Egypt is sweeping its economic challenges under the rug

Egypt is presently confronting many economic challenges that its government is trying hard to solve. Regardless of the type of economic policies the government adopts, the debate among economists concerning which policies to apply will continue. However, when it comes to single-mindedly using present and future “reservoirs” to establish new mega projects that will supposedly yield substantial returns in the far future, the government needs to be open to debate: what if our mega projects don’t yield the returns anticipated by the State?

Culturally, Egyptians tend to be obsessed with a single idea, believing that this one concept will solve our problems permanently. Eventually, a few years later, we realize that we were wrong but our egoism prevents us from comprehending our faults and pushes us to engage in a new obsession. The State’s latest tapping into Egyptian Religious Endowments funds (after having drawn on literally all our other national resources and international funds) should lead us to question whether the economy is all about expanding the government’s expenditure.

The Egyptian State is currently obsessed with the idea of expanding the nation’s hardware, exemplified in the development of our physical infrastructure (new cities, roads and tunnels). The State expends these efforts but completely neglects to identify suitable software applications that will eventually work to maximize the returns on these projects by formulating incentivizing policies designed to encourage the private sector to expand its businesses (assuming that the State does not have the capacity to play both roles).

The Egyptian State has been concerned with the fact that a few corrupt businessmen used to manipulate the Egyptian economy prior to the 25 January 2011 revolution, which is a valid concern. It has therefore been working to replace the private sector’s “economy engine” with its governmental tactics and apparatus. This approach, combined with the government’s development of economic policies that serve to expand its role, has resulted in the substantial expansion of government projects and a marked shrinking of the private sector.

The Egyptian state doesn’t want to consider a third option i.e. firmly fighting corruption while giving the private sector more room to expand its investments. The risk entailed in placing the entire resources of our nation in a handful of mega-projects would be reduced by the diversification of investments into thousands of new projects wherein each entrepreneur will better innovate and manage his individual business’s risk. Devised decades ago, this economic concept (that we decline) has boosted the economies of many advanced nations.

Furthermore, the unemployment rate in Egypt is estimated at about 25% among our youth, who account for two-thirds of the population. However, young Egyptians prefer holding unproductive casual jobs that give them a few extra pounds (but no clear career path) to occupying the positions available on the job market. We need to address this socioeconomic challenge scientifically – not by applying our current bullying approach. The manner in which the State tackles our young people’s challenges will make them either the assets or the threats of society.

Prior to any development, advanced nations tend to empower their soft power to determine the type of capacity expansion they need. They then prioritize their hardware capacity needs based on their return on investments, while identifying who is best equipped to do what. In contrast, we in Egypt have adopted a “train approach”; we strive to keep the train moving regardless of whether it will reach the desired destination or if we are transporting the right goods or not.

A small gust of wind will bring back the dust that the Egyptian government has been hiding under the rug for the last few years! Most of our problems have not been resolved, because the State often emphasizes its efficiency in the launching of new projects while downplaying the effectiveness of the projects – which is what matters most at present. Our extensive economic challenges should prompt us to better validate our economic path and not insist on our current singular approach.



Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s