The investment minister visited Beni Suif, one of Egypt's poorest governorates, early this week. Wael Gamal reports The long legacy of neglect suffered by Beni Suif marked Investment Minister Mahmoud Mohieddin's visit to the governorate last Saturday. The minister's meeting with local officials and members of parliament revealed the wide gap between reform plans concocted in Cairo and facts on the ground -- including underdeveloped managerial and economic mentality -- prevailing in the governorate. The disparity of capitalist development is clear in Beni Suif. The governorate's share of Egypt's economic activity and growth over the past 20 years continues to be minuscule. Beni Suif's GDP per capita ranks among the bottom three Egyptian governorates. According to the 2004 Egypt Human Development Report recently published by the UNDP, it barely reaches LE3,454, compared to LE10,543.2 in Cairo, and LE8346.5 in Alexandria. As a result, in spite of Beni Suif having one of the highest percentages of labour force to population (32 per cent), about 45.7 per cent of its 2.2 million people live under the poverty line. The local economy depends on both agrarian and public administration employment. Infrastructure is still very primitive. Private sector investments are thus very limited, even compared to other Upper Egypt governorates that suffer the same disparities. That's why reform issues, having finally been settled in the capital's business circles, are still debated here. Mohieddin had to argue against ideas that had already been dismissed in official Cairene circles long ago: that the public sector is the backbone of the national economy; that the state is a main actor in the economy; and that privatisation is not a very good policy. The fate of a troubled textile factory exposed the differences. Built in the 1960s, "the factory is doing very badly," said Mohsen El-Jilani, chairman of the holding company of textiles industries. "It is barely covering workers' wages and sometimes unable to even do this." For El-Jilani, the solution is in the hands of the private sector. "The factory needs more than LE70 million in investments to work properly." A Beni Suif MP, Ali El-Bakri Selim, seemed to speak for many when he rejected the idea of privatisation as saviour. "The state has a responsibility. The problem is not in public ownership, but in the corrupt managers," he said. Mohieddin -- a neo-liberal reformer -- defended his perspective, while attempting to steer the discussion away from ideological confrontations. "Economic efficiency is the only criterion to be considered. We have to see which of the different approaches is the most beneficiary to the factory," he said. His suggestion: that a committee of experts including officials from the holding company and independent industry figures study the case in two months time. Local investors were more practical. Mohsen El-Gibali of the Beni Suif Investors Association had a specific demand for the minister. "There are anti-investment measures taken only in Beni Suif. While land is provided free of charge in other economic zones, and even in Upper Egypt, it is sold in Beni Suif. This drives investors away to Minya and Assiut. Changing this dynamic is crucial to any improvement." Beni Suif's eight lowly economic zones place it squarely at the bottom of Egypt's list. Investors are discouraged by the cost of land, combined with transport problems and a lack of trained labour. Mohieddin promised to tackle the issue with the prime minister. The governorate has managed to attract one major multinational -- cement giant Lafarge. In the 1990s, the company invested $350 million to buy the first privatised cement factory, Beni Suif cement. That investment, however, has not been trouble free. "We had a lot of problems registering the land we bought with the factory," said Medhat Estefanos, who directs the company's commercial sector. "The government continued to revise the price of the land even after we started working." The multinational has not made that much of an impact on the local community. Although 90 per cent of its workers are locals, they number no more than 380 -- hardly enough, on their own, to make a difference for the governorate's success as a whole.
