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VIEWPOINT

GIVE ME TITLE.......GIVE ME CREDIT

One of the challenges that Egypt is experiencing with regard to reform is the fact that those most affected – average Egyptians – have not been directly addressed by the process. Economic abstractions such as growth rates, budget deficits, debt servicing and structural reform mean little to the man on the street who is primarily concerned with a safe and secure home, and how to feed his family and educate his children on a highly taxed salary that is shrinking with inflation. Under such conditions, people may view the reform process as adversarial and public consensus will be withheld, preventing government from making the bold moves required to turn Egypt around. There can be no deep reform without public acceptance and participation, and it is the task of government to determine how best to enlist this necessary support.

For years, many of us have advocated the importance of creating a better business environment, primarily so that the private sector would be empowered to provide desperately needed jobs.

Today, more people are employed in the private than public sector, perhaps for the first time. The informal sector, however, still provides the bulk of Egypt’s employment, thus depriving the formal economy of inestimable resources. The question is how to get people involved in the reform process in a way that is constructive to themselves and country, and how, simultaneously, to build that precious and most essential element of reform: people’s trust. Historically, extra-legality has been perceived as a political and social problem to national economies, whereas it could instead represent our best solution for economic growth.

Recently, the Egyptian Center for Economic Studies, in cooperation with Hernando de Soto’s Institute of Liberty & Democracy, completed a survey of Egypt’s property market that revealed some startling facts. Ninety-two percent of Egypt’s property owners hold their real estate assets as extralegal, that is, unregistered and without a title. The total value of this property is estimated at a staggering $200 billion and may well exceed this amount; but so long as it is unregistered, it is dead, useless capital. This situation is largely owed to an archaic process whereby registration of deeds and contracts takes over 200 days of red tape, and costs the applicant the sum of approximately £E 20,000. The cost of obtaining authorization to build on undeveloped land takes more than 1,000 days and estimated costs exceed £E 100,000. The registration process is dispersed and disorganized, representing a costly and daunting challenge that people find impossible to confront.
Clearly, it must become easier for people to own their property. The solution would be similar to that proposed for establishing proprietorship of new businesses, namely, a one-stop shop and a single real estate formalization and registry authority. As De Soto has memorably pointed out, “anarchy is not the absence of laws but the presence of too many laws.” Such is the case in Egypt, where vast amounts of capital have been rendered inert by not facilitating legal ownership.

By giving poor and average citizens the opportunity to own the place where they have lived often all their lives, the government would in effect be providing them with a fresh start, real security and a capital asset. A deed in hand is far more valuable than any amount of rhetorical promises of future prosperity. By rendering property registration accessible, people would become a part of the reform process instead of its critics. Ownership would serve as collateral for loans with which people can start businesses, thus providing millions of average Egyptians with a concrete stake in the national enterprise.

It is my strong conviction that if you give people title, put their names on a deed that ensures the roof over their heads, and promises the possibility of credit and enterprise, while providing them with more equitable tax treatment, then the impact on the economy – not to mention people’s attitudes – will be tremendously positive. The role of the media in the reform process has been long overlooked. It must be reassessed as a great untapped resource that can be rallied to the cause of public awareness of their new property rights, and keep people apprised of the value of their participation throughout the reform process.

It is well known that restructuring bureaucracy results in lay-offs and employees taking early pensions, thus reducing productive contributions to the economy. This would be counterbalanced by giving people title and the possibility of seed money to improve their lives in any number of ways.

Only by acting to directly touch people’s lives in beneficial ways, will the government achieve the ground swell of support necessary to proceed with even deeper reform. By making ownership available through a simple, accessible process, people can become part of a reform process that they can understand and will wish to protect.

Taher S. Helmy
President, AmCham Egypt

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