Washington –Egypt is on the right track, but it is time to begin a second wave of reforms, which is what the Egyptian government is trying to do now to fully complete the reform process, members of the American Chamber of Commerce in Egypt (AmCham) told the business community in Washington DC. The message was delivered at a lecture on the challenges facing the Egyptian private sector in view of the regional business climate, delivered by members of the AmCham during their annual door-knock campaign.
Four representatives of the Egyptian private sector participated in the lecture: AmCham President Tarek Tawfik; Ahmed Issa, head of the retail banking division at CIB; Tamer Younes, chair Amcham, head of corporate affairs North Africa and Levant at Procter & Gamble (P&G); and Dina Sherif, CEO and co-founder of Ahead of the Curve (ATC). The conference was moderated by Andy Braner from the Centre for Transatlantic Relations and was co-organised by the Johns Hopkins SAIS Conflict Management Programme and the US-Egypt Business Council.
“We could not sit down and talk about the success story of Egypt a year and a half ago,” said Tawfik, who spearheaded the recently concluded door-knock campaign in Washington. He said that the business community was, at the time, facing real challenges that are now being addressed by the government reforms and decisions to bring the economy back on its feet.
Tawfik confirmed that Egypt now has a new business model that depends on manufacturing, expansion, and exporting, which is different from the old trade-oriented patterns. “The shift in the industry sector from negative growth to a positive growth rate, of more than 11%, reflects an Egyptian success story that no one imagined two years ago,” he added.
Tawfik said that Egypt is not good at presenting itself to various foreign circles, although it has achieved success in reforming the country’s business environment, reforming the exchange rate, saving energy, and even doubling its output within two years, along with increasing exports, establishing modern infrastructure, reducing licensing times, improving the legislative environment for investment, and reviving tourism.
In response to another question from one of the attendees on the suspension of privatisation, Tawfik said that there is a general trend of partial privatisation, and disagreement within the government on the need to list shares of public companies on the Egyptian Exchange (EGX), as 10 state-owned companies are now being prepared to be listed.
“We are sitting here talking about the Egyptian reform programme and its achievements, but the devil is in the details,” Tawfik said, pointing to the need to eliminate bureaucracy and improve the administrative sphere.
“Egypt should now focus on the second wave of reforms, which includes the deepening of structural reforms and reforms to government institutions and companies. For all of the above, large international banks such as Citigroup and HSBC are expecting Egypt to rank 20th in the world economically by 2050 but achieving this goal requires greater transparency and governance,” he said.
Tawfik stressed that Egypt’s opening for the private sector to invest in the railway system, in the import and trade of natural gas, and the establishment of an appropriate tariff for investment in the field of renewable energy all strengthened the government’s credibility with regard to expanding the participation of the private sector and foreign investment in economic activity.
He explained that Egypt uses 70% of its water in irrigation and that changing the current irrigation system would save 50% of the water and reduce the losses by up to 20%, and that other measures to ration the use of water in houses, factories, and streets would increase Egypt’s ability to deal with its water problem. “The Egyptian people will only ration water when the prices go up. It is now more expensive than fuel, after it was taken for granted before,” he stressed.
For his part, Issa of CIB said that Egypt has the best return on investment and that most investors who left the Egyptian market regretted their decision afterwards, explaining that the talk about the effects of the economic reform programme on poorer classes is normal. “Reform was necessary and it had to happen, and I think the government is doing very well in addressing the side effects of this programme,” he said.
“Egyptians understand what is happening and they are tolerant, but there is optimism in the end,” he said, adding that companies that have not invested in Egypt so far “have a lot to lose.”
In response to a question about the exit of some investors from Egypt, Issa said that not a single investor left because of Egypt, but rather due to global crises.
“The money is now available in the Egyptian sector,” he said, noting that the value of deposits in banks, which is estimated at EGP 3tn, accounts for 11% of the GDP, which reflects Egyptian citizens’ confidence in the banking system.
“Everyone recognises that there are challenges facing the Egyptian economy such as bureaucracy and corruption, but state officials and concerned parties in the banking sector are determined to overcome these challenges as soon as possible in order to push the macroeconomy forward,” he concluded.
Moreover, Sherif of ATC said that there are many success stories in the field of entrepreneurship in Egypt, which must be highlighted, refusing to say that the Egyptian government has not been able to market economic reforms abroad, and adding instead that Egypt is trying to market success stories, but it must go in two directions. “The first is through the Egyptian government, whose role is to market and highlight what is happening and the second is through foreign investors themselves, who should do more to learn about the current experience in Egypt,” she explained.
Younes of P&G said that his company views the Egyptian market as an important centre for penetrating surrounding markets and added that the cost of energy, labour, and industrial land has made Egypt more attractive for investment than other countries.
He stressed that the Egyptian market is a promising market due to the high population, pointing out that his company realised the importance of this market, so it took into account the balance between exporting and the local market, which absorbs its products in case export markets are troubled.
Egypt is not good at presenting itself to various foreign circles, although it has achieved success in reforming the country’s business environment, reforming the exchange rate, saving energy
Egypt has the best return on investment and that most investors who left the Egyptian market regretted their decision afterwards
there are many success stories in the field of entrepreneurship in Egypt, which must be highlighted
Egypt is trying to market success stories, but it must go in two directions. “The first is through the Egyptian government, whose role is to market and highlight what is happening and the second is through foreign investors themselves
P&G views the Egyptian market as an important centre for penetrating surrounding markets and added that the cost of energy, labour, and industrial land has made Egypt more attractive for investment