CAIRO: Perhaps in an effort to recognize that the consumer is, in many ways, the engine of the economy, EFG-Hermes hosted a workshop entitled "Growth, Inflation and the Egyptian Consumer. Hosting a number of executives each, in some way, tied to the consumer market, EFG economist Simon Kitchen led the discussion. The tenor of the discussion was generally upbeat, detailing the rise in consumer spending, especially since 2004. Questions from the audience highlighted concerns that high levels of inflation and only modest improvements in wages were hampering the consumer's ability to drive the economy. "The key to sustaining growth for Egypt is the development of a consumer market, said Kitchen. He conceded that "inflation does have a huge effect on consumer spending decisions, but he optimistically predicted a decline in inflation over the coming year. Much of the talk by the panel centered on the idea of empowering all Egyptians as consumers. "We're still looking ahead to see real buying power from the real end users, said Coldwell Banker CEO Mohamed Abdalla. One of the most critical ways in which to give purchasing power to the consumer, argued Head of the Consumer Finance Division at NSGB Walid Chaoush, is for banks to extend credit more deeply into the population. "Penetration of credit is still low, he said. "Banks are still reluctant to lend. Having worked in the Ukraine, Chaoush noted that consumer spending tripled there because banks were more eager to extend credit. Evidence, however, suggests that credit is beginning to penetrate the consumer market to a greater degree. Herve Majidier, country director for Carrefour, noted that purchases in the store made with credit cards rose from 15 percent to 23 percent between 2005 and 2008. Consumer spending has increased drastically despite smaller wage growth, argued Hany Mowafy, managing director of AC Nielson Egypt. Rattling off a list of industries, he noted, "Everywhere I see double growth. This "massive increase in their spending, he said, has come even as 15 percent of Egyptians report not having spare cash. In the question and answer session, and audience member pressed Kitchen about his apparent relative pessimism on inflation. Kitchen argued that he remains optimistic for the coming year, noting that "A lot of the inflation earlier this year was imported. Despite narrow differences on the spending power and will of the Egyptian consumer, the four panelists and moderator agreed that caring for the consumer was among the most critical elements in building the Egyptian economy. "The consumer is your Holy Grail to growth in the next phase, Mowafy said.
