News / Middle East

    If Egypt’s Economy Doesn’t Improve, Does Democracy Matter?

    A jewelry vendor outside a store in the Khan al-Khalili area of Cairo (file photo)
    A jewelry vendor outside a store in the Khan al-Khalili area of Cairo (file photo)
    Mohamed Elshinnawi

    This is Part 2 of a 3-part series: Egypt’s Transition
    Parts 1 / 2 / 3

    Eman Mahran can’t find a job. The unemployed biomedical engineer has been looking for work for four years and her plight represents a large and troubling aspect of the ailing Egyptian economy.

    “I graduated in 2007 and I thought I would have a bright career because of my specialty. But I lost hope, joining my unlucky generation of young Egyptians,” said Mahran, who is unmarried and lives with her retired father.

    Main challenges

    Egypt’s unemployment rate is approximately 12 percent, according to the International Monetary Fund. Even those who have jobs are worried. Egyptians, such as Magdy El Meshmeshy, a vice president of a manufacturing group, complains that the current political situation in Egypt is not helping the economy. “Social unrest, a security vacuum, continued instability, shrinking production and lack of incentives for medium-sized enterprises are not the right way to revive the troubled economy,” said El Meshmeshy.

    Magda Kandil, the executive director of the Cairo-based Egyptian Center for Economic Studies, agreed. She listed several challenges facing post-revolution the Egypt.

    “At the top of these challenges, we should mention security failure,” the economist said. “Also, corruption charges have tarnished the image of the private sector and have made it very difficult to reestablish a good image of private-led growth.” Kandil also called political instability a “genuine concern.” In addition, she listed other factors as major sources of Egypt’s economic malaise: the loss of foreign capital influx, the decline of tourism,  slumping foreign direct investment, and capital flight after some Egyptians decided to just “liquidate and leave.”

    Sobering facts and figures

    Kandil also warned that the transitional government and the Supreme Council of the Armed Forces that now rule post-revolution Egypt must tackle the economic challenges more seriously. With a budget deficit that accounts for 10 percent of the GDP, an unemployment rate of 12 percent, an 11.8 percent rate of inflation, a 33 percent drop in tourism and a 12 percent decline in the value of the Egyptian pound relative to the Euro, the prospect of economic recovery is gloomy.

    Kandil is also worried about the national debt, estimated at $35 billion, and the fact that Central Bank reserves are being used to pay for minimum wage increases. Foreign currency reserves have dropped from $36 billion to $26 billion since the revolution, according to the Egyptian Center for Economic Studies.

    Then there is the issue of costly subsidies, such as the $70 billion the Egyptian government spends to support petroleum products. There is general agreement among economists that such subsidies should be slashed drastically with monies only going to the most vulnerable enterprises. They say that the huge resulting savings could help improve education and job training.

    Gap between solutions and actions

    Ibrahim Oweiss, a professor of economics at Georgetown University in Washington, D.C., says the government has so far not taken any major steps to deal with these daunting challenges.

    “The first thing is really to establish a system of law and order to reestablish stability throughout the country,” Oweiss said, “and after that, things could move forward because there are great potentials for the Egyptian economy in the future.”

    Magdy El Meshmeshy feels there is a wide gap between the available solutions and the way the ruling military council and the transitional government are handling the situation. “There is no articulated road map for the economy or a medium-range strategy so far. But if the new government starts to deal with the corruption and restoring security, investors will feel more comfortable to come back and help the Egyptian economy,” El Meshmeshy said. He argues that small and mid-sized enterprises could create more jobs and contribute to reviving the economy.

    What the economy needs

    Experts agree that priorities should be focused on improving security, and on political reforms that ensure good governance and accountability. These reforms should be coupled with a well-defined and forward-looking economic strategy that will restore confidence and bring back domestic and foreign investment.

    “There is a lot to be desired in terms of legislation to fight corruption, red tape and bureaucracy,” Kandil of the Egyptian Center for Economic Studies said. She complained that the ruling military council and the transitional government did not articulate a clear vision for the post-revolution economy. “They need to press ahead with reforms to ease controls on lending to small and medium size enterprises, reform existing labor laws, reduce waste in government spending and increase efficiency in tax collection to boost revenues.”

    Many Egyptians feel that after years of organized corruption, an economy dominated by government-protected business monopolies, and stark injustices in wealth distribution, there is a need to build  a private sector that will put the economy back on its feet. El Meshmeshy put it this way: The government needs to come forward with “a clear message about the private sector leading the growth and creating jobs, more incentives and a new image of the private sector away from the corruption that tarnished the reputation of businessmen during the Mubarak years.”

    The consensus among experts is that crony capitalism basically prevented the fruits of Egypt’s past economic growth from reaching the working class. Consequently, there is now a need to put special emphasis on promoting sectors with employment opportunities that will help the wealth trickle down.

    Eman Mahran, the unemployed biomedical engineer, agrees. “With less corruption and more focus on the quality of education and health care, more jobs would be available for qualified people and that will help me join the work force in the near future,” she says hopefully.

    Follow our Middle East reports on Twitter
    and discuss them on our Facebook page.

    You May Like

    Republicans Struggle With Reality of Trump Nomination

    Despite calls for unity by presumptive presidential nominee, analysts see inevitable fragmentation of party ahead of November election and beyond

    Nielsen's, Sina Weibo Team Up for Closer Look at Chinese Social Media

    US-based rating agency reaches deal with China's Twitter-like service to gauge marketing effectiveness on platform which has more than 200 million users

    Despite Cease-fire, Myanmar Landmine Scourge Goes Unaddressed

    Myanmar has third-highest mine casualty rate in the world, according to Landmine and Cluster Munition Monitor, which says between 1999 to 2014 it recorded 3,745 casualties, 396 of whom died

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Press Freedom in Myanmar Fragile, Limitedi
    X
    Katie Arnold
    May 04, 2016 12:31 PM
    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Press Freedom in Myanmar Fragile, Limited

    As Myanmar begins a new era with a democratically elected government, many issues of the past confront the new leadership. Among them is press freedom in a country where journalists have been routinely harassed or jailed.
    Video

    Video Taliban Threats Force Messi Fan to Leave Afghanistan

    A young Afghan boy, who recently received autographed shirts and a football from his soccer hero Lionel Messi, has fled his country due to safety concerns. He and his family are now taking refuge in neighboring Pakistan. VOA's Ayaz Gul reports from Islamabad.
    Video

    Video Major Rubbish Burning Experiment Captures Destructive Greenhouse Gases

    The world’s first test to capture environmentally harmful carbon dioxide gases from the fumes of burning rubbish took place recently in Oslo, Norway. The successful experiment at the city's main incinerator plant, showcased a method for capturing most of the carbon dioxide. VOA’s Deborah Block has more.
    Video

    Video EU Visa Block Threatens To Derail EU-Turkey Migrant Deal

    Turkish citizens could soon benefit from visa-free travel to Europe as part of the recent deal between the EU and Ankara to stem the flow of refugees. In return, Turkey has pledged to keep the migrants on Turkish soil and crack down on those who are smuggling them. Brussels is set to publish its latest progress report Wednesday — but as Henry Ridgwell reports from London, many EU lawmakers are threatening to veto the deal over human rights concerns.
    Video

    Video Tensions Rising Ahead of South China Sea Ruling

    As the Philippines awaits an international arbitration ruling on a challenge to China's claims to nearly all of the South China Sea, it is already becoming clear that regardless of which way the decision goes, the dispute is intensifying. VOA’s Bill Ide has more from Beijing.
    Video

    Video Painting Captures President Lincoln Assassination Aftermath

    A newly restored painting captures the moments following President Abraham Lincoln’s assassination in 1865. It was recently unveiled at Ford’s Theatre in Washington, where America’s 16th president was shot. It is the only known painting by an eyewitness that captures the horror of that fateful night. VOA’s Julie Taboh tells us more about the painting and what it took to restore it to its original condition.
    Video

    Video Elephant Summit Results in $5M in Pledges, Presidential Support

    Attended and supported by three African presidents, a three-day anti-poaching summit has concluded in Kenya, resulting in $5 million in pledges and a united message to the world that elephants are worth more alive than dead. The summit culminated at the Nairobi National Park with the largest ivory burn in history. VOA’s Jill Craig attended the summit and has this report about the outcomes.
    Video

    Video Displaced By War, Syrian Artist Finds Inspiration Abroad

    Saudi-born Syrian painter Mohammad Zaza is among the millions who fled their home for an uncertain future after Syria's civil war broke out. Since fleeing Syria, Zaza has lived in Lebanon, Egypt, Jordan and now Turkey where his latest exhibition, “Earth is Blue like an Orange,” opened in Istanbul. He spoke with VOA about how being displaced by the Syrian civil war has affected the country's artists.
    Video

    Video Ethiopia’s Drought Takes Toll on Children

    Ethiopia is dealing with its worst drought in decades, thanks to El Nino weather patterns. An estimated 10 million people urgently need food aid. Six million of them are children, whose development may be compromised without sufficient help, Marthe van der Wolf reports for VOA from the Metahara district.
    Video

    Video Little Havana - a Slice of Cuban Culture in Florida

    Hispanic culture permeates everything in Miami’s Little Havana area: elderly men playing dominoes as they discuss politics, cigar rollers deep at work, or Cuban exiles talking with presidential candidates at a Cuban coffee window. With the recent rapprochement between Cuba and United States, one can only expect stronger ties between South Florida and Cuba.
    Video

    Video California Republicans Weigh Presidential Choices Amid Protests

    Republican presidential candidates have been wooing local party leaders in California, a state that could be decisive in selecting the party's nominee for U.S. president. VOA's Mike O’Sullivan reports delegates to the California party convention have been evaluating choices, while front-runner Donald Trump drew hundreds of raucous protesters Friday.
    Video

    Video ‘The Lights of Africa’ - Through the Eyes of 54 Artists

    An exhibition bringing together the work of 54 African artists, one from each country, is touring the continent after debuting at COP21 in Paris. Called "Lumières d'Afrique," the show centers on access to electricity and, more figuratively, ideas that enlighten. Emilie Iob reports from Abidjan, the exhibition's first stop.

    Special Report

    Adrift The Invisible African Diaspora