CAIRO: Right after he wrapped up an interview with Egypt’s trade minister, Daily News Egypt caught up with Richard Ensor, managing director of Euromoney Institutional Investor, to get his views on what was said by officials at the economic conference.
Daily News Egypt: Can an internationally standardized rubric such as GDP accurately measure a country’s actual increase in wealth, particularly in a context like Egypt where population growth could quickly offset a 4.7 percent increase in GDP?
Richar Ensor: All countries have their own circumstances. You begin with GDP and then go to more specific figures from the World Bank in order to get a clearer picture. However, as [Investment] Minister Mahmoud Mohieldin said yesterday, if you’re going to improve the distribution of wealth you must create wealth in the first place.
What methods would you recommend Egypt consider for new sources of growth?
As [Minister of Trade] Rachid was saying, Egypt is looking to increase consumer spending by developing its domestic markets. Even two years ago I think that the Egyptian government was not yet thinking in that way, of rebalancing domestic investment with attracting foreign investors. Rachid’s emphasis on energy exports reflects that.
Moving towards a post-financial crisis context in which many governments are profoundly questioning their regulatory systems, does Egypt need to reconsider its financial structure?
There is an element of truth in that. Free markets haven’t worked as well as everyone thought. However, I think it’s unfair to apply that criticism to an Egyptian context. Look at how they’ve managed their banking system in coming through the crisis. If something isn’t broken, don’t try to fix it.
Much of Egypt’s economic growth is driven by its rapidly increasing population; how can it achieve growth that relies on a more sustainable engine of demand?
You encounter this question in developing economies all over the world. In China they dealt with it by enforcing the one child rule. In India they didn’t. China is now facing a different set of problems, namely a rapidly aging population. India continues to struggle with a population boom.
The Egyptian growth rate will eventually slow down as measures such as old age pensions replace the reliance on children to support their aging parents. Population growth is difficult to control. I think it would be neither possible nor advisable to implement a Chinese model in Egypt.
Egypt’s growth rate has kept the mood at the Euromoney Conference optimistic in spite of the financial crisis. What is your opinion of Egypt’s economic future, in the coming year and beyond?
The Egyptian government has a poor track record of achieving the projects it sets for itself, and I believe the ministers would be the first to agree with me on that. It comes down to poor education and a large bureaucracy. I’d say the Brits introduced the bureaucracy and the Egyptians have continued it. Excessive bureaucracy leads to corruption and discourages decision-making.
Multiple panelists and ministers described efforts to reduce the amount of red tape.
They’ve been saying that for 10 years! [Finance Minister Youssef] Boutros-Ghali used to tell a joke. ‘Someone comes to a minister saying he has to get rid of red tape in Egypt. The minister agrees and says he will have a civil servant do it. The civil servant begins to cut the red tape – long ways.’
How much cause for optimism do you believe we have?
The reform programs initiated by this group of ministers [the ‘business friendly cabinet’ appointed in 2004] are reason for optimism. These guys know what they are doing. Particularly when you compare [governance in] Egypt with other African countries, there is much cause for optimism.