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RETURN OF THE TIGER
For over two decades, Egypt has pursued an economic
reform program designed to empower the private sector, streamline
the bureaucracy and attract foreign investments. It took time, but
by the mid-90s Egypt was dubbed “the tiger on the Nile”
in reference to the emerging markets of East Asia that had taken
the global market by storm. Enthusiasm ran high and foreign capital
flowed into Egypt. More multinational corporations and foreign franchises
went to work at a decent profit while local businesses expanded
and diversified to join the fray.
Egypt’s foreign currency reserve reached and exceeded an unprecedented
$20 billion; local companies were listed on the London Stock Exchange
and GDRs were being sold in the US. Egypt had made great strides
towards its macro-economic goals and was recognized as a leader
among emerging market economies. The government had opened almost
every activity to the private sector; notably utilities – power,
oil and gas, telecoms, and major infrastructure projects including
airports, sea ports and roads.
Yet by the end of the 1990s, it seemed the tiger on the Nile had
gone astray and was lost somewhere in the desert. In 2002, economic
commentators remarked that Egypt had backtracked. Indeed, Egypt’s
faltering economy may have reflected that of the world at large,
but there were also internal reasons for the slump. The global economy,
still recovering from the dot-com bust, was further impacted by
the events of 9/11, especially the Middle East. Meanwhile, Egypt’s
performance was affected by two different cabinets. One set us back
with central planning ideas, and the other just maintained the course
with its indecisiveness. Egypt’s current government has proven,
by contrast, the difference 14 months can make. Tough decisions
about fiscal, monetary and trade policy have placed Egypt back in
the game.
Thanks to the coordinated actions of a team-oriented government,
Egypt’s economy has rebounded, and this time there’s no
turning back.
Not only are foreign reserves back to over $20 billion, we’re
starting to see IPOs, foreign listings and new corporate and sovereign
bond issues again. Major projects in the fields of oil and gas are
under way; we’re exporting billions of dollars worth of LNG
to Europe and US; steel, fertilizer and cement exports are also
up. FDI is coming in at a much higher level, and this year alone
we’ve seen more investment than in the past four years combined.
But we’ve only just begun to restore the predictability and
transparency that sustain a market economy. To keep moving forward,
we needed political reform, and that’s exactly what we are
witnessing today.
Signaled by the amendment of Article 76 of the constitution, Egypt’s
political reform is geared towards greater public participation,
competitive politics and therefore more efficiency of government.
The legitimacy and accountability arising from multiparty elections
has changed the face of local politics. Egypt now stands at a crossroads.
We needed this political reform to reinforce economic measures taken
over the years and pave the way for more to come. Indeed, we must
go further, and continue to examine our constitution to introduce
more amendments that will ensure the advancement of the democratization
process. In addition to constitutional revisions, it is imperative
that we examine complementing laws, to create a package of legislation
that will support both the political and economic reform processes.
The foundations for a new Egypt should be built on the complementary
functions of three branches of government. First, we need a strong
executive branch and on this front we’ve made serious, impressive
gains. The September elections bolstered the ruling party’s
legitimacy and made government answerable to the people for the
first time in our history. Second, we need judicial reform, since
the court system upholds the laws that safeguard the political,
economic and civil gains we’ve made and must continue to make.
Third, our legislature must undergo reform and free, transparent
and competitive elections will jumpstart this process. If the opposition
parties play their role efficiently and competitively, legislature
will play its role in advancing democratization. Most importantly,
these three branches of government must be able to act independently,
and therefore create the necessary checks and balances. This separation
of powers should be the basis of modern Egypt. It will ensure a
market economy that can flourish and compete globally, while expanding
and protecting civil liberties
We now have the building blocks of a solid political foundation.
I believe that Egypt can re-invent itself, and that the tiger can
return to the banks of the Nile for good.
TAHER HELMY
President, AmCham Egypt
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