What should Egyptian policy-makers focus on in the coming period? Niveen Wahish reports on what connoisseurs had to say at this year's Euromoney conference A can of carbonated soda may cost around $1 in the US. In Egypt, the cheapest package sells for LE1 which is less than $0.2. Yet that very LE1 is earned by some Egyptians in 45 minutes of work. This was how Omar Mandour, general manager for Egypt, Libya and Sudan of the Coca-Cola Company illustrated the need to improve the incomes of the majority of Egyptians to boost expenditure. Mandour was addressing participants at the annual Euromoney Egypt conference which ended yesterday in Cairo. Mandour's was pretty much the core message at the conference titled "Competing for investment, investing in competitiveness." "There should be an emphasis on social equity to benefit those that have not benefited in past years," said Taher Helmy, senior partner of Helmy, Hamza and Partners. "The gap between the rich and poor is a reality; a substantial portion [of the Egyptian population] have not benefited [from the growth of the Egyptian economy]. That needs to be addressed." The comments of both Helmy and Mandour came within the framework of a general agreement that the fruits of reform by Egypt in the past five years have not been felt by the majority of the people. Yet, according to Youssef Boutros Ghali, minister of finance, income redistribution is now at the forefront of government plans. He said there are plans to halve poverty ratios in a few years although he did not specify how as "the specific policies of these issues are being drafted". Mahmoud Mohieldin, former minister of investment, gave some hints. He said that countries in the Eastern Hemisphere had higher poverty levels than Egypt yet they dealt with it through short-term support in the form of subsidies and social funding while pushing for high quality growth with value- added industry at the core. Mohieldin stressed that there is "no automatic trickledown effect." He said that even seven per cent growth rates, without investment in human capital to enable individuals to have access to labour markets, will not do much to the redistribution of income. On a similar note, Ania Thiemann, senior economist and project manager at the Organisation for Economic cooperation and Development (OECD) said that human capital scored the lowest in a study of Egypt's business climate. "Because of the absence of good education, a whole layer of the population cannot benefit from the growth," she said. On a more optimistic note, Florence Eid, member of the board of the Arab Banking Corporation International Bank, said trickledown does happen but takes longer than five years, especially in light of a large demographic base. She said that by default those best prepared to take advantage of investment flows when growth improves are those already at the very helm of the economy. "Egypt is at a crossroads. It is very important for the second phase [of reforms] to be continued." She said Egypt is pretty much going through what Brazil and Turkey were going through when they began their reform process. The only difference, she said, is that they had a longer transition period where reform was well established before political transition came about. Eid was alluding to the parliamentary and presidential elections coming up next month and next year respectively. In fact, the elections and the subsequent stability of the country were voiced as a concern by some investors. Hani Tawfik, chief executive officer of Arab Private Equity Association, attributed the scarcity of investments in renewable energy to a lack of clarity on the stability of the political regime. Mohieldin, though, believes that is "no issue of concern as long as there are institutions". He said the same issue came up in 2005 during the past elections yet those were among the best years for growth. "There is no investment without risk, but the prospects are promising." Like Mohieldin, Ghali was bullish on the Egyptian economy. "Invest in Egypt" was his message. The coming period will see high growth rates, "seven per cent and hopefully eight per cent," he said, adding that besides addressing poverty and continuing to maintain an investment climate that is healthy, the government will address education. "It is at the core of our vision for the next few years and it will be at the core of our policies."
