The three-day Egyptian Economic Conference 2022 (EEC), held on 23 – 25 October in Egypt’s New Administrative Capital, was a milestone on the path of the National Dialogue launched by President Abdel-Fattah al-Sisi last April. Given the large number of participants, their value and diversity, also the openness and candour with which relevant economic issues were tackled, ambitions discussed, cures proposed, and development outlooks outlined, the event exuded success and reassurance. The major topic on the table was the current economic situation in Egypt and the dire challenges it faces on the local and global levels. The resolutions and recommendations offered by the EEC represent a roadmap to boost the Egyptian economy amid current hardships.
The EEC is a side stream of the National Dialogue which is all about open dialogue on Egyptian political, economic, cultural, social, media and religious issues. As stressed by President Sisi in the closing session of the EEC, its resolutions and recommendations would be adopted as a roadmap for the Egyptian economy to follow in the upcoming phase. The conference platform should be extended to act as a solid overseer of the implementation of the EEC recommendations, and should present an annual account of what has been achieved on various fronts.
The 1200 participants in the conference included Cabinet ministers, senior government officials, parliament members, heads of political parties, investors, businessmen, economic experts, high-profile bankers, representatives of chambers of commerce, and representatives of the National Dialogue.
Given that global economic changes have undeniably impacted Egypt’s economy, Egyptian American economic expert Mohamed El-Erian gave a televised address during the opening session of the conference, briefing the attendants about the economic variables that have come to dominate the world. Dr Erian talked about the challenges facing the global economy and the global financial system, challenges which he said originated in and by the developed countries of the world, especially the G7 economies. Dr Erian said that the instability of these economies lead to fragility in the global economy. Some of these elite economies, he said, have recently witnessed a disorderly collapse in their currency, a disorderly increase in yields, emergency central bank interventions, and multiple government policy U-turns. This, he said, led to a public reprimand from the IMF and warnings from rating agencies. This instates the inherent unthinkable instability that we have right now, Dr Erian said, pointing out that we are now living in an “unusually uncertain global economy”.
Among other reasons, countries have lost the ability to grow because the global economy has changed characteristics as “we have gone from a global economy that was lacking enough demand to a global economy that is lacking enough supply”. Simultaneously, there is an economic deceleration in the three major economies of the US, EU and China. Enhancing this deceleration, Dr Erian said, are global changes in geopolitics that the world has witnessed out of the Russia Ukraine crisis, and the food shortage and energy shock that ensued. This is a very challenging environment for the vast majority of countries in the world, he said, concluding by affirming that global economy and global finances are being subjected to numerous shocks.
Dr Erian’s address was revealing, and worked to guide many of the conference’s discussions and recommendations, the highlights of which I will mention here.
Financial and monetary policies: Working to reduce the debt-GDP ratio; swiftly reaching an agreement with the International Monetary Fund [an agreement was reached and announced on 27 October]; attaining a flexible exchange rate to reflect market dynamics of supply and demand.
Enhancing the role of the non-banking financial sector through: expanding the ownership base of State-owned companies through the securities market; simplifying licensing procedures for fintechs, electronic services and digital transformation; enacting legislation to facilitate establishing financial firms investing in start-ups.
Enhancing private sector participation through: governance of State-owned assets to limit State simultaneous monopoly on ownership, operation and supervision in some production sectors; enhancing the role of the Sovereign Fund of Egypt (SFE) through transferring the ownership of a number of State-owned companies to SFE; working to increase of the private sector’s market share in economic activity; banning State administrative bodies from imposing any new fees on investors without prior Cabinet approval; reviewing all investment procedures, approvals and fees by the General Investment Authority; expanding the establishment of special economic and logistical zones, especially in Upper Egypt; endorsing the joint participation of private and public sectors in priority projects.
Needs of priority economic sectors: Reforming agricultural cooperatives and unions; setting up rapid transport lines to move fresh agricultural goods to markets; providing incentives for those who establish health facilities in new and border cities, and facilitating their licensing procedures; expanding tech universities and encouraging partnership with the private sector by providing financial and tax incentives and facilitating licensing procedures; localising the manufacturing of inputs to electricity and renewable energy projects, while granting additional incentives to the private sector to encourage investors to engage in these projects; creating a new system for real estate financing that maintains a balance between the forces of supply and demand while stimulating the private sector to participate in providing housing units for all income brackets; establishing a special economic zone for ICT industry, and providing incentives for companies working in software export; developing an investment friendly climate in the hotel and tourist transport sectors, and working on raising the competitiveness of Egyptian airports to receive increasing numbers of tourists; expanding the local manufacture of railway moving units and electric traction and their spare parts; involving the Egyptian and foreign private sectors in the management and operation of all transport facilities; extending railways to neighbouring countries to maximise intra-regional trade and encourage exporters; expanding the construction of dry ports and logistic areas.
Developing the industrial sector through: rooting local industrialisation through the integrated vision of the national industry strategy; developing industrial exports while empowering laws to favour local products; turning industrial towns into integrated urban areas that include housing and services for employees.
This is a promising list of recommendations by the Egypt Economic Conference 2022. Their implementation hinges on the seriousness and firmness of observing them and empowering a mechanism for annual follow up as announced by President Sisi.
Watani International
2 November 2022