Endless challenges EMPLOYMENT, water, land and education are the Arab world's most pressing challenges, according to Abdel-Latif Al-Hamad, chairman of the Arab Fund for Economic and Social Development. Al-Hamad, speaking at the Egyptian Centre for Economic Studies (ECES) pointed out that these are no easy tasks. However, he stressed that this is not an invitation to give up but to work towards change. Al-Hamad said that the global economic crisis should not be blamed for the region's problems. "Our problems existed prior to the crisis." One of these problems is unemployment. And according to him it is not going away any time soon. In fact, he said that things will get worse. "The Arab world needs to create 70 million jobs by 2020." And this task will not be easy with the region's exponential population growth rate. Tackling education should go hand in hand with tackling unemployment to make sure the educational system graduates individuals that will meet the needs of the job market. Further he said that the region's contribution to scientific research does not match the levels of countries whose population is no more than two per cent of the region's population. He said the Arab world contributed 11,000 scientific articles compared to 60,000 by individual European countries. This could further deteriorate if nothing is done about reforming education. Another thorny issue for the region is water resources. "We are the poorest when it comes to water resources," Al-Hamad said, pointing out that the per capita share of water in the region is 1,100 cubic metres per year. This figure is expected to drop to 500 cubic metres by 2025. In comparison, it is 8,000 cubic metres worldwide. What augments the situation, he said, is that 60 per cent of water resources are outside the Arab world and cannot be controlled. Climate change is another challenge. A rise in temperature of two degrees Celsius by 2025 will also affect the renewed water. While the amount of annual renewed water currently fed into the Nile is 400 cubic metres, that will drop to 320 cubic metres. "This is an issue which affects stability and regional peace," he said. And with the scarcity of water he stressed that countries must be very careful with their agricultural policies, producing what they have a relative advantage in and not targeting self sufficiency at the expense of precious water resources. On a similar note, he pointed out that desertification and the expansion of urban areas are leading to the loss of agricultural land. Al-Hamad stated some striking figures: only one third of the region's land is cultivated. One per cent of that area is lost to urbanisation annually. And desertification threatens 24 per cent of cultivated land. And even sea water has not been spared. While the region extends over 30,000 kilometres of sea water shores, 18,000 kilometres are populated and that means pollution, excessive fishing and the loss of biodiversity. Lending on the way A NEW law governing small and micro finance lending in Egypt is expected to be endorsed soon by parliament in its upcoming session. Last week, Ziad Bahaaeddin, chairman of the Egyptian Financial Supervisory Authority (EFSA), announced the highlights of the draft law. According to Bahaaeddin the new law will allow for the establishment of joint venture companies specialised in micro finance lending. "The capital of these companies will not be less than LE20 million. They will operate through using their own financial resources. They will not be allowed to receive grants, or any form of aid either through local or international bodies and they are definitely not a second version of the money investment companies which spread in Egypt during the 1980s," he said. Small and micro enterprises in Egypt are considered a pivotal sector in the Egyptian economy. According to Ghada Wali, advisor to the EFSA chairman for micro finance, the poor, too, have a right to access credit. "There is an 80 per cent lending gap in this sector. Endorsing micro lending through clear-cut regulations will be a step towards regulating this huge market and protecting the rights of the poor," she said. In an attempt to preserve the rights of the lending companies, a complete data base on borrowers will be circulated so that defaulters will not be allowed to step up for more loans. Meanwhile, a new concept for introducing insurance measures on these small and micro loans is now being discussed. According to Adel Mounir, vice chairman of EFSA, it has been recognised worldwide that imposing insurance on small loans is a most effective means to reduce hazards for both borrower and lender. "The rate of payback for small loans is almost 90 per cent, therefore, the insurance costs for that type of lending is considered marginal. Moreover, insurance is a guarantee that the enterprise will continue, the loan will be reimbursed and the borrower will remain sustained even if a certain incident should interrupt his/her activity for a certain period," said Mounir. Tourism fights recession SPEAKING at an event organised by the German Arab Chamber of Industry and Commerce last week, Minister of Tourism Zoheir Garana said the tourism sector is working to overcome the challenges posed by the current economic crisis. Sharp reductions in business travel, declining levels of disposable income, currency fluctuations, increased unemployment and the ongoing threat of swine flu have all resulted in lower international tourism receipts. Statistics of the United Nations World Tourism Organisation (UNWTO) show a decline in international tourism flows and revenues by around eight per cent from January to June 2009 compared with the same period of the year 2008. "We have strengthened our alliances with all key stakeholders in the tourism trade; airlines, tour operators, and the media," said Garana. He added that the ministry is working closely with the private sector, monitoring market trends and diversifying Egypt's tourism product into specialised niche areas. The ministry currently finances and supports over 20 programmes that address everything from road safety to executive development in order to maximise human potential and develop a world class calibre workforce across all levels of the industry. Garana said that in the year 2008, tourism accounted for 11.3 per cent of GDP, 19.3 per cent of current account receipts, 12.6 per cent of total employment and 24 per cent of total service taxes. Concerning the evaluation of hotels in Egypt, Garana said that there are negotiations underway with the UNWTO to re-evaluate hotels in Egypt according to new norms. He said real estate investment in tourism is in continuous development and is considered one of the fastest growing markets in Egypt. Garana blamed the decline in the number of tourists from the United States on negative US media coverage of security in the Middle East. "According to 2007-2008 statistics, Egypt received a large number of tourists from Russia, Italy, Germany and France, as well as Saudi Arabia and Libya," he said.
