“We've seen exceptional GDP growth rates before, as far back as maybe 10 years ago, yet the people at the bottom seldom feel the benefits. Today's 5.6 per cent real GDP growth rate looks great, but it is not trickling down fast enough to improve people's lives,” said Ahmed Abu Doma, an entrepreneur and board member of T20, a network of around 700 Egyptian alumni of global universities and leading consulting firms. Abu Doma was speaking at a recent seminar at the American University in Cairo marking two years since the launch of Business Forward, an online business and economics portal. He was referring to the first decade of the new millennium, when growth rates climbed to a hefty seven per cent of GDP, while the poverty rate increased to well over 21 per cent of the population. Abu Doma wondered whether Egypt's solid real GDP growth rate would mean anything to the average citizen, when around a third of the population lives below the poverty line. According to 2019 statistics, 32.5 per cent of Egyptians live in poverty. A 2018 study entitled “Trickle-Down Economics: Is it Valid in Egypt?” by Abdel-Moneim Lotfi Mohamed, an economics professor at Beni Sweif University, showed that there was scant evidence that the benefits of growth trickled down to lower-income brackets. According to the study, for most of the late 1980s, close to a quarter of Egyptians lived below the poverty line. The only period of decline in the poverty figures was during the 1990s, when they gradually levelled off at 17 per cent towards the end of the decade. Largely powered by foreign direct investment (FDI) in the gas and tourism sectors, Egypt's growth is highly dependent on external forces. Last year, Egypt was Africa's largest recipient of FDI in a global climate where investment flows have been decreasing for a third consecutive year. Last year alone global FDI flows dropped by 13 per cent to US$1.3 trillion, making Egypt's job of attracting the right type and volume of FDI even more precarious. For more sustained growth, Egypt will need to attract more FDI in labour-intensive sectors such as manufacturing instead of the more-sought-after hydrocarbons sector, Abu Doma said. A buzz word of sorts, the trickle-down effect is based on the idea that the increasing wealth of the rich will gradually yield benefits to those further down the economic ladder. But for Abu Doma, the trickle-down effect in Egypt has proved too slow to spread wealth, and a more immediate solution would be to invest in information and communication technology (ICT). “Why are students in Cairo getting a better education than their counterparts in rural areas? All students should have equal access to education. The way to bridge that gap is through ICT,” Abu Doma said. For Ghada Labib, deputy minister of planning, the government's commitment to ICT is evident in its overall policy agenda. Data-gathering efforts across ministries would not only support policymakers in decision-making, but also improve the quality of government services, she said. “Something like the births and deaths registration database lets us know real-time population growth in every village. This information can help us to determine that village's need for food subsidies or healthcare services,” Labib said. Technological centres in every governorate would be introduced to automate everything from building permits to business licensing, with Port Said designated to be the first fully digitised governorate with fibre-optic connectivity, she added. “Civil servants will be evaluated and given scores to determine their job positions and skills-development needs, leaving less room for corruption,” Labib said. ICT-backed data-mining is already helping to distribute economic growth across the broader population. It had been such data, after all, that had identified an estimated 2.26 million of Egypt's most vulnerable households and had helped them to participate in the Takaful and Karama (Solidarity and Dignity) cash-transfer initiatives, Labib pointed out.
*A version of this article appears in print in the 12 December, 2019 edition of Al-Ahram Weekly.
