CAIRO: For the average citizen to feel confident and optimistic about Egypt’s economic progress, it will require empowering those who lack proper skills and training in the labor market, said Minister of Investment Mahmoud Mohieldin in his opening speech at the Euromoney Egypt Conference Tuesday.
Government officials boast about Egypt s unprecedented growth rates – recorded to have reached 7.1 percent – and the fast growing investment climate attributed to economic reforms, but the trickle-down effect is slow.
Figures speak for themselves. The Egyptian economy is responding positively to comprehensive measures [taken by the government], said Mohieldin. Figures show that investment is diversifying and growing by [multiples] . But the question is why people don t feel that growth?
The minister explained that it would take time for people on the streets to actually experience the change and development taking place, and that will not occur until you provide necessary infrastructure as well as include more sectors in the growth process, such as agriculture.
The trickle-down effect will happen if levels of growth and investment are [sustained] and if the Egyptian market gains enough accessibility to these issues, Mohieldin pointed out. It will not occur without establishing infrastructure such as roads and transportation, without an education system that allows graduates to obtain necessary skills, and without building a good network linking villages and cities together.
One way to speed up this trickle-down effect, as different speakers at the conference explained, is to enhance learning and training skills, particularly across the informal sector.
The market is moving so fast that we did not have enough time to develop educational skills, said Taher Helmy, senior partner at Hamza and Partners. For that to [efficiently] happen, the government, private sector, and civil society have to unite forces.
He emphasized that all these arms should work hand in hand and launch new programs targeting empowerment of the informal sector and poorer segments of society, in particular, so that they can move up the ladder of development.
Egypt success story is illustrated in its growing GDP, a rising FDI, and a strong foreign exchange reserve that recently soared to over $30 million.
Things have changed dramatically over the years . From a rating company s perspective, one of the main drivers of growth is confidence in management, economic policies, fiscal and monetary policies, as well as in other improvements that are taking place across the board, said Farouk Soussa, director of MENA Sovereign Ratings at Standard and Poor s.
Recent reforms – especially in the banking sector – coupled with the growth of the economy have created a rising tide and addresses impediments.
Look at the financial sector: It has been through a period of banking reform that was unprecedented. The sale of joint ventures held by the government, sales of [state-run] banks, reform at the Central Bank of Egypt are just a few examples, stated Aladdin Saba, chairman of Beltone Financial. The value of assets is going up, and problems that were there are coming to a close, leaving the financial sector stronger and creating a very interesting asset class within the sector.
He added that the current revolution in real estate was estimated to bring in $29 billion worth of investments into the country within the next few years, a figure that will create demand for building and construction materials.
All that will provide asset classes in Egypt and bring in investors and clients from overseas, he said. [Positive] changes that are happening in the equities market . have caught the attention of investors looking at new asset classes in the region.
The minister is confident that the economy is going through an upward trend overall. The stock exchange, for example, has seen very important developments, not just in terms of an increasing market capitalization – that increased by 45 percent – but also in terms of volumes of trading, he pointed out.
He added that new schemes were currently being introduced to the stock exchange. One particular example he gave is the launch of a stock exchange for small- and medium-sized enterprises (SMEs), expected to take place after Ramadan.
Minimum capital of firms listed in the SME bourse will start from LE 500,000 to LE 20 million, and the stock exchange will also lower transaction fees for trading.
Although the economy is moving forward, challenges still lie ahead. One major challenge the minister mentioned was how to maintain sustainable growth and development levels as well as the means to integrate various segments of the population into the equation and enhance quality of living. We need to look at ways of expanding access to land and to trained labor, pointed out Ziad Bahaa El-Din, soon-to-be chairman of the Council of Trustees, responsible for evaluating the country’s investment environment by proposing solutions to investment obstacles.
Improving the quality of education will not happen by just building schools, speakers at the conference agreed. Public-private partnerships have to play an essential role in training our youth and enabling them to have better skills so that they can be part of [Egypt’s] growth, added Helmy.
