SME owners complain of “poor services
CAIRO: More than 70 percent of public sector employees view the private sector as non-trustworthy, predatory and a beneficiary of government favoritism, while the same percentage of small and medium enterprise (SME) owners say they suffer government neglect and complicated procedures impeding their businesses, a study released Tuesday by the Economic Development Councils Union (EDCU) revealed.
According to the study, conducted in partnership with the United Nation’s International Labor Organization in seven governorates, the gap in perception between the public and private sectors remains wide despite the government’s 30-plus year efforts to transform the nation’s economy to a capitalism-based system.
EDCU President Fouad Thabet says the study’s results are not surprising considering most recent reforms implemented in favor of the private sector have aimed to attract big business with little focus on improving conditions for SMEs.
“Government agencies work very delicately with the corporate business society, tailoring legislation to these companies’ needs, Thabet says. On the other hand, he adds, 73 percent of the 1,050 SME owners who participated in the survey classified government services offered to them as “poor.
The results, Thabet says, explain the gap in perception since those not working in the private sector differentiate between large corporations and small businesses.
The study comes just weeks after Prime Minister Ahmed Nazif told reporters at Dubai’s Arab Strategy Forum 2006 the government is still facing difficulty “convincing Egyptians of the importance of transformation away from a government-directed economy. Still, he said the government has succeeded in passing several reforms to encourage investment and the establishment of small businesses including simplifying company registration procedures so now it only takes three days.
In September, The International Finance Corporation s annual Ease of Doing Business report ranked Egypt among the bottom 10 of 175 countries and last in the MENA region after rating 10 areas of doing business in each economy under study, including starting a business, obtaining licenses, employing workers and obtaining credit.
Samer Sulaiman, economics professor at the American University in Cairo, agrees with Thabet. The government, he says, has been too busy legislating in favor of large businesses, leaving the problems of many SMEs, such as access to land and credit, and complicated registration processes, unsolved.
“I think the [public’s] perception is related to the close relationship between big business and the government, Sulaiman told The Daily Star Egypt. “Most prominent local businesses have grown under the government’s wings and have gained many advantages as a result. When people start to see businesses succeed because of hard work and ethical business practices, they will trust the private sector.
The issue becomes even more political when labor issues are put into consideration, Sulaiman adds. Part of the reason why Egyptians still favor government over private sector jobs is the latter only provides opportunity for the few lucky to work in management positions and neglects the rights of the lower ranks.
“In the 10th of Ramadan and 6th of October, there are laborers working for LE 200 and LE 250 per month on 12 hour days, Sulaiman says. “The problem in Egypt is most laborers are not members of effective labor unions because those unions are controlled by the government.
Despite the recent initiatives introduced and some implemented by the government to improve conditions for SMEs and the private sector’s labor class, Sulaiman says few will prove effective in the long term unless combined with deeper institutional changes, especially on the political front.
“Technocratic changes, even if effective for some time, are usually very limited, Sulaiman says.
