Will Egypt’s bullying attitude help overcome its economic crisis?
By : Mohammed Nosseir
:: A bullying attitude might work to move some nations forward, especially those that suffer from a rusty decision-making mechanism. It might work well when bureaucrats are resisting reform — if a clear vision exists. But adopting a bullying attitude without having a vision is like banging our heads against a wall.
Unless they are overcome quickly as per the government’s promise, the economic difficulties that currently entrap us in Egypt are bound to pose a serious threat to state stability. “We will enrich citizens first and then apply economic reform,” President Abdel Fattah El-Sisi declared during his presidential campaign. This was probably wishful thinking that eventually clashed with economic reality.
Over the last few years, two main pillars of Egypt’s economy have suffered badly; we are experiencing a sharp decline in domestic and foreign direct investments, and there has been a substantial drop in the number of tourists.
The effect of the current economic slowdown on Egyptians is reflected in significantly lower earnings and the harsh application of the government’s economic reform program, which has led to a substantial increase in the prices of goods and services.
The hyperinflation that we are living with forces Egyptian households to reduce their basic consumption, tap into their savings, sell some of their assets, and for the less fortunate, increase their debts.
At present, Egypt’s economy is neither driven by economists nor following a single school of thought. It is managed by government executives who are assigned tasks that need to be accomplished within a short timeframe, and who are not aware of the impact of their respective tasks on one another.
Furthermore, decisions are often articulated based on state statistics, the accuracy of which is not at all certain. Leaving the entire population to wonder about the economic reform program is increasing uncertainty and anxiety among citizens at a time when we need clear direction.
The recent fuel price hike was necessary to reduce government subsidy expenditures, which account for roughly a third of our budget. But a government plan to develop an alternative transportation method, to prompt citizens to stop using their private vehicles and start using public transport, has long been overdue.
The government has not yet begun to tackle the real factors that hinder the flourishing of the tourism and export sectors, such as bureaucracy, corruption, deficient law enforcement and low productivity.
We do not only lack a realistic functioning alternative; our traffic dilemma is further complicated because privately owned minibuses (an important means of transport) are unable to adjust their tariffs to meet the fuel price increase, so they are shortening their routes to compensate for higher fuel costs.
When the government decided to float Egypt’s currency, many pundits predicted this would reflect positively on our exports and on the tourism industry. But the fact that exports of ready-made garments — the most promising Egyptian industry — have increased by only 4 percent over the six-month period following the currency devaluation, and that there has been no noticeable increase in the number of tourists, discredit the argument that being cheaper is good for the economy.
The absence of an overall vision for the economy is our true dilemma. Egypt has been a cheap tourist destination, and a country known for its low production costs, for decades prior to the currency fluctuation. The government has not yet begun to tackle the real factors that hinder the flourishing of the tourism and export sectors, such as bureaucracy, corruption, deficient law enforcement and low productivity.
Applying bullying reforms while neglecting critical economic issues is pressuring our citizens, and the outcomes are unclear. Egyptians are used to living under difficult economic conditions, but the present situation is becoming considerably tougher. The state is narrowing public political and economic spheres, squeezing Egyptians to the maximum.
We are still living in an immature economy, in which the government and private citizens are spending unwisely and are unable to advance their revenues. Large numbers of Egyptians may support the ruling regime on political issues, but when it comes to their daily incomes, people will not put up with it for long.
:: Mohammed Nosseir, a liberal politician from Egypt, is a strong advocate of political participation and economic freedom. He can be reached on Twitter @MohammedNosseir.
:: Disclaimer: Views expressed by writers in the Column section are their own and do not reflect RiyadhVision’s point-of-view.