7 January 2019

Egypt's Economic Renaissance - Lessons to Learn

As Egypt preps to take the wheel to steer the African Union over the next 1 year, the Arab Republic is recognized for its impressive economic come back, after suffering almost a decade of major slump.

Egypt's economy grew by 5.3 percent in the 2017-18 fiscal year,notably the highest performance in 10 years. (Reuters July 25 2018). It is projected that the impressive comeback is expected to continue through 2019 and potentially reaching and surpassing 5 percent.

Much of Egypt's economic recovery is associated with the country's readiness to 'tighten its belt' under the leadership of the country's sixth democratic leader, President Abdel Fattah al-Sisi.

His efforts have not gone unnoticed, the international community has showered him with praises extolling his implementation of the fiscal policies and structural reforms proposed by the International Monetary Fund (IMF) back in 2016.

More commendations poured out during the Africa 2018 Business Forum held in Egypt's city of Sharm-el-Sheikh in the early weeks of December 2018. Here, President of the African Development Bank, Akinwumi Adesina was among those who recognized Egypt's 'strong macroeconomic performance, good ratings in the Doing Business Index, and the success of major projects in which the Bank is supporting Egypt, lessons that can be learned for the development and the integration of the continent' as quoted by the global news portal, InfoReport.

In his speech, Adesina said Egypt's unprecedented renaissance has serves as a vivid lesson for the rest of the continent to realize and capitalize on their potentials.

In its latest ADB Country Results Brief, Egypt topped the rest of the continent racking up the highest amount of Foreign Direct Investment (FDI).1

Over the years, Egypt has been receiving the lion's share of ADB's funding for various development projects; and not surprising, given that it is reputed as the bank's the second largest shareholder on the continent and that ADB has some USD 2.9 billion invested across at least 30 development projects that are currently underway in the country.

Our partnership is key to helping Egypt bring about sustainable and inclusive economic growth", said African Development Bank's Country Manager Malinne Blomberg. "Effective infrastructure, macro-economic reforms and access to social services, which we promote, are the bedrock of a vibrant and growing Egypt. It is critical for the Bank to accelerate development pace with our High 5 priorities," she added.

This Country Results Brief describes recent economic and social trends in Egypt, particularly those related to the Bank's five key development priorities enshrined in the High 5s: Light up and Power Africa, Feed Africa, Industrialise Africa, Integrate Africa, and Improve the quality of life of the people of Africa. These High 5s are based on the a set of indicators from the Bank's 2016-2025 Results Measurement Framework. It also reviews how the Bank manages to optimise its investments by improving people's quality of life. Worth noting and learning from, is that, while Egypt's close neighbors in East Africa are attempting to squeeze all they can from agriculture in a bid to industrialize, the sector accounted for only 12% of Egypt's GDP over 2018.

With ongoing technological development in the new digital era, East Africa will have to invest more in education to grow a work force that can handle the service sector or resort to importing skilled labour.

This future is evident in the ADB Country Results Brief' on Egypt, which highlights how it (ADB) '... intends to help the country achieve its Vision 2030, focused on achieving high, inclusive and sustainable growth in a competitive economy.'

The country expects to invest more in human capital in the short and medium term. With 1,000,000 young people entering the labour market every year, creating a dynamic private sector that can provide productive jobs is a crucial element for the country's human capital development - ADB2 Country Results Brief' on Egypt ADB Published 10.12.2018

Building on The Success: Wooing Investors

At the summit, Egypt's President Abdel Fattah al-Sisi seized the chance to encourage investors to 'take advantage of opportunities on the continent.'

Leading by example, President Sisi pointed out that Egypt has increased its investments across the continent from USD1.2 billion to USD10.2 3

He went on to underscore the upcoming intra-African trade fair scheduled for mid-December in the capital, Cairo. An event that is seen as testimonial to the continent's resilience and a worthy rebuttal to critics' argument that 'intra-African trade is low, limited by problems including armed conflicts, political rivalry and a lack of logistical and transport connections between states.'3

In the same stride, African countries are expected to launch a joint market as early as next year. Should it be ratified by the expected 22 countries, the 1 billion strong market will open up trade opportunities and boost the much coveted intra-African trade.3

Bidding Good Ridden to Hard times

Since Egypt's 2011 uprising or rather the Arab uprising, the country has faced tough times. In 2013 when the current president took over after a military coup, the country started a snail crawl towards recovery, but it has not been easy to say but the least.

The uprising scared away investors and all but destroyed tourism of the infamous 'land of the pyramids'. This caused a major shortage of foreign currency that spiraled to lack of imports of very basic needs ranging from home consumer goods to cars and subsequently the shutdown of numerous companies and the unleashing of catastrophic unemployment levels and related social unrest.

Things have continued to be tough for the general public even as recent as 2016 when the Gulf News published a a news report titled: 'Economic slump pinches Egypt's middle class badly' which starts of by capturing the pain of the 'economic pinch' in this opening:

Cairo, Egypt - Egypt's capital has the second highest number of high net-worth individuals(150) - Africanbusinesscentral.com

Even though the economy is performing well and is expected to continue doing so, the middle and lower classes of the Egyptian society will continue to feel the pressure of the ongoing austerity measures and inflation that are responsible for the economy's improvement

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