Poised to receive a $4.8 billion IMF loan that the government anticipates will help pull the economy out of an impending fiscal crisis in which the budget deficit is expected to reach LE200 billion by the end of the current fiscal year, a series of discussions with investors and economists was launched to gauge their outlook on how investments can be solicited and economic growth attained to generate much-needed employment. Speaking at the Egyptian Centre for Economic Studies (ECES) last week, Egyptian Minister of Investment Osama Saleh said that the government's current targeted economic growth rate, which has been downsized to 3.5 per cent from the previous four per cent, cannot be attained without soliciting investments to the tune of LE276 billion for the first year, then annually for five consecutive years, in order to attain a 7.2 per cent growth rate needed to generate 800,000 jobs annually. According to ECES Acting Executive Director Omneya Helmy, national unemployment levels have currently reached 13 per cent. The government has set a target to reduce unemployment to five per cent in 2021-2022. The outlook comes at a time in which access to funding is becoming an increasingly pressing problem for the government as it seeks resources needed to fund public investment projects. Over the past three years, public investment has declined from 13 per cent to seven per cent, according to Helmy. According to Osama Saleh, in the past eight years Egypt lured total investment in the range of approximately $8.5 billion, the amount peaking in 2007 and then declining, negatively affecting employment levels. Acknowledging the structural problems that continue to beleaguer the investment climate, such as complicated bureaucratic procedures related to acquiring lands needed to set up investment projects, Saleh said his ministry is currently working on facilitating the acquiring of lands for investors, through the provision of temporary licenses “until permanent licenses are issued within the span of 60 days”. Saleh added that the government would also work with investors who suffer problems related to acquiring energy inputs. He added that the ministries of investment and industry are also currently cooperating to increase transparency regarding legislation and the honouring of contracts and agreements, in view of several cases raised after the 25 January Revolution. Also speaking to the ECES, Minister of Industry Hatem Saleh gave a positive outlook for Egypt's industrial sector, despite the current slump it has suffered over the past two years. He cited the resilience of Egypt's industrial infrastructure and, more importantly, “the will and desire of investors in this domain, to overcome their problems”. Exports began to pick up in November, Hatem Saleh said, “despite successive workers strikes”. He added that Egypt's informal sector, which the government currently aims to incorporate, through fiscal incentives, within the formal economy, “has been the engine and mainstay of growth, over the past two years”. Numbering some 1.5 million enterprises in the trade, industrial and services sectors, and employing some eight million employees, according to the European Investment Bank, many of these enterprises, Saleh said, are small workshops geared to export. He recommended that venture capital and cluster industries in Egypt's governorates be encouraged, as well as an approach that encourages small and medium-sized enterprises as “the easiest and quickest way to generate employment”. Attempts to lure investment from Europe through preferential as well as free trade agreements are also underway, the industry minister said. He added that his ministry's aim is to attain an industrial growth rate of nine per cent in 2025, constituting 33 per cent of GDP and 35 per cent of overall investment. While the government is also setting its sight on new megaprojects to be implemented in the Suez Canal zone, Alamein on the North Mediterranean Coast and along the Upper Egypt, Red Sea routes, existing local investments also need to be supported, the majority of which have borne the brunt of political and social unrest, workers strikes and a general lack of security. “It is important to support investors who are already operating in the market, and then to build on this, whether it is the informal sector, tourism, or agriculture, which can all be geared to generating much-needed hard currency,” said ECES Chairman Alaa Arafa CEO of Al-Arafa Investments and Consulting, a major investor and exporter of garments. “But we need, above all, political reconciliation to be followed by candour in dealing with the economy's fiscal and monetary problems. Most of all, we need a clear vision to move forward, and generate jobs,” Arafa added.
