Joint efforts required to jump-start Egypt's economy
Egypt, Economics, 4/24/2002

The Egyptian economy is sluggish. The market has been in recession in the last few years. In a bid to revive the market and increase consumer purchasing power, the Central Bank of Egypt (CBE) has therefore decided to provide loans totalling LE1.8 billion to Egyptian banks, which will in turn offer them to public and private sector employees.

In this way, the public will be encouraged to supply their needs with Egyptian-made products and thus reinvigorate the market.

The move by the CBE was met with mixed reactions, but the question of who is responsible for jump-starting the economy remains.

Is it the responsibility of the government? Or should the business community and manufacturers play a more active role? Or is it up to the consumers, who play their part, but are not aware of the fact?

Former Prime Minister Ali Lotfi said that activating the market is everyone's responsibility as every individual in Egyptian society is affected by market conditions.

The government should reduce the tax burden on manufacturers and abolish the ten per cent sales tax, Mr Lotfi said. Land prices in the new communities should be brought down to encourage investment projects, he said.

Reducing the cost of borrowing for "genuine" businessmen and investors is essential, he added. In an interview with the business daily Al-Alam Al-Youm, Mr Lotfi urged the government to create more advantages and incentives for Egyptian exporters.

Mr Lotfi said that the People's Assembly (PA) are still debating a pile of draft laws, which include the new unified labour law and investment legislation, and which, if passed, will help boost economic growth and stimulate the market.

Mr Lotfi said that businessmen and investors had a crucial role in improving production to withstand competition at home and abroad. Consumers should buy locally made products and avoid imports, especially those for which there is a local equivalent, he said.

Moustafa Zaki, head of the Importers Section at the Federation of the Egyptian Chambers of Commerce (FECC) said that the government's repaying its local debts -- about LE20.4 billion -- would be an important step towards a revitalised economy, adding that the CBE's LE1.8 offer affirmed the bank's role in stimulating the market.

"But the business community is still asking the government for more tax exemptions. Higher purchase arrangements could also help revive the market."

"The Egyptian public are known to have a strong consumer instincts but the problem is that they do not have the ready cash. The government and the business community should do their utmost to create job opportunities and raise incomes, which would help to beat the recession on the one hand, and push the private sector to improve quality of their products and reduce costs as far as possible on the other," Mr Zaki said.

Mahmoud Abdul-Fadel, head of the Economics Department at the Faculty of Economics and Political Sciences said that if the government, the banks, businessmen and consumers pulled together, the Egyptian economy could be dragged out of recession.

The banks should endeavour to restore confidence between themselves, Mr Abdul-Fadel said, adding that once this happens, businessmen and investors will find it easier to obtain loans at favourable rates of interest. Hence more projects, which will mean more jobs.

Businessmen must realise that the coming period is critical, for which they will have to improve their performance and the quality of their products in order to attract customers, many of whom prefer foreign goods that are often cheaper and of higher quality.

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