The World Bank ranked Egypt as the top reformer worldwide this year. Sherine Abdel-Razek reports on what lies ahead Egypt came in as the best reformer worldwide in 2006/2007. It applied wide reforms on five out of 10 areas examined by the World Bank (WB) to measure the ease of doing business in different countries. This effort helped boost Egypt's position on the global ranking on the ease of doing business to jump to the 126th position out of 178 economies surveyed this year by the Doing Business 2008 -- the fifth in an annual series issued by the World Bank and International Finance Corporation (IFC). Last year Egypt came in the 167th position among 175 countries covered by the report. "We have to separate ranking from efforts of reform," said Michael Klein, World Bank vice-president during the launch of the report in Cairo earlier this week. He explained that investors are attracted to reforming countries even should they have a problematic business environment. "Those with the low rank have more potential to grow," he said. Klein pointed out that more and more investors are eyeing Egypt. Egypt's foreign direct investments doubled in 2006/2007 to reach $11.3 billion. In fact, according to Klein, Egypt's FDI per capita is almost double that of China. Nonetheless Egypt's overall rank is considered relatively low especially when compared to its peers in the region. Saudi Arabia was ranked in the 23rd position, Israel came in at 29, Kuwait at 40, Oman at 49, United Arab Emirates at 68, Jordan at 80, Lebanon at 85, and Tunisia at 88. The Doing Business 2008 report, assesses regulations affecting 10 stages of a business's life, namely starting a business, dealing with licences, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, and closing a business. Egypt achieved improvements in five out of these 10 categories. In 2005/2006 Egypt had introduced only two reforms. Egypt cut the minimum capital required to start a business, from LE50,000 to just LE1,000 and halved the time and cost of start- up. It reduced fees for registering property from three per cent of the value of the property to a fixed amount. That was not all. Other reforms included easing the bureaucracy that builders face in getting construction permits, launching a new one-stop shops for traders at Egyptian ports, cutting the time needed to import by seven days and the time to export by five. And it established a new private credit bureau that will soon be making it easier for borrowers to get credit. According to Klein, if Egypt worked on other, still-problematic investment related procedures, like enforcing contracts and access to credit, there is a realistic chance that it can come among the 100 top countries soon. "It took Egypt just one year to jump almost 50 ranks," he said. "It's doable, knowing that Georgia succeeded in one year to leap from the 112th position to the 18th." But it seems Egypt will have to move fast and work harder. Klein said new criteria will be taken into consideration in the future when measuring the ease of doing business. These might include transparency, corruption, infrastructure development as well as the effect of reforms on women, all of which remain sore spots for Egypt. However, Minister of Investment Mahmoud Mohieddin is confident that a number of reforms currently being put in place will support Egypt's position in the future. "If they measured the development in infrastructure we will score high. As for transparency, there is currently a committee headed by the Minister of Administrative Development and representatives of other ministries to deal with this problem." The Egyptian reform efforts are enjoying international recognition according to Mohieddin. He pointed out that during 2007, not only did Egypt join the World bank's reformers club, but it also became the first Arab and African country to join the investment committee affiliated to the Organisation for Economic Cooperation and Development (OECD). Nonetheless, Mohieddin is being realistic. He said that Egypt can not sit back and be content with this year's performance. "One can not know what reforms countries at lower ranking might take which could push them to overtake us." For a full review of the Doing Business report, see the previous issue.
