Courting foreign investment
To meet the challenges of globalisation the Egyptian economy needs to tackle a host of issues. Mona El-Fiqi reports
In two recent seminars, experts and businessmen discussed the obstacles that have hindered the Egyptian government's economic reform programme over the past two years.
Experts say that among the problems that need to be tackled most urgently are soaring unemployment, the low volume of exports, the lack of foreign direct investment, the instability of foreign exchange rates and the nature of education policies. Organised by the Egyptian Junior Business Association, the first seminar was entitled "How can the 1Global Competitiveness Report 2004 help build Egypt's national agenda for sustainable development?" One of the topics discussed was a World Economic Forum report that gives an overview of the global economy. The report is optimistic about the international economic environment but says Arab countries are lagging behind. The report downgraded its global ranking of Egypt from 40th in 1998 to 58th in 2003.
Addressing the seminar proposing solutions for Egypt's long list of economic challenges Chief Economist and Director of the Global Competitiveness Programme at the World Economic Forum Augusto Lopez-Carlos said that it is up to the Egyptian government to address many of the issues affecting the country's economic situation. "To manage globalisation in a better way, the government should redirect the country's expenditure policies," he said. He also emphasised the need to enhance the role of education and human resources, suggesting that the government reallocate funds to those sectors. Moreover, Lopez- Carlos added that education policies should in themselves be changed and that the government should make more of an effort to boost the education of women in order to minimise female illiteracy and further integrate women into the labour force.
Another factor that Lopez-Carlos said would help maintain sustainable economic development is market stability. "You will never have economic development if you have an inflation rate that is out of control and unpredictable exchange rates," he explained. However, the notable successes of a number of other countries in transforming their economy and raising their per capita income is a source of hope. "It is very encouraging to look at the experiences of other countries. They are relevant even if the recipes change from one country to another," Lopez-Carlos added.
The lack of foreign direct investment constitutes the main worry for Egypt, a country whose economy could -- if it chose to follow in the footsteps of other Arab states such as Jordan -- be transformed altogether. But why are foreign investors not viewing Egypt and the Arab world as investment options? The problem "is not the size of the market since the Arab market grows as the population rate grows," Lopez-Carlos said. In his analysis, there is something wrong in the investment environment that pushes investors into neglecting Arab markets. Usual investment practice leads to making comparisons between different regions' profit potential. In attracting foreign direct investments, the insufficiently liberalised Arab markets are well behind countries such as Korea and China. "Egypt has been a little more successful in attracting foreign direct investments than other Arab countries, but the level is still low," Lopez- Carlos said.
The second seminar, entitled "Marketing Egypt's great potential to attract Arab and foreign direct investments", was recently held at Al-Ahram Organisation. Voicing the opinion of foreign investors in Egypt and another 15 countries Chairman of Future Pipe Group and member of the International Board of the Council on Foreign Relations-US/Middle East Project Fouad Makhzoumi said that there are many factors that attract investors to Egypt. He mentioned the country's political stability coupled with the government's support of economic reform programmes. According to Makhzoumi, foreign investors have faith in the Egyptian economy but they still find themselves facing many problems such as red tape, the duplication of laws, the existence of monopolies, the instability of foreign exchange rates and the absence of accurate economic figures.
