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VIEWPOINT

The proof will be in the details 

Egypt’s business community greeted the outcome of the World Bank Donor Conference, held in Sharm Al Sheikh at the beginning of February, with cautious enthusiasm.

The encouraging news was that $2 billion was granted for “immediate disbursal” as part of a $10.3 billion package to be activated over the next two years. This first installment will fund over 100 government-targeted projects, though the exact breakdown of what the projects would be was not immediately available following the conference. Minister of State for Foreign Affairs & International Cooperation Fayza Abul-Naga stated that the World Bank would release those details “at a later date.”

More good news came in the shape of renewed commitments to reform, which the government emphasized were not related to conditions for receiving funding but rather were already a part of Egypt’s economic revitalization scheme. Indeed, points for action that were broadly agreed to at the conference – like reducing unemployment, increasing vocational training and environmental protection, and promoting micro-credit schemes for new businesses – have long been among Egypt’s stated aims.

While matters relating to foreign-exchange policy and the possibility of further devaluation were left unclear, it was suggested that the end of the Hajj season, along with this new injection of “fresh money,” would alleviate some of the pressures that all of Egypt has experienced in the last few months.

The new monies will certainly act as a much-needed band-aid following the dramatic reduction of foreign revenues – particularly in the tourism sector – since September 11. Furthermore, such a significant financial commitment cannot help but brighten Egypt’s prospects for renewed interest on behalf of foreign investors.

But there’s reason for caution. New money cannot solve old problems – and specifically not those related to efficiently allocating major cash resources within the framework of a cohesive, comprehensive reform strategy.

Egypt’s role in the region and its pivotal position in today’s theater of world politics account easily enough for the decision to buoy our economy. But unless Egypt rallies to face domestic challenges, the results of the donor conference will amount to little more than a temporary bailout, when what we need are deep and lasting solutions.

For over 10 years, the business community has directed its considerable energies towards maximizing the potential inherent in reform. Yet rising unemployment and insignificant progress on the export front now tell us that our efforts have just begun. The effects of inflation related to the pound’s decline are already hitting people where its hurts, and recent taxation policies have elicited more conflicts than confidence.

Until Egypt can generate income from a range of solid domestic sources, we will continue to look to donors. Whatever short-term advances we appear to make will be artificial, since we will not be responsible for initiating them. Many of us may have visions of Egypt as a dynamic, productive nation. But reliance on donors is just that – reliance.

Under the circumstances, needless to say, no one is looking the gift horse too hard in the mouth. Big money means big possibilities – not to mention a most welcome vote of confidence. The fact is, however, that this very significant sum needs to be put to work properly so that the opportunities it represents are actually realized.

That will require thinking long term and making some tough, well-informed and well-considered decisions. It will also demand transparent management and coordinated efforts that offer tangible benefits in both the public and private realms.

Let’s hope that the forthcoming information about fund allocation reflects Egypt’s need to create jobs in industry, and finance the small and medium-sized enterprises that will be vital for building a diverse, stable and self-reliant economy.

Mohamed L. Mansour
President, AmCham Egypt

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