By Wael Z Orban
We have been hearing a lot of rhetoric about the economic damage that hit Egypt amid the ongoing people- fight of freedom. You are right, there is damage and it is a profound one. The good news in my humble opinion is that the damage is short term; it is not only reversible but can be more than offset if Egypt turned into true democracy with transparency and accountability. Think about it this way; we have been growing by 5-6% over the last decades (obviously figures were reduced amid the financial crisis). But the figure we achieved is substantially lower than other emerging market where double-digit economy growth figure were achieved (think Brazil and India for example).
Over the last years, we have been living in denial. Actually it seems more of a lie concerning stability and prosperity. The collapse of the Egyptian authority in less than a week was a wake-up call that we urgently needed to build a system that is more sustainable. That is a democratic system that is built upon accountability and transparency. A system that encourages creativity and foster productivity. A system that sees population is a blessing rather than a curse (think China vs. Europe). A system that spends more on education than security. A system that gives people a sense of time and respect for work and above all ownership.
The equation is simple. I would fight for 10-12 percent growth over the next few decades rather than settle for the 5-6 percent growth which is basically below average emerging economies.
The people I saw in Egypt over the last few days/weeks are determined. They are committed, have a sense of purpose, sense of time and respect. The people I saw are mainly young, creative and energetic. They do what they do with a smile. These are the people that the current system made to believe a population curse. These people would made Egypt achieve the 10-12% grow of the coming few decades so we can catch up gradually with countries like Brazil or South Korea.
I always contemplate how our grand-parents managed to build great pyramids that lasted for thousands of years, while we struggle now to get someone to fix ceramic tiles in our bathrooms. There are rubbish theories that pyramids are built by slaves. I totally disagree. Slaves would not build something with that precision and last for that long. Slaves, like we do now, construct buildings that collapse before they are even registered.
The path is not rosy. We cannot turn things around in a week. We have a lot of work to do that is going to take years and years. But we need to start. And we started….
Wael Z Orban, CFA
Stock Market Expert