CAIRO: “We believe that the last few years, we were learning to walk and that now is the time for us to run, we cannot just continue walking. We need to accelerate the pace of reform,” said Rachid Mohamed Rachid, Minister of Trade and Industry and Acting Minister of Investment in an Organization for European Economic Cooperation (OECD) conference Sunday.
The OECD in cooperation with the Ministry of Investment launched the “The Way Forward” report, presenting the conclusions of the Business Climate Development Strategy developed for the government of Egypt by the MENA OECD investment program.
The program’s objective is to increase investment and competitiveness in Egypt through government policy support and consulting.
Marc Franco, European Union ambassador to Egypt, kicked off the conference by commending the various reforms that the Egyptian government had undertaken over the past few years. Despite these reforms, he added, there were still areas that required improvement which were highlighted by the report.
He explained that working on these issues will increase Egyptian competitiveness in EU markets which where Egypt’s main trading partners are and where there is significant potential for trade.
Antony O’Sullivan, head of the private sector development division of OECD, stressed the importance of the collaborative approach used in the report by working with different ministries, and representatives from the private sector insuring the implementation of projects and policies that are the outcome of the report achieve the required goals.
He said that the report identified the main areas which required improvement as anti-corruption efforts, access to infrastructure, access to finance and SME promotion and the general legislative and institutional environment for investors.
On the other hand, O’ Sullivan commended the government’s trade promotion efforts and called on the export promotion agency to “insure that the result of these efforts would be felt on the ground and in reality particularly giving small and medium enterprises better access to market intelligence, support and guidance.”
He concluded his speech by calling for stronger political commitment to show corruption is being tackled in a serious manner suggesting that corruption cases should be used as an example to suggest serious government commitment.
He also suggested that the more business licenses and regulations procedures are reduced; the less the opportunities are for corruption.
From the government’s side, Ahmed Darwish, Minister of State for Administrative Development, used an extended metaphor to transparently explain Egypt’s successes and failures in investment climate reform.
He explained that if each stage the investor goes through in the business cycle is a traffic stop, he would label each procedure with red, green or yellow depending on the ease of which the procedure could be carried out.
Darwish said that the first thing the investor starts with is a feasibility study which requires access to information, giving it a yellow light since information required for investment is available but “not at your finger tips.” Also in the yellow category were site preparation and access to utilities including electricity, water and sewage and when running a business, the quality of the labor force. He called for major reforms in these areas.
“We are not sure that our labor force is equipped with skills needed for market,” he said.
Moving on, he said that for investors, acquiring a piece of land is a red light as obtaining land with access to necessary infrastructure is not easy. Obtaining licenses is also is a red light and “is not a very good experience for most investors.” Finally another red light is the closing of a business.
“Unfortunately, closing a business takes up to years longer than the average,” he commented.
The only green light Darwish talked about was the procedure of establishing a company which according to Darwish is a green light because the reforms in this area have enabled investors to very quickly start a business.
Rachid closed the session by reminding the participants that improving the investment climate is a means to an end, and that end is improving the economic development of the country and benefiting the community.
“This goal must be kept in mind that despite improvements in business climate rankings we still have to look at what is happening on the ground,” he said.
He remarked that even though Egypt “stood solid” during the financial crisis there are still challenges which the government cannot face alone and called for more responsibility and support from the Egyptian private sector.
He also cited the political context and concerns about the political outcomes of the upcoming parliamentary and presidential elections as something that cannot be ignored but said that “these are concerns which all democracies go through.”
On a more positive note, Rachid said that the Egyptian investment climate had been given a “vote of confidence” from foreign investors as long term FDIs have recently been increasing.
About the government’s role he said “we are more confident because we know where to push, we cannot avoid the hard decisions in making political changes with regards to business environment.”
“Our FDI has dropped from around LE 14 billion to LE 7 billion [it had dropped further during the global financial crisis and later increased to LE 7 billion] and we want to reach LE 20 billion in next four years, this is a time to move at a faster pace,” he concluded.
