Despite colossal challenges facing the economy, optimism still reigns, reports Mona El-Fiqi Regardless of the challenges facing Egypt today, participants at a one-day conference held under the slogan "Stimulating Growth and Investment during Transition" were deeply optimistic. The conference was organised by the Federation of Egyptian Industries, the Egyptian Junior Business Association and the European Bank for Reconstruction and Development (EBRD). At the opening session, Minister of Planning and International Cooperation Fayza Abul-Naga said that after the 25 January Revolution, every single component of Egypt's economy was battered. Investors remain wary, she added, because of ongoing uncertainty as the transition from military rule to an elected civilian government has dragged on. Abul-Naga went on to say that topping the list of sectors which were negatively affected is tourism, an important and labour-intensive sector. In general, she said, economic growth is slowing down. Moreover, Egypt is losing $1 billion on its balance of payments per month, and international reserves have shrunk from $35 billion on 24 January to their current $24.5 billion. "However, I am certain that Egypt will make it," said Abul- Naga. Executive Director of the Economic Research Forum Ahmed Galal said, "I agree with Abul- Naga that Egypt's future is bright despite the unhappiness the people are currently feeling." One of the reasons why one should be optimistic, in Galal's view, is the fact that the economic cost of the transitional period is much lower than similar experiences in other countries. Galal added that Egypt's economy is diverse, and this factor makes him optimistic about the future. Experts have put primary estimations of the cost of the uprising at $9.9 billion until September. As the revolution was triggered by demonstrations that expressed people's desire to achieve social justice, Abul-Naga asserted that the government is currently implementing procedures to help achieve social justice including the creation of job opportunities, the enhancement of small and medium enterprises (SMEs), and the provision of one million housing units at reasonable prices over the coming five years. One more move to achieve social justice, Abul- Naga said, is government plans to eliminate subsidies to energy-intensive industries, a plan discussed even before former President Hosni Mubarak was ousted. The elimination of energy subsidies on all industries is also in the offing, but that measure will be implemented gradually. This will help ease pressure on state finances. Abul-Naga believes that democracy is not just about voting in elections, but also the creation of projects that respond to people's demands. While the election process is ongoing, Abul-Naga added that the government is trying to strengthen the economy before handing it over to the next government. While the government believes creating jobs, supporting SMEs and providing appropriate housing units are the main challenges, experts see other issues as more important. Galal said a lack of a clear economic vision during the transition period is a serious challenge. For example, the government has insisted on refusing to borrow from abroad, while Galal believes Egypt needs additional foreign cash injections. One more challenge, he added, is the revival of the private sector, which includes more good capitalism and the enhancement of SMEs. It is also important to recognise the existence of the informal sector, Galal said. To reinforce the private sector while moving into a healthy stage of political reform, Chairman of the Egyptian Junior Business Association Omar Sabbour said it is important to address the severe shortage of cash flow that currently faces the private sector, particularly SMEs. Sabbour added that providing finance to SMEs would help to reduce the unemployment rate. Also optimistic about Egypt's future was Jan Krzysztof Bielecki, former prime minister of Poland, who said "I can guarantee that much better days are yet to come." According to Bielecki, economic and political transition must go hand in hand since economic growth needs stability. Enhancing Egypt's competitiveness and creating an efficient national civil service system is also necessary, according to Jan Fischer, vice president of the EBRD. The aim of the participation of the EBRD as an international financial institution at the conference was to discuss the potential of it playing a role in supporting Egypt in its transitional phase, during which uncertainty can cause a slowdown in investment while economic challenges can emerge in the short term. Director of Communication at the EBRD Jonathan Charles said that the bank delegation came to Cairo to find out more about the country's needs in its transition period. Charles said the EBRD is able to offer Egypt up to one billion euros per year, but that this has not yet been agreed. EBRD funds would largely target SMEs and the private sector, since the institution mainly centres on investing in private sector clients whose needs cannot be fully met by the market. The EBRD promotes entrepreneurship and fosters transition towards open democratic market economies. Conference participants also discussed many other topics such as growth promotion and employment creation through the development of SMEs, driving competitiveness through innovation, investing in food security and preparing for a sustainable future. During the closing session, attendees agreed that government and business leaders will face the challenge of managing a delicate balance between uncertainty in the short term, protecting the economically vulnerable and achieving economic competitiveness in an increasingly complex and volatile global market. However, one thing is certain: Egyptians are determined to rely on their home-grown development programmes and agendas to see this phase through.
