Al-Ahram Weekly | Economy

		31 Oct. - 6 Nov. 2002 Issue No. 610 Economy	Current issue Previous issue Site map
Published in Cairo by AL-AHRAM established in 1875		Recommend this page

Fundamental failures

EXPERTS at a recent conference have blasted the state for failing to play an effective role in integrating Egypt into the world economy, reports Mona El Fiqi.
The conference, entitled "The Role of the State in a Changing World", was organised by Cairo University's Centre for Economic and Financial Research and Studies, the Centre for Developing Country Studies, and the Public Administration Research and Consultation Centre.
Mustafa Kamel El-Sayed, director of the Centre for Developing Country Studies said that the government's failure was clear when it was not able to achieve even the goals it set for itself. "These aims were to increase foreign direct investment flows to Egypt, narrow the gap between exports and imports, raise savings rates and local investments, increase growth rates to seven or eight per cent and raise the competitiveness of the Egyptian economy," said El-Sayed.
According to El-Sayed, the state should have implemented a comprehensive political and institutional reform to face globalisation.
Since Egypt is obliged to meet its commitments to international institutions, experts asserted that the role of the state should be changed to help Egypt manage a comprehensive integration in the coming period.
The role of the state in promoting exports was one of the main topics discussed at the conference. Shereen El-Shawarbi, professor of economics at Cairo University said that the role played by the state in this domain was the main reason behind the moderate performance of Egyptian exports.
El-Shawarbi added that although international markets in general have become more liberalised in the past two decades, Egypt was not able to conquer a share of the market because it could not produce exportable goods. In fact, Egypt has even lost market share for its conventional exports, El- Shawarbi said.
According to El-Shawarbi, the government's protectionist policies are the main reason that Egyptian exports cannot compete in world markets. The imposition of high tariffs on production inputs increases the cost of manufacturing and makes the price of exports uncompetitive, El- Shawarbi said.
Participants at the conference also said the state has failed in its role to broker labour-business relations. Ahmed Ghoneim, professor of economics at Cairo University said the government "did not have the desire to reform" and was therefore unable to strike a balance between keeping labour satisfied and business groups in tune with government policies.
Targeting poverty

THE AFRICAN Development Bank (ADB) will extend a total of $220 million in loans to two Egyptian banks. The bank said it has approved a $140 million loan to finance a credit line to the National Bank of Egypt (NBE) and $80 million to finance a line to the Export Development Bank of Egypt (EDBE).
The two loans will "contribute to poverty reduction in Egypt and promote export growth", the ADB said. By marketing raw materials to agro- processing industries, the EDBE loan is specifically intended to help women increase their incomes. It will also promote agro-based industries for export.
On the other hand, the NBE loan will provide the financial resources needed for extending medium and long-term loans to fund viable investment projects in industry and tourism, with an emphasis on small and medium enterprises (SMEs). The NBE will be able to use the proceeds of this credit line to support private sector investment.
The availability of long-term investment funds should help shift investment activities from the trading to the productive sectors and provide more impetus to the manufacturing sector, according to the ADB. Furthermore, the bank said, the provision of long-term funds will help address the lack of long-term development of Egypt's private sector. The bank said the proposed credit line falls under ADB Group's strategy for intervention in Egypt, which aims at poverty reduction.
ERF in Sharjah

THE ECONOMIC Research Forum (ERF) for the Arab states, Iran and Turkey, held its ninth annual conference this week in Sharjah, UAE. The conference, which ended on Monday, is a venue to discuss recent policy-related research findings. This year it brought together some 250 participants.
Throughout the three-day conference around 30 papers were presented tackling issues related to five main issues: trade, labour, finance, industry and the environment. Alongside the regular sessions, special meetings were held bringing together researchers working on long-term projects with external experts. These special sessions focused on, among other things, small and micro-enterprises, governance in the Middle East and North Africa, and the region's economic growth.
ERF is an independent, non-governmental, non- profit organisation aimed at initiating and funding policy-relevant economic research. It does not conduct research in-house, but acts as a research network, clearing-house and facilitator.
Airbus top in the region

AIRBUS Industrie, the European aircraft manufacturer, has launched a new marketing campaign in the Middle East, beginning with Cairo, this week. According to David Vilupillai, regional manager for marketing relations, Airbus booked 150 firm orders, worth some $14.6 billion at list prices, despite poor market conditions. The figures were for the first nine months of the year and give Airbus a 54 per cent market share.
"Airbus has done extremely well in the Middle East, where it has won all of the new business so far this year," stated Vilupillai. "We predict that airlines in the Middle East and North Africa will need to acquire some 620 airliners, worth about $50 billion, up to the year 2018. It is well placed to win a majority share of this market with its attractive aircraft family," he added.
Vilupillai indicated that Airbus has managed to increase its market share from 20 per cent in 1991 to 54 per cent in 2001, in competition with US manufacturer, Boeing, whose share of the world market has decreased from 80 per cent to 45 per cent over the same period.
"Boeing's deliveries will have dropped by half, from 620 aircraft in 1999, to 300 aircraft by 2003. Airbus has maintained a stable amount of deliveries, ranging from 294 to 300 aircraft over the same period," he stated.
Egypt's national carrier, EgyptAir, is a key Airbus customer, operating 22 aircraft on short, medium and long-haul routes. It currently flies seven A320s, four A321s, nine A300s and three A340s.
"EgyptAir has also ordered an additional five A318 and two A340 which are due to be delivered by the end of 2003," Vilupillai said. Vilupillai's regional tour also includes Saudi Arabia, Kuwait and the United Arab Emirates.

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