CAIRO: The author of the “Emerging Egypt 2008 business report praised Prime Minister Ahmed Nazif’s efforts in decentralizing Egypt’s economy, but also recognized the challenges ahead.
The Oxford Business Group (OBG), in partnership with EFG-Hermes and the American Chamber of Commerce in Egypt, launched its “Emerging Egypt 2008 business report at a conference in the Grand Hyatt Tuesday.
The OBG’s regional editor Oliver Cornock said Egypt was the region’s best example of the effects of economic liberalization on developing economies, having generated year on year growth in wealth and employment at a rate of seven percent.
He praised Prime Minister Ahmed Nazif and Finance Minister Youssef Boutros Ghali for decentralizing Egypt’s economy and rolling back the role of the state through a number of constitutional amendments.
“Both of these men have a serious vision – their policies are inspirational,
Cornock said, adding that these policies had earned Egypt the number one spot in the World Bank’s table of “Top Reformers for 2007.
The 236-page report focuses on Egypt’s politics and various economic sectors, including banking and finance, energy, construction and real estate, tourism, agriculture, media, health and education, telecom and IT, and transport.
In addition to economic analyses, the report includes feature stories on individual sectors and companies, and interviews with a wide range of top figures including Naguib Sawiris and Transport Minister Mohamed Mansour.
Cornock gave an overview of the report and discussed its main findings before opening up to an extensive questions and answers session.
He admitted that Egypt’s rapid growth had raised a number of serious challenges for the government and the Egyptian public.
In an interview with Daily News Egypt after the conference, Cornock said that more had to be done to ensure a better spread of wealth – an analysis included in the report – known in economics as the ‘trickle down’ effect.
Currently too large a sector of the population was not seeing the benefits of the country’s growth and were thus becoming poorer as inflation and prices rise.
This is a consideration for the government as they look to reduce subsidies on essentials like cement and wheat so that they can be more competitive in the international market on the one hand, but also ensure that the poor who rely on these subsidies will not be priced out of the market on the other.
Wage increases he said have to be on a par with inflation, or else there would be many more of the workers’ strikes in the coming years that spread across the country in 2007.
He added that the property market was also heavily skewed toward the wealthy and that rising property prices, without an adequate mortgage market, would leave even the burgeoning middle classes struggling to become home owners.
“New residential units are mostly at the top end and this doesn’t help the lower brackets. It’s essential that Egypt gets a mortgage market going. Long-term housing finance is a big part of making the transition from an emerging economy to an emerged one.
Overall however, Cornock said Egypt was benefiting hugely from liberalization and privatization and that the diversity of the country’s economy was one of its biggest assets.
“Not one major sector accounts for more than 25 percent of Egypt’s GDP, he said, pointing out that this will stand the country in good stead in the event of a global economic downturn.
The printed report and the online report can both be purchased at www.oxfordbusinessgroup.com