Two consecutive revolutions in January 25th 2011 and June30th 2013 have left the Egyptian economy battered and in shambles. Yet, thanks to initial contingency plans, support from Egyptians abroad and Arabian Gulf States along with some strict policies the Egyptian Economy have managed a near miracle of nearly surpassing South African Economy as the Second African Economy next to Nigeria. Despite all these initial successes, the Egyptian Economy is far from reaching the safety harbor.
In fact , the Egyptian Pound is witnessing a nightmare scenario in Fall 2015 and another in Summer 2016 that has led to the resignation of former Governor of the Central Bank of Egypt Dr. Hisham Ramzy and possibly the reigning governor Tarek Amer. Both menpolicies have led to a weakening Egyptian Pound against all Major currencies especially the US Dollar. While the USD is witnessing a strong performance against all other currencies in 2015 and 2016 the situation in Egyptian market reflected negatively on the Egyptian currency, the handling of the currency and the Economic policies in the post 2011 has strongly affected the Egyptian currency status and can exacerbate the status of lower Foreign Currency reserves in the Central Bank of Egypt. In that respect what Egypt may need now to revitalize its economy is not simply mega projects. The reason is that these mega projects as good as they can be on the long term, they are time consuming, fund wasting and their returns can only be felt on a long term basis.
The abysmal performance of the Economic group in Egypt has led the Egyptian Pound to lose over 100% of its face value since January 2011 and most of the country’s USD reserves. The once proud Egyptian Pound that stood at 5 USD against 1 EGP before 1952 is now lingering around 12 EGP against a single US Dollar in 2016.
Accordingly and in order to maintain an influx of hard currency and revenue for the nation, the focus should be on quick cash projects and practices that can improve the fiscal balance and generate quick revenue. That revenue can later be channeled into large project with long term output similar to infrastructure and land reclamation projects. The purpose of this article is shedding some light on areas that requires more focusing by Economists in Egypt in order to generate quick cash sources for revenue that can be targeted.
The Banking System,
This is what it is all about, it’s the banking system because the banks can be considered asthe heart of the economy just as the Stock market is its brain. A sound economy is neither attainable nor sustainable without a functional banking system that entertains its massive demands for credit. Moreover,without a sound banking policy, banks fail to attain any desirable the results and sustain a growing economy. The Egyptian banking systems managed in the late 1990s and early millennium to sustain the economy and avoid getting hit by the economic collapses of 1997 and 2008 . With some sound economic policies they managed to steer away from danger and avoid a near banking system collapse similar to what took place in European and American banks as well the Asian Tiger economies in 1997.
Private banking may come as the rescue vessel for the Egyptian ailing economy with more restrictions being imposed on banks in the likes of the Caribbean nations, Switzerland, Liechtenstein, Luxembourg where most private banks and secret accounts are located.
Egypt may have a golden opportunity to benefit from the international need for safe private banking and the Egyptian army can play a huge role here. A tight private banking system can be the life saver and an incredible boost to the economic system. Private and secret bank accounts are not new to the Egyptian banking sector since a number of private sector banks have been implementing this system on a small scale but have an incredible room for growth should the country take the necessary step and apply an Ironclad type of laws governing the confidentiality and complete anonymity of the private bank account holder. For some the risks involved in such a law are high judging by the current ongoing war on terrorism in Egypt and worldwide but there are risks involved in every great project and certainly the rewards are far greater than the risks especially, Egypt won’t be the first country to implement private banking on national scale. The biggest Swiss Bank UPS Credit Suisse possesses assets worth 2 Trillion USD in 2014 from Private Banking alone. The Swiss Bank carries more assets more than all the Egyptian based foreign and local banks combined. That sort of reward is enough to change the laws and bring investments and hard currency badly needed for the Egyptian market. The Egyptian private banking could benefit from the incredible growth in the number of Asian millionaires who now exceed 3.6 Million in 2014. Similarly, the growing West African economies could boost the need for a safe private banking and Egypt could be an ideal contender for such banking services to African businessmen and investors.
The Egyptian Army is one of the strongest in the world which has proven time and again especially after June 30th 2013 its capability of protecting the nation from any threats internally or externally. Thus any international trust funds will be protected by such a force from any domestic and or external threat. Therefore, the Egyptian army protection and pledge to guard the safety, anonymity and integrity of any foreign private bank deposit will be key towards the success of this initiative.
The Banking secrecy codes will be an integral part of the success of this imitative to expand the horizon of private banking in Egypt. Egypt will not be doing anything different from what European countries like United Kingdom, Luxembourg, Lichtenstein or Switzerland are already doing. According to Bloomberg online magazine, Switzerland’sbanking industry is a $7 trillion worth. The Swiss banking system holds a third of the world’s offshore assets.
Egypt can easily tap into that lucrative multi trillion-dollar business and acquire a sizeable share of it judging by its status, location and the experience of its banks. Therefore, an ironclad and extremely strict bank secrecy laws implemented by the Egyptian government and approved by the parliament will open the doors for a wealth beyond imagination ending Egypt’s currency problems forever. Egypt will benefit from its location in the Middle East and Africa to be the hub of the banking industry of the region. The Egyptian government should take no heed of any criticism by EU, USA or others in that direction and should seek only the benefit of the Egyptian nation. Of course the law will be strict towards any dubious funds that could be incurred as a result of drug or human trafficking as well as terrorism.
The Taxation System,
Taxes are one decisive factor to lure an investor or to completely repel the same investor. Countries that have managed to lower their taxes especially the income taxes have managed to lure not just investments but also have kept their own citizens from trying to transfer their money abroad and invested them in local bank bonds as well as other types of investments whether that is agricultural, commercial , industrial or touristic. The most important factor is that the citizen won’t be feeling that his government is on the hunt for his money. Thus, providing.the citizens and the foreigners the confidence to trade, invest and save their money safely.
Accordingly all international investors weigh the taxes rate among several elements including the business friendly environment and safety of the country. The new Suez Canal economic project that will feature major industrial parks and commercial centers. The success of that project will depend mainly in presenting the potential investors with attractive Taxation cuts and benefits for investing in Egypt.
Accordingly the lower the taxes , the higher the yield Egypt will gain due to the influx of capital and investments from abroad and locally. Despite this, consecutive socialist minded economic experts exert pressure on the government to raise tax rates which is always counterproductive for a country seeking foreign investments. Tax rates must be dropped to attractive levels around a maximum of 15% if not lower to pave the way for creating the perfect haven for investments.
While Zero income Tax or extremely low tax rates would be ideal as a general rule, there are certain cases where it would not benefit the economy especially in bigger countries such as Egypt where the population requires a huge service sector along with a big standing army and a an equally big police force. Accordingly, a taxation system must be in order to maintain such a big country while keeping it as low as possible just to cover the incurring expenses.
Solar Energy Investments:
The most reputable researchers on earth have concluded that fossil fuels for energy consumption are finite and oil have less than 50 years to deplete globally and that certifies the fact for the need for new renewable resources of energy is imperative. Egypt receives direct sun light almost 350 days a year at least with some of the highest uninterrupted and concentrations of sun light in the world making it the perfect location for major Solar Energy.
Accordingly, it was not a coincidence that Egypt was chosen to be the perfect location for the highly ambitious German solar energy project labeled DesertTec . This highly ambitious project is focused on constructing huge number of CSP (Concentrated Solar Energy) stations in North African countries including Egypt where the direct sunlight is among the highest in the world thus guaranteeing a sustainable and clean source for Germany and other European countries. Egypt has taken slow steps in the direction which is not the same case with Morocco who took wide steps in establishing itself as a pioneer in the field of clean Solar Energy Generation.
The new laws for energy in Egypt may assist in reviving the energy industry as more private sector companies and individuals are invited to assist the government in generating and selling energy for the government for the first time ever. This is simply not creating more jobs but also a steady revenue and income for thousands of Egyptian families along with solving Egypt’s energy crisis once and for all.
In 2015 Egypt signed a mutual agreement with Russia for establishing 8 Nuclear power Stations in Dabaa , North Coast which goes against the growing trend for clean energy.Also the construction will be based on a loan of 25 Billion USD from Russia which represent a further burden on Egyptian economy. Despite the above-mentioned nuclear project, the opportunity is still viable to be the main source for European clean energy utilizing Egypt’s free and great natural resource that is the bright sun. This opportunity can be once in a lifetime opportunity since other North African countries such as Morocco and Algeria are attempting to seize it and be the main suppliers for clean energy to Europe in the decades and centuries to come.
Citizenships to foreign investors.
This is a very sensitive issue for Egyptians who take the matter of nationality with ultra sensitivity for reasons usually related to national pride. The suggestion can be summarized as to granting nationalities for eligible candidates from all over the world without discrimination after careful security scrutiny and background checks for each candidate. The nationality fees will be similar to the European Union or more depending on the case which can vary from 500,000 USD to 1,000,000 USD. Most importantly is that the candidate has no criminal or terrorist records and a new task force and bureau should be established to verify these cases case by case. The reason for this is obvious that Egyptians don’t want to see Al Qaeda members or Jihadists walking around with Egyptians passports and IDs. The number of these nationalities should be limited to no more than one million new nationalities granted from Egyptian government. The expected direct revenue from this method will range from 500 Billion USD to 1 Trillion USD . That figure is not counting the huge influx of cash and investments these new nationals will bring as expected that any Nation carrier will likely to invest in a house and very possibly a new commercial project.
The New Citizenship holders shouldn’t be allowed to practice politics or nominate themselves in any Parliamentary elections before 15 years of obtaining the citizenship among and within normal safety standards in these cases. On the other hand, these new nationality holders should be given some advantages with investments and easier registration for their newly found companies, manufacturing plants and projects in general. The main purpose in this process is guaranteeing that the purpose of acquiring the Egyptian citizenship is for investment and normal residence purpose and not an
A number of new nationalities should be kept for exceptional candidates from other countries who can benefit the Egyptian economic, cultural and scientific development in Egypt
One million new nationalities may seem a huge number for some readers but bearing in mind that Egypt population increase surpasses that number annually makes the number very logical to a country the size of Egypt. They will not represent a burden on the country but on the contrary they will effectively assist in its development.
A lot of foreign residents in Egypt may benefit from this situation among others since they have been living in Egypt for decades and haven’t been granted the nationality, hence it can solve a problem for many families who didn’t acquire the Egyptian nationality and at the same time very keen on maintaining their permanent residency in Egypt as citizens.
Kick starting small industries and factories and reopening shutdown and closed facilities:
The healthy capitalist economy can never rely on mega projects and gigantic corporations alone. The core and aim of the capitalist theory is to improve the “Individual” by which each person has the right to own and operate his own venture. Accordingly, while mega projects for transportation, waterworks, electricity, and housing are imperative for planning a healthy economy, nevertheless the individual initiative remains the difference between the Capitalist and the Socialist/Communist Economy. The small industries represents the catalyst where most Asian economical success stories started including China, Taiwan, Hong Kong, Thailand and Malaysia.
With the emphasis being on mega projects throughout the years 2014-2016 the small industries were overlooked during that phase. The numbers of closed factories and small industry facilities haves been conflicting since January 2011.According to estimates by the Federation of Egyptian Industries, the number of closed industrial facilities are over 7000 which employed up to two million workers at one point. Some other estimates believe that only 1500 facilities were shutdown due to financial and security problem in the post Jan 2011 period. Nevertheless, these facilities were registered, licensed and operated at full capacity at one time by skilled labour and administrators who found themselves either unemployed post the revolution or had to accept any other jobs since that period. The high priority now should be revitalizing these dead industries with cash influxes, long term payment facilities and tax exemptions. The investment in these facilities will yield a quick return since the knowhow, equipment, labour, logistics are all existent already and simply needs a push in the form of short and long term loans. This will enable the return of about 2 million Egyptians back to their jobs and provide an incredible boost in the economy within a short period of time.
On the other hand, investing a small portion of the funds directed towards mega projects into small industries all over the country related will be imperative and will direct Egypt to a new healthy capitalist economy that the country has been seeking for decades.
Egyptian culture being one of the most unique in the world has always been the center of attraction worldwide. Pharaonic, Coptic and Islamic handiworks, sculptures, statues and works of art are treasured by collectors worldwide. It is high time, that the Egyptian private sector would organize, manufacture and export these sought after products worldwide. The handiworks will open the door for thousands of families across the nation especially in rural areas to have a steady income and assist in a flourishing economy.
The small industries are the key to economic success as they are bolts and nuts for a strong solid economy which protects it from economic downfalls that can hit bigger industries and corporations at any time.
Tourism is currently Egypt’s main source of income with about 14 million tourists visiting Egypt at its peak in 2010. The tourism rate has scoreda major decline in terms numbers in the years that followed Jan25th revolution, because of the political turmoil, rise of Islamists and terrorism that spread in most large cities except those located on the Red Sea such asSharm El Sheikh and Hurghada. The tourism industry in Egypt have not reached a fraction of its possible potential. Egypt that enjoys a mild weather most of the year except in the summer is not enjoying the full potential that it can have from an influx of Westerners and others who can enjoy Egypt’s 350 days of sun.
The reasons behind lack of utilizing Egypt’s full potential are numerous:
- Lack of proper infrastructure::
While Egypt have modernized its infrastructure in the past 4 decades especially after the 1973 war, it still falls short behind a lot of modern standards and countries with lower GNP. The rampant corruption in the governmental public sector for both transportation and infrastructure, have rendered Egyptian road and railways as subpar and they have became one of the most dangerous roads in the world. According to United Nations report in 2014 with over 13,000 fatalities and 40,000 injuries annually creating losses that exceeds 17 Billion Egyptian Pounds (2.1 Billion USD)as a result of fatal crashes of busses, trucks, cars, etc… This places Egypt among the worldhighestpositions in terms of fatalities resulting from road accidents.
The same deterioration has reached the once very prestigious and historical Egyptian railways which were constructed as the 3rd oldest railway in the world which was constructed even before its American counterpart and most European countries with the exception of the United Kingdom. Unfortunately, the track record of the Egyptian Railways in the past 2 decades isbecoming abysmal with dozens of fatal accidents occurring each year and in some years almost on monthly basis.
That lack of proper intercity roads and proper infrastructure keeps away a lot of tourists who are accustomed of visiting a new country and renting a car to drive around with a map or a GPS on their mobile devices to discover the country on their own pace.
Furthermore, the lack of proper living conditions of some town and cities as well some districts in major cities like Cairo, Alexandria, Port Said, Aswan and Luxor. There are dozens of areas that have piles of garbage in the streets as well as broken streets that are neither fit to drive or walk through. These may sound like small matters but these scenes are not tourist attractions and tourists prefer to spend their hard earned cash in cleaner cities and more hygienic places.
For decades the consecutive governments through its channels has failed to deliver an acceptable human standards of living and on the contrary the standard of living and cleanliness have been deteriorating rapidly that they get worse by the year. In the late 1940’s Cairo was ranked among the cleanest cities on the planet. Decades of deterioration and mismanagement and lack of proper care have rendered major parts in the city to be like slums that are total shame for a city of its history. Similar occurrences happened in other major cities like Port Said, Alexandria, Ismailia who were once clean cities with lots greenery now turned into cement blocks with garbage spread around them.
Since 2013, President Abdel Fattah Al Sisi embarked on a massive and ambition mega project to modernize the Egyptian transportation system that includes new freeways, highways, railroads, ports and underground metro facilities. These projects have the potential to change Egypt’s image and infrastructure to meet the challenges of the 21st century.
- Negative Attitudes towards tourists.
Egyptians have been known to be one of the friendliest nations in the world especially towards foreigners but a sense of xenophobia and negativity towards others fueled by a government run media in the past decades that depicted the foreigners as those who possess prying eyes on Egypt and seeking to destroy it.
Furthermore in the past decade the ultra radical Islamist media have boosted that image into a worse one and used radical Islamist rhetoric to depict tourism and those who work in it as being anti-Islamic and against what they falsely label as “Egyptian Traditions”
Due to the prevailing effect of these radical clerics and Sheikhs in the post millennium period, a lot of Egyptian tourism workers have been living a double life or not convinced that they are on the right job so they started to act weirdly among the tourists. Tour operators started to only care about the cash they earn from these tourists and neglected that they represent their own countries in front of these tourism. Furthermore, some started to overact and became holier-than-thou in front of tourists and imposed his own values on them. All these acts did affect negatively the image of Egyptians tourism.
- Decreasing the focus on cultural and archaeological tourism:
While it is Egypt strongest feature, monuments and archaeological sites are a magnificent tourist attraction usually for one visit or two maximum. On the other hand, recreational and entertainment tourism is the sort of sustainable tourism that Egypt needs to focus on more.
To elaborate on this point, most people will not wish to visit the Pyramids or the Egyptian museums more than a few times in their entire lives and many do it only once , but they can visit the sandy beaches of Sharm El Sheikh and Hurghada almost annually for some . Some even bough their own villas and chalets to stay there for longer period. The focus on the upcoming years should be on the recreational tourism of all sorts and focusing on building more hotels and casinos of all grades in what is known now as the Egyptian Riviera that stretches from Sharm El Sheikh all the way to MarsaAlam south east of Egypt should be the first priority in any upcoming tourism development plans.
Solving Tourism Problems:
As mentioned earlier tourism could be the gold mine of Egypt with a country that has over 3000 Km of sandy beaches, a moderate climate most of the year and a 7000 years worth of civilization antiquities. Egypt requires the following to be catch up with other tourism markets that is taking the lead now such as Spain and France.
- A new program of reconstructing and renovating Egypt’s infrastructure from roads to railways as well as the rezoning and reconstruction of the rundown areas in major cities. This program should be mainly administered by an independent committee and mainly utilizing Egyptian and international private sector companies who have a good reference in such operations. The aforementioned new Program by President Abdel Fattah Al Sisi of constructing 3000 Km of roads can be the starting point but it is still far from enough.
- Bank loans should be provided to Egyptian small entrepreneurs to invest in touristic project on smaller scale that can adopt more and more tourists on budget and limited income. The reason behind this is that Egypt has some fabulous hotels that are among the best in the world but most of them are 5 stars hotel that targets a tourist with a certain budget. While the currency exchange for foreign currency against the Egyptian Pound works in favour of tourists, there is still a lot of room for budget tourism.
- The city of Sharm El Sheikh or El Gouna nearby Hurghada could be set to be the next Monaco or Las Vegas of the Middle East providing all year round entertainment and touristic services for the Middle East and Europe while enjoying the all around excellent weather on the Red Sea shores. This is provided that the private banking system will be established as mentioned earlier in the article.
- Massive investments in security programs for touristic sites including hotels, museums, archaeological sites maybe cumbersome for the Egyptian government at the moment but will be very rewarding on the long run since tourism cannot function efficiently without proper security measures.
- Awareness programs should be implemented in schools and universities on the importance tourism and preserving monuments as well as the proper treatment of tourists These programs should be mandatory as school children should learn the benefits of tourism on their country.
- On another level, introducing a law incriminating attacking tourism in religious programs or any open forum or podium by penalty of imprisonment to those who incite the population against tourism and tourists in all forms of media or public speeches.
- A new certificate of capability and approval for the tourism workers that each employee should be achieved for all those working directly with tourists like in tour operators, guides, hotel workers and others in direct contact with tourists. This certificate should include tests of Basic English language or any other language that the applicant is proficient in as a second language. Also a test for the proper etiquette of handling touristic groups.
- An independent tourism service quality bureau should be established in each major tourism Egyptian city to issue these certificates and they should be independent from the Ministry of Tourism because each city should compete with the other to increase the city revenue of tourism with only guidelines to be monitored by ministry of tourism.
- Applying stricter laws harsher penalties for any infringements of the laws by any persons or establishments who can lead to damaging the image of Egyptian tourism business. Licenses to be revoked from those who breach the laws and damage the tourism industry regardless if these were restaurants, hotels or bazaar owners who mistreat tourists and the service quality bureau should have a special branch to receive any complaints from Egyptian or foreign tourists being mistreated or deceived by the owner or the workers in these establishments.
- Creating brand names and special tag logos for world renowned Egyptian made handicrafts and combating the invasion of Chinese fake and cheap products in the Egyptian market. Also inducting new programs for promoting handicrafts and establishing schools for teaching younger generations of handicrafts designers.
- The examples of Dubai and Singapore should be shining examples for Egyptians on how cities that it’s not mandatory to have monuments or archaeological sites managed to attract tens of millions of visitors annually for shopping and entertainment purposes and generate much more revenue than what Egypt is having with its 14 Billion dollars from visitors to mostly archeological and monuments sites.
- Focusing on building shopping malls, budget hotels and theme parks like Disney Land for example will actually be the solution of expanding the variety and horizon for Egyptian tourism in the future. British firms that built city states like Hong Kong, Singapore and Dubai can assist Egyptian firms in building world class cities like these and renovating the current ones.
- Lifting all restrictions and providing all facilities for filming of international movies, TV series or documentaries which is hindering Egypt from becoming the hub of international cinema location recently. Morocco, Jordan and now Dubai have taken the lead in that direction. This is wasting Egypt’s status being the Hollywood of the Middle East with it’s a century long movie industry from becoming an integral part of the international movie industry. Needless to mention the great direct and indirect revenue from filming more movies by international production companies and the frequent visits by Hollywood and other international starts to Egypt.
- The archaeological sites, monuments and historical sites must be preserved and restored by professional archaeologists, for example Islamic part of Cairo should be a pedestrian area as established by former Minister of Culture Farouk Hosnyshould be implemented on larger scale areas. These areas should be locked for visitors and be treated as special cultural sites for visitors and removing all sorts of industrial workshops from the area except those of indigenous and local artifacts. A model for this can the “Poble Espanyol” which is an open air museum in the Spanish city of Barcelona with the only difference that the building in the Islamic district of Cairo would be over 1000 years old and not since 1929 as built by the Spanish. Germany have covered huge steps in restoring old building dating centuries ago in Germany and some were even bombarded during WWII and yet have been restored to perfection , therefore utilizing German expertise side by side to Egyptian one will likely to generate great results and restore the historical face of the ancient city.
- Tapping into new tourism markets with significant growing middle class which includes Chinese, Indian, West African, Central Asian and South American markets. Not only these countries will represent a huge boost to Egyptian tourism but also these countries mostly don’t have direct vested interests in the Middle East politics which can result in utilizing their tourists as a political and economic leverage against the Egyptian state in a similar case to what Britain , Russia and a few European countries sometimes do. It also serves to expand the horizon and good image of Egypt to all these countries through their tourists.
Tourism can easily generate about 50- 100 Billion dollars annually without counting the other indirect revenues on dozens of related service industries should the above steps be implemented to the letter. Given Egypt’s cultural and historical significance to the world Egypt can attain the highest ranking in tourism in a few years provided the hard work and dedication from parties in the country because tourism is an industry which every citizen contributes to one way or the other.
The Economic policies in Egypt have been fluctuating throughout the past 30 years, Egypt was usually plagued by socialist experts trying to implement the much needed capitalist Free Market Economy. This is the equivalent of a Football coach utilizing defenders for attacking purposes and his attackers for defense, which will usually result in epic failures and losses.
The tally is a hybrid of conflicting policies that usually waste billions of Dollars annually and keeps the economic progress of Egypt hindered from launching to its full capability. Egypt has the potential to be one of the richest and most diversified economies in the world within a decade given its potential, location, mineral and human resources. The proper administration and utilizing proper Egyptian experts such as Mohamed Al Arian former PIMCO president, Mahmoud Emaraand Rashad Abdoalong with foreign ones to administer Egypt’s economy in the next decade will be essential to attain any tangible results in the near future. The above example in this article is merely a few of countless others on ways to attain a quick cash flow to a hard currency strapped economy.
Furthermore, a total revision of the Capitalist structure of the Egyptian economy is in order as it is utilizing socialist tools that includes extreme government intervention in a hypothetically capitalist economy. The Egyptian Economy is like a Formula 1 Car built on the chassis of truck hence and thus it is slow and will never reach its potential as a sports car.
Egyptian economy has always missed an integral but critical element that can considered as the basis of any healthy capitalist economy which a strict anti-monopoly/ anti-trust laws. Since the revival of the Capitalist economy in 1975, the Egyptian economy struggled from monopolies imposed by traders, industrialists and businessmen in most vital products. Despite the efforts by consecutive governments, the anti-monopoly laws have never been strict enough to end the phenomena that have plagued the Egyptian economy for decades and still do. The inflation rates and the price hikes of foodstuffs and other strategic products in the past decades are a testament of the failed policies that has to be changed into ruthless antitrust laws without exceptions and disregarding the status or the economic weight of the accused. Only the healthy competitive market economy of Egypt will flourish. As throughout the past decades the Egyptian economy was like a game of football without a referee and each team was setting their own rules to keep the ball and score by any means necessary. This has to end now in order for Egypt’s economy to flourish and the corruption would diminish substantially.
Moreover, The Currency regulating policies of the Ministry of Finance and the Central Bank of Egypt have been disastrous. Their policies have facilitated the creation of alternative black market that has caused the Egyptian market and Egyptian citizens losses in Billions of dollars and increased in 2015-2016 the inflation rate to levels any recorded levels in Egypt’s modern history. The governor of the central bank still believes in the academic theory that devaluing the currency will help exports and increase the rate of tourism. The truth is that this policy can be theoretically valid in highly industrial economies that rely mainly on exports of miscellaneous products like household appliances, Cars, vehicles, foodstuffs, clothes, chemicals and medicine. These countries would benefit from a weaker currency for a short period to boost the exports. Countries like USA, China, Japan, Germany and other EU countries can benefit from such policies. On the other hand, the sad fact that applying this theory in Egypt causes huge economical disasters due to the fact that over 50% of Egyptian food requirements, oil and most of the industries that are aimed for export rely on ingredients and raw materials that are imported. Thus import of food, Oiland these raw materials counter the desired effect aimed to devaluating the currency and creates further inflation that has tripled the prices of some products from 2011- 2016.
Not content by the 5 years of post revolution failed economic policies; the current government is still overspending on mega-projects that resemble a deep sink for most of Egypt’s hard currency. These mega projects may be beneficial to Egypt economy in the long run but at the current moment overspending on them threatens the possibility of their actual full completion. The overreliance on these mega projects to kick start the economy, will sink the Egyptian economy into an abyss of debts and inflation if further balance between the country’s current needs and long term projects is not implemented. The results of the above-mentioned policies were abysmal as thousands of factories are still shutdown and remain shut down due to the fluctuating price of the Egyptian currency against other currencies. The tourism is at record low due to terrorist attacks by the Muslim Brotherhood and affiliates and inability of the government to quickly contain the effects of such attacks and assure the world that Egypt remains the safe country it has always been.
All of the above requires a complete shift of policies from President Abdel Fattah Al Sisi who chose Prime Minister Sherif Ismail to be his point man in these delicate times and clearly Prime Minister Ismail hasn’t proven that he is up to the task yet.
Despite the extreme necessities of acquiring new renewable resources of energy as explained earlier, Egypt s blessed by abundant natural resources. The newfound gas and oil discoveries promises to turn Egypt into a region and world power in energy but that alone will not be enough to save Egypt’s economy since relying on oil or Gas revenue is a risky bet for a country with a population exceeding of 90 million people. However, these discoveries such as Al Zohr Gas field in the Mediterranean could be a catalyst and a boost to finance and fund other developments that can transform the Egyptian economy to be a leading one by next decade.
The above suggestions and ideas are not written in stone but simply ideas that are ready for modifications and altering to suit the needs of Egyptian Economy and the process of revitalization. However, testing these ideas on multiple sectors is definitely a far better method than the current pace of the Economy and relying on foreign aid, debts and grants from neighboring countries along with International associations like IMF. The latter \ only adds burdens on the daily lives of the average Egyptian and certainly creates further burdens and debts for upcoming generations which we can guarantee them a far better future by thinking out of the box. Egypt has the potential to lead the region economically and have been missing one chance after another to do that. It is high time to fulfill that potential and restore Egypt’s glory days.