Despite record economic growth, Egyptians are poorer
CAIRO: There has been a slight increase in poverty in Egypt, despite the sustained levels of economic growth the country has been boasting over the past few years.
“Egypt has seen a slight increase in poverty recently despite economic growth, said the Chief Economist of the Middle East and North Africa region at the World Bank, Mustapha K. Nabli.
This statement shows that although Egypt has been experiencing growth rates of seven percent annually, the average citizen has not yet reaped the benefits of the economic resurgence.
Nabli also described ideas of mass privatization of public sector companies as ill-advised. “Mass privatization schemes haven’t worked as well as some had hoped, such as in the Czech Republic which is a failure, I think.
This is because “when you redistribute the ownership of a company, you lose the management. No one is accountable anymore and no one is motivated to improve things, Nabli continued.
However, “this doesn’t mean that greater ownership is not wanted, he said, “but it’s a dangerous route that might backlash, I don’t advise it.
Nabli was giving a presentation at Artoc headquarters in conjunction with Egypt s International Economic Forum Thursday, entitled “Job Creation in an era of High Growth? Challenges and Opportunities.
Nabli’s premise was that because of the economic growth across the region, labor markets have become more dynamic. Economic growth has gone in hand-in-hand with strong employment creation, declining unemployment rates and labor force growth. “That’s huge news, big news, he said, “growth in private investment is leading to job creation in the region.
However, Nabli did sound a warning that more job creation was needed in the future. Additionally, while the growth rate has been high in Jordan, Bahrain and Kuwait, unemployment has still risen. This is because the jobs are being filled by foreigners.
Nabli also pointed out that the majority of the jobs created were low quality and work was needed to rectify this. “The challenge remains significant, Nabli said.
The economist pointed out that the most important aspect of facing the future economic challenges of the region is good governance.
“Problems change, situations change and solutions change so it is your capacity to make decisions and correct them in time [that matter], that is why governance is critical, he said.
“So if there is no access to information, or self criticism then you won’t get anywhere, Nabli added, “you can never predict the solution properly, but you must have the mechanisms in place that can adjust to the [situation you are facing].
Artoc Chairman and Head of the Arab Business Council Mohammed Shafik Gabr said, “Nabli’s visit is very timely. We recognize that economic reform can be politically difficult. In Egypt there is no doubt that there has been economic reform. What worries me is when we compare it to other countries across the globe.
“So we shouldn’t just compare ourselves with our yesterday, Gabr added, “economic reform is not easy, it requires strong leadership and risk which can be politically sensitive.
In his presentation, Nabli pointed out that the region experienced growth for the fourth consecutive year in 2006. The growth was mainly driven by “the surge in oil revenues according to the economist.
Gross Domestic Product (GDP) in Mena increased to 6.3 percent, up from 4.6 percent in the early 2000s.
He did raise the point that there were significant differences between the countries of the region and that these inequalities would rise in the future. Per capita growth was 4.2 percent, the highest level in two decades, and up from 1.7 percent in the nineties.
Iraq is not included in these statistics.
According to Nabli, the other reason for growth besides oil revenues is the reform process in the region. He highlighted the shift in domestic demand in favor of investment.
The major contributor to GDP growth in the region is investment, according to Nabli, which means more dynamism in the region. Investment increased across the board.
Nabli has been in his current post as chief economist of the Mena region since 1999. He joined the World Bank in 1997.
