are focused on increasing Egypt's competitive advantage in the production of goods and services."
Over the past 25 years, USAID has funded high capital projects such as roads, power, and telecommunications. However, current objectives are devoted to the development of regulatory bodies. "We are mandated by the Congress to provide $200mn a year to significant policy reform programmes," said Brown.
According to Brown, however, the pace of reform will not be determined by American aid. Brown said, "USAID's strategies in Egypt are not dictated by us, but are [drawn up] in close consultation with the Egyptian government." Brown also noted, "if there are any alterations that need to be made in strategy, at any point, they will certainly be made."
Another important goal is the promotion of Egypt as an IT hub. "We have many ideas to peruse. In the short term, we need to look at the training of personnel so that they will be able to utilise the tools of Information Technology. Agreements have already been signed with US IT companies to conduct this training," said Brown. "Meanwhile, we are looking at how ... to develop [Egyptian] telecommunications into a more privatised, more independent sector of the economy. I believe Egypt's potential in this arena is very high," he said.
As for himself, Brown has reached the age of retirement and will soon leave his post as director of USAID in Egypt. However, he plans to join Winrock International, a US non-profit development organisation. Looking back on his experience in Egypt, Brown says he is convinced that the country is moving in "the right direction." There are many potentially lucrative investment opportunities for foreign direct investment. Brown concluded, "International investors are looking at Egypt."
