18 - 24 January 2001
Issue No.517
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Al-Ahram Weekly On-line 18 - 24 January 2001 Issue No.517 |
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A new saga?
The cabinet recently approved two foreign ventures in the retail and wholesale sectors. One is by the French supermarket chain Carrefour, and the other, according to the government's announcements, will be by a major German company that plans to make large-scale investments in the governorates of Cairo, Giza, Alexandria and Qaliubiya. With this second venture, says Minister of Internal Trade and Supply Hassan Khedr "a new and civilised marketing approach" will be introduced to peripheral areas outside of the capital, supplying commodities to small traders seven days a week, 365 days a year. It will supplant the traditional weekly souq (market) held in villages throughout the countryside.
These developments beg the question of whether, in the drive to solicit foreign investment, there has been sufficient consideration of the impact such ventures will have on production and marketing structures in the countryside. Do our economic authorities recognise the need to assess the effects of these -- particularly on small and medium producers and traders whose traditional livelihoods will be lost forever with the advent of this new and overwhelming competition?
Also, what guarantees are there that commitments to these investors will not be backtracked on if allegations are made that new "foreign-based monopolies" are developing? Surely such a situation would undermine the efforts currently being extended to promote Egypt as an "investor-friendly" market.
That such a scenario might occur is not the stuff of imagination. Witness the euphoric heralding of the British supermarket chain Sainsbury's entrance into the Egyptian market and the subsequent developments pertaining to this. After a turbulent, short existence, there is now talk that Sainsbury's may pull out of the Egyptian market or downsize its investment. Regardless of what transpires, the reactions elicited by this venture are instructive.
When prices offered by the British chain drastically undercut local retailers, the latter cried foul. And although Sainsbury's actions were in line with marketing strategies followed in liberal economies, they seemed totally unacceptable in view of the conditions of our local market. The domestic response was in no small part due to the fact that in spite of almost three decades of the open door policy, liberalisation and privatisation, government policies and private sector practices have failed to strengthen domestic strategies for production and marketing or prepare people for competition. And this shortcoming cannot be attributed to insufficient time.
There has been, in fact, a total disregard of consumers' rights by both government and retailers. This has resulted in a persistent failure to formulate anti-trust and consumer protection laws. Such legislation, our private sector now belatedly realises, would have been to its advantage in countering foreign competition. While an ineffectual Federation of Chambers of Commerce is overcome with internecine strife and disputes with the Ministry of Trade, the government has failed to conduct a constructive dialogue with Egyptian traders to "educate" them in the mechanisms of "free competition."
Against this backdrop it was impossible for Sainsbury's to maintain its hard-hitting strategies until a "compromise" was made and it raised its prices so as not to challenge the status quo. What happened subsequently? Did those threatened Egyptian traders get together to form a similar wholesale or retail venture and likewise assert their presence in the local market? They did not.
And so their predicament continues. While they accept competition in theory, they do little to sustain it.
Just as our economic administration needs to thoroughly assess investments so that it can be more self-confident in defending them, so must our private sector radically reorganise itself to become an active force in a fast-changing market.
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