Merit Al-Sayed is an economist and Strategic Projects Implementation Manager at the Arab African International Bank in Cairo.
Dear Omar, Thank you for your insight. We have been closely monitoring the evolution of Egypt on the ground lately. I firmly believe that the magnitude of reforms cannot be handled by one party only. it’s much above the capability of the military and the private sector and the public sector and even the foreign investors. As a enabling measure, the Government of Egypt needs to accelerate its reform plan and to move ahead with the implementation of its reform plans it announced later this year. There are a multitude of risks and handling them requires a substantial different approach than the preceding governments of Egypt that yielded little to the bottom of the Economic Pyramid. Generally, we emphasize that there are alot of issues that need to addressed and is urgently needed to overcome the existing shortcomings in the economic priorities and historic socio-political deficiencies. Thank you. Merit, Mark , Terence.
Dear Julia, Thank you for your reply. I understand your concerns and that's the point of this Op-Ed. We are broadening our readers understanding on how competitive economies are constructed at the outset. Answering your inquiry on what Schumacher, he explains that Macro economics, on its own merit, captures post-facts, GDP rates, raw numbers that are purely historic and say little about the potential and emerging opportunities in a given market context. He believes that micro and meso economics complement the outlook and take a deeper dive where a view on systems, relationships between institutions and the society becomes precise, granular, dynamic and detailed. In addition, they are a multitude of other forces that shape up any competitive economy of a nation, here we are discussing the case of Egypt after three years of turmoil, with enormous challenges that we have presented at the beginning of this article. Governments usually take 2 distinct measures to bolster a nation's competitive standing. One is the enactment of proper Macro Economic Policies (i-Fiscal, ii- Monetary and iii-Macro Economic Policies) and Second is the deployment of (Social Infrastructure and Political Institutions). In the case of Egypt, ( a country laden with acute problems such as a large population and a bloated inefficient public sector) the government has acknowledged that it needs to an "economic revolution" to recover from damage caused by political instability as it seeks to attract billions of dollars in foreign investment and repair its state finances. Further more, the Government has stated in order for it to compete globally, Egypt must overhaul an economy which has been dominated by the state for decades and assure its investors it is committed to safeguarding their money. Last but not least, the GoE has openely acknowledged that it has a huge issue in Investment laws- The laws need to be revisited – the investment laws, the business laws categorically. In terms of your inquiries on the viability of the 12 Bn Aid Package and the Micro Finance, I value your ideas on this matter and I can see why you're concerned about . In terms of the first, the aid package was a "jolt of life" for Egypt's dwindling reserves, floundering economy and halted productive capacity. It curbed inflation, maintained currency and enabled Egypt to import its necessities in the short and medium term. Furthermore, it increased the confidence in the Egyptian economy and filled the vacuum caused by declining foreign investment flows. You can track the Sovereign Credit Ratings of Egypt and the Credit Default Swaps (CDS) as a guiding indicator and measure their progress yourself throughout the transition period. In terms of lifting of subsidies, I firmly believe that these measures had to be taken and was a bold step by the country's President to alleviate a huge burden on the state's finances. I advise you to revert to the IMF Managing Director- Christian La Garde Latest views on the measures in which she deemed the actions taken as "very impressive". In terms of the second point I differ on is the Micro Finance- as panacea of financial and social inclusion. The poverty rate in Egypt as per the latest consensus of the World Bank is 25% (which is a conservative measure and is underrated). Almost , 20-40 million of Egyptians live below the poverty line. This disenfranchised and poor segment has no access to financial , social or economic services. The plan to integrate an estimated 60 percent of the population into the system by registering and documenting ordinary Egyptians' assets could more than double economic growth rates within five years by giving people access to credit and the protections of legal status. With the above and to summarize, we believe that Egypt is taking the right set of reforms to rebound and to generate a healthy business environment. We will actively be watching and gauging the issues unfolding and measuring the incremental impact on the Macro level as well as on the individual level in the coming period. I hope the above answers your inquiries, Thank you. Merit, Mark and Terrence.