Monday,23 July, 2018
Current issue | Issue 1282, (11- 17 February 2016)
Monday,23 July, 2018
Issue 1282, (11- 17 February 2016)

Ahram Weekly

More or different?

The private sector must change the way it contributes to development, says a newly released report, writes Niveen Wahish

Upper Egypt
Upper Egypt
Al-Ahram Weekly

“Egypt is a country of income disparities, with the masses living in hardship and a few on top. Something is seriously wrong with the way things are,” according to Dina Sherif, lead author of the report “Expanding Horizons in Development: The Rising Role of the Private Sector”. She made the remarks while introducing the report at a conference organised this week by the American Chamber of Commerce in Cairo (AmCham).

“It is not about doing more, but about doing it differently,” she said. Sherif pointed to the huge urban-rural divide in the country, with Upper Egypt lagging behind, despite the millions of dollars poured into it. Furthermore, 60 per cent of urban dwellers live in informal areas and experience the multidimensional poverty that comes with them. Sherif, however, sees opportunities in the informal areas because, as she says, “in these enclaves a lot of economy [economic activity] is going on”.

The report is an output of the Egyptian Corporate Social Responsibility Centre Project, executed by the Industrial Modernisation Centre, affiliated to the Ministry of Trade and Industry in cooperation with the United Nations Development Programme. It says that 20 million people in Egypt live at the bottom of the income pyramid (BOP) and stresses that the private sector has a role to play in supporting business opportunities for such people.

The private sector’s role is changing, it says, going from philanthropy and charity to corporate social responsibility and now corporate entrepreneurship responsibility, which is about businesses coming up with solutions that can accelerate and sustain access by the poor to needed goods and services and livelihood opportunities.

“A cheque alone will not be enough,” said Mohamed Al-Kalla, chair of AmCham Egypt’s Corporate Sustainability and Responsibility Committee. He said the poor are consumers, employees and entrepreneurs. “There is no way forward without including the poor in the supply chain,” said Al-Kalla.

Large companies should engage small and medium enterprises (SMEs) within their value chains as a form of job creation, the report concludes. “Big business has little potential for the kind of job creation needed by Egypt. However, SMEs have incredible potential to create the jobs needed for Egypt to stay on a path of sustainable growth,” it says.

Producers can integrate people from the BOP at an earlier stage in the value chain, says the report, “especially in the agricultural sector, where aggregation could be used to collect small volumes produced by individual farmers. This model should be complemented by investment in producer awareness of quality standards”.

On a similar note, the report highlights the need to keep the BOP at the heart of business models for the sake of companies themselves. “The increase in poverty levels has resulted in a significant market loss for the corporate sector in Egypt, given the decrease in the number of consumers with buying power,” the report points out, adding, “This is an opportunity for the corporate sector to innovate by producing goods and services that are targeted towards previously neglected underprivileged consumers.”

Egypt’s poverty rate increased from 25.2 per cent of the population in 2011 to 26.3 per cent in 2013, according to statistics from the Central Agency for Public Mobilisation and Statistics (CAPMAS).

The private sector also has a role to play in acting responsibly towards society, the report recommends, by “engraining responsibility within its internal operations to ensure the protection of human rights, transparency and minimal negative impacts on surrounding communities”.

Financial institutions also have a role to play by extending services and providing tailored products to those at the BOP, the report says.

In the light of these recommendations, Sherif argued that change must be fast in Egypt. “Progress can no longer be incremental — technology will not allow that. We have too many unemployed people and too many problems,” she said. For progress to take place the report contends that strong political will and regulatory frameworks are needed, as well as a strong civil society, in order “to push forward accountability and transparency in the private sector”.

“Inequality is unacceptable,” former minister of urban development Laila Iskandar told AmCham members at the meeting. “People will not accept waiting for the fruits of prosperity for 30 more years. People want opportunities, and they are impatient. Are we fighting for an economic system that will draw these people into our circle of prosperity, or are we only worried about our own immediate interests?”

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