Higher salaries and lower prices top Egyptians’ wish lists

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    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

Khalaf Ahmad Al Habtoor

Guest Commentary
January 02, 2018

The unseated Muslim Brotherhood president Mohammed Morsi left the Egyptian economy in shambles. Foreign reserves were depleted. Foreign investment dried up. Those were the darkest days literally with constant electricity blackouts. That said, since 2013, the government has without a doubt made progress.

Foreign reserves are at their highest in Egypt’s history. The Egyptian Exchange has seen healthy gains. In the third quarter of 2017, tourism leapt 70 per cent higher than during the same period a year earlier. And with the largest gas field in the Mediterranean (Zohr) now operational with smaller fields poised to follow suit, the nation will be self-sufficient in energy in 2018.

Cairo is making massive investments in infrastructure. An airport being constructed in Giza is set to begin service in summer 2018 as well as another north of Cairo. New cities in Alamein and Aswan are being built along with the new administrative capital. The world’s largest seawater desalination plant is underway on the Red Sea. Some 2,085 new factories have been established over 25 governorates.

The International Monetary Fund (IMF) projects GDP growth at 4.5 per cent in the fiscal year 2017/18. However, there has been no trickle-down effect benefiting the daily lives of ordinary folk.

With Egypt’s population, currently at over 100 million, expected to rise to 150 million within 30 years provided existing birth rates continue, the government is planning for the long term.

The problem is that people – other than those with millions on deposit in banks earning up to 20 per cent annual interest – fail to glimpse the sunshine; on the contrary, many of my Egyptian friends say they are struggling to keep their heads above water. Those in low income brackets tell me that lamb, beef, chicken and certain cheeses are now luxury items.

While I am not a believer in the ‘live now, pay later’ principle, I do feel that more attention should be paid to needs of the poorest sectors of society and the middle classes, whose pockets are being severely squeezed by high inflation (25.4 per cent in November) caused by the flotation of the Egyptian pound in November 2016; a move in compliance with the terms of a $10bn IMF loan.

Prices of almost everything soared almost overnight, including basics such as food, transport and electricity while simultaneously fuel subsidies have been reduced. In some areas, property prices have doubled making home ownership impossible for many. Moreover, being approved for a personal bank loan is not easy and those who are successful can expect to pay exorbitant interest rates.

Unfortunately, salaries have not kept pace with inflation and that is an understatement. Civil servants, police, teachers and doctors working in government hospitals are grossly underpaid as well as private sector employees. Corruption cannot be combated as long as workers go hungry.

I frequently spend a few days in Cairo to catch up with friends who tell me that while investment in infrastructure is all well and good, their priorities are better schools, teaching standards, healthcare and job opportunities; their thoughts reflected by innumerable posts on social media.

While it is the case that infrastructure projects have created jobs, much of the construction work is being undertaken by the Armed Forces Engineering Authority. To be fair, the army should be credited for building housing units for low income workers and slum residents that are delivered to recipients fully furnished.

In a nutshell, it seems to me that there is a dire need to brighten the public mood. Egyptians say they are receiving little benefit from the government’s grand plan for the future at this moment in time and worse they feel they are being made to pay too high a price.

I pray that the Arab World’s beating heart will succeed but Egyptians need to be enthused; they need to feel they are partners in this great recovery effort in the same way that Emiratis did when the late Sheikh Rashid bin Saeed Al Maktoum began his transformation of Dubai from scratch.

The discovery of a limited quantity of oil did give Dubai a jumpstart, but the secret of the emirate’s success lies with the unified spirit prevalent between our rulers and people. Sheikh Rashid used to drive around town listening to his people’s concerns, no matter how small, and usually acted to alleviate them.

Egyptians have been asked to exercise patience and while I get that Rome was not built in a day and neither will the New Egypt, millions are in desperate need for relief from biting poverty now. There should be a safety net to lift a quarter of the population out from under the poverty line. Interest-free loans for small businesses and start-ups permitting householders to purchase a kiosk, open a shop or buy a taxi is one idea.

State-of-the-art technologies will also give Egypt an edge. Modern machinery and revolutionary economic planning helped Western Germany to rise from the rubble of World War II to emerge as one of the planet’s major economic powerhouses, likewise Japan recognized as the world’s second largest economy by the 1960s.

Tokyo cultivated a strong work ethic among the population viewed as a patriotic duty and made loans freely available. Free market principles devoid of stifling bureaucracy accelerated its spectacular trajectory.

If there is one piece of advice I would give the powers that be in Egypt, it has to be get rid of the red tape and the armies of low-level civil servants, some of whom make it their life’s mission to place obstacles in the way of potential foreign investors.

Slim down rules and regulations. Crack down hard on corruption. And please ensure the streets are free of garbage with televised public interest campaigns with spot fines for litterers.

Egyptians fiercely love their country but they are exhausted from all the sacrifices they have had to make since January 2011, exacerbated by rocketing prices. The government does have a lot on its plate, not least containing the terrorist threats from Daesh-affiliates in northern Sinai. Nevertheless, making concessions to lighten its people’s load right now would not only be wise, it would be the right thing to do.

  • Middle East Policy

    Middle East Policy has been one of the world’s most cited publications on the region since its inception in 1982, and our Breaking Analysis series makes high-quality, diverse analysis available to a broader audience.

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