Egypt passed the economic conference with flying colours, but what's next?
But to make this success a turning point, it must be followed by a broader, more transparent, and more detailed discussion of the coming phase.
There is no doubt that the success of last week's economic conference in Sharm El-Sheikh (EEDC 2015) surpassed all expectations. I say this not under the influence of the celebratory mood that prevailed over there during the conference days —actually I wasn’t there—but based on media coverage and local and international reactions to the three-day event.
Specifically, the conference was a success in terms of attendance and importance, broad political support for Egypt from countries and international financial institutions which had refused until recently to recognize the new state, multinational corporations looking for promising investment opportunities, and last but not least, in terms of organisation.
This success places a heavy responsibility on the government, and all of Egypt, to turn the programs, agreements, and pledges made during the conference into facts on the ground, and to use the positive momentum created by the conference to turn the economy around. This is not an easy mission. It requires large efforts in and out of government and greater transparency and clarity in the state’s economic program. It also requires a broad debate within Egyptian society on the available choices and priorities.
Transparency is needed to address the massive expectations of the Egyptian people, who sat in front of the television hearing of deals worth billions of dollars with little distinction made between pledges and obligations, grants and deposits, financing and partnership. This is not to minimize the significance or fact of these agreements. Global companies that signed deals with the Egyptian government are legally obligated to properly disclose accurate facts.
I’m only pointing to the need to distinguish agreements that have actually been signed from statements of intent that require further consideration before being set down in binding contracts. The implementation timeframe and financing of projects should also be clarified, along with concessions made by the government, whether land, financing, or partnership. Making these details public is necessary to temper public expectations and avoid disappointment when results fail to materialize immediately.
We also need more clarity in the state’s overall economic policy. Speeches by the president, the prime minister, and the ministers of finance and planning sketched the broad outlines of this policy, especially the state plan through 2030 presented by Dr. Ashraf al-Arabi and Hani Qadri’s tax policy overview. Moreover, the director of the IMF, the vice-president of the World Bank, and the EU foreign policy chief all expressed confidence in Egypt’s economic future.
This is progress, but it is not enough. The Egypt 2030 plan contains targets, but no explanation of the policies or procedures needed to achieve them. For example, by 2030 it seeks to reduce unemployment to 5 percent, eliminate illiteracy completely, place ten Egyptian universities among the 500 best in the world, and make Egypt one of the top 20 countries in the number of registered patents.
These targets and more are attainable, but the next step is to flesh out the mechanisms, programs, and policies that will further them and the assumptions on which they are based. Attaining these objectives also requires funding, statutory amendments, and government staff with the requisite skills. And all of these issues require greater clarity and transparency, to enable society to become a partner in implementing this ambitious plan.
A third matter that requires further clarification is the state’s social policy: how to ensure a fair distribution of the proceeds of investment and realize social protection for the most vulnerable. Despite the celebratory air of the conference, it was unable to dispel legitimate fears that the type of development promoted by the state is geared toward big investors and those with insider access rather than the poor.
The space devoted to social policy at the conference was unfortunately too little and too late, and the media coverage minimal. Even the most recent programs launched by the Ministry of Social Solidarity did not receive due attention, despite their significance. Egypt needs a genuine, comprehensive discussion of social justice.
It needs not only targeted subsidies and new social security programs, but a better understanding of the nature and causes of poverty, why it is concentrated in some areas more than others, and what prevents the poor from benefiting from social programs. And while foreign investors that made up the conference’s main audience may be concerned about these questions insofar as they impact security and stability, the discussion is needed within Egyptian society and among its social classes. The future of the country hangs on which social policies we choose.
Finally, with the conference over and apprehensions relieved, it may be appropriate to give the many laws issued in recent days a calmer, more considered review, particularly the investment law and the changes to the income tax law. The latter in particular abruptly changed the direction of tax policy, raising many issues that require further study, but that is a topic for another day.
Yes, the conference was a success. But to make this success a turning point, it must be followed by a broader, more transparent, and more detailed discussion of the coming phase. More importantly, the success of this shift requires the participation of all segments of society, which means that the people must be partners in thinking about and making choices, and not just be expected to faithfully implement them.
Ziad Bahaa-Eldin holds a PhD in financial law from the London School of Economics. He is a former deputy prime minister, former chairman of the Egyptian Financial Supervisory Authority and former chairman of the General Authority for Investments.
This article was published today in Arabic in El-Shorouq newspaper.
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