Cairo – Decypha: Most of Egypt’s news for the past six months has been focused on reform measures. With the government moving fast in terms of change, many citizens have raised concern with prices and a relative reduction in their standards of living. As the Egyptian government remains optimistic, the view for investors and the general populous remains unclear.
To better understand the government’s plan in terms of reform, Decypha sat down with Egypt’s Minister of Planning, Monitoring and Adminisrative Reform, Dr. Hala Al Saeed, for an interview, to understand the state’s plans to enhance the investment climate, attract foreign direct investment (FDI), deal with subsidies, and achieve inclusive growth.
What are the most important policies that the government intends to focus on in the coming period?
As you know, the government has taken a package of reform measures both from the financial and monetary angles during the last period, which included liberalization of the exchange rate by the central bank last November, and the reduction of fuel subsidies.
It is, however, important to note that these difficult reform measures, are followed by short and medium-term containment measures that are designed to limit any negative effects on citizens.
Examples of short term containment measures include expanding the beneficiary database of the social program Takaful and Karama, which is designed to aid the country’s below poverty line families.
For medium term measures, the state has plans to funnel investments into service sectors, such as education, health, housing, water and sanitation, thus ultimately improving the average living standard of Egyptians.
We are also working on injecting investments in value-added sectors such as agriculture and manufacturing to create jobs for youth. In addition, the state has set plans to improve the efficiency and quality of the government services provided to citizens.
What is the Ministry's plan to push forward economic growth?
We have set a 4% target growth rate for Egypt’s growth domestic product (GDP) by the end the current fiscal year (FY) 2016/2017, but I assure you that we will exceed this figure by June 2017.
As for our target for the next fiscal year 2017, we aim to double the current rates by 2020. Economic growth is not an end in itself, we can achieve 7 to 8% economic growth, but it may not be reflected in equitable distribution and inclusive growth, and I think it essential for social justice for growth to include all levels of Egyptians and governorates of the country.
In Egypt, we have every governorate known for its craft or workmanship. We are working on a plan to take advantage of the competitive edge of different governorates, through the establishment of industrial complexes that encompass the most prominent trades and skills each area is known for.
The angle the state is focused on is aimed at enhancing the local component in each area, thus following production with marketing and exporting each governorate’s commodities abroad.
What measures does the government intend to take to promote FDI in Egypt?
In terms of investments we have two angles to focus on: existing investments, and others we target to attract into the Egyptian economy.
For the existing investments, the government is keen to remove any problems or obstacles encountered, and our doors are open to investors from all sides, to listen to their problems and work on resolving them. In addition, we are currently working on improving Egypt’s ranking in the World Bank’s business index, via the review of several measures, including guarantees to attract foreign investments to Egypt during the coming period, providing incentives for growth, the adoption of the new investment law. We also seek to resolve any disputes with investors in an amicable manner.
What are the biggest obstacles facing Egypt in terms of attracting investments?
Many complain about bureaucracy, but we are simply working to raise the efficiency of the administrative system of the state, and to minimize human intervention as much as possible in the delivery of services, shifting to a more electronic interface that is faster and more accurate.
How will the current economic reform affect both existing investments and the potential flow of FDI?
Economic reform naturally leads to an improvement in the investment climate. As the government works towards improving governmental services, eliminating the foreign exchange black market, and of course liberalizing the exchange rate that solved many problems, investors’ confidence in Egypt is bound to increase.
A few days ago, I was in a meeting with the Regional Director of the World Bank, he praised the reforms we have taken and expressed the bank's determination to work with the government to improve and contain any negative effects on citizens. I assure you that we are proceeding with the reform process without retreat.
What is the government's plan in terms of subsidies? How will the state mitigate the effects of reducing subsidies on citizens?
The subsidies file in Egypt encompasses petroleum products, electricity, commodities, water, social housing, pensions and many others elements that impact the lives of citizens. The problem here is that subsidies do not necessarily reach the households they are intended for. To address this issue we are now working on building a database of eligible beneficiaries, eliminating non-beneficiaries from the system, and there are more than one ministry working on this file.
As the government carves its way into a better economic climate, it’s different sectors are facing a massive cost hike and a relative decline in demand, especially as end users are inclined to economize their spending as means of dealing with a turbulent standard of living.
By Decypha Editorial Team
