Richard M. Banks
Consulting Editor for Euromoney Conferences
Twenty years ago this September, Euromoney held its first annual conference in Cairo. We’ve been covering the investment challenges and opportunities within country through our conferences, publications and research without interruption during these two fascinating decades. We don’t intend to stop.
In 1995, Egypt’s GDP was just under $61bn. Last year it was just over $270bn – more than four times as large. But, does Egypt feel four times as wealthy?
Not to me it doesn’t.
And the figures back me up. The population has grown from 60 to 80 million during the same period and therefore the GDP per capita (PPP adjusted) has only just over doubled (from $5,000 to $10,500). Adjusting for inflation and other factors, Egypt is a lot bigger but not a lot richer than it was 20 years ago.
And that doesn’t surprise me.
Only a very few societies have managed to combine massive population growth with massively increased wealth. Most countries get big first and wealthy second. In Egypt, that truth is amplified by the limited availability of productive land, the twin legacies of colonialism and socialism, and an insufficient education system.
When the history of the last twenty years is written, I believe that writers will conclude that Egypt has done well to manage all that has happened to it without more instability, unrest and suffering. It is not a story of failure, but of survival in the face of great challenges.
So much that is positive has happened too. Despite everything, foreign investors are now a part of daily life. They have built thriving companies staffed by Egyptians producing everything from cars to yoghurt, textiles to telecoms equipment. The financial sector is strong and stable too – with some of the most professional banks in the region.
It’s the next twenty years however, that are pivotal to Egypt’s future. As Egypt’s millennial generation comes into the workforce their demands will be greater than their predecessors. As they begin to have children, the pressures on infrastructure, education and health will not stop growing. It is not until 2030 that Egypt’s population is predicted to stabilise around the 100 million mark. There is more population pressure in the pipeline.
The recent EEDC conference was notable for the scale of its vision for Egypt’s future. International commentators were both amazed and, truth be told, a bit sceptical. But the point is that these visionary projects are more than just visions – they are necessities. Egypt must move its economic centres of gravity outside of the Nile valley. It must expand into resource-poor land finding solutions for the challenges in so doing. It must find ways to educate and provide healthcare to a rapidly growing population. It can’t do that with policies that tinker around the edges – it has no choice but to be bold.
Egypt cannot hope to achieve the fulfilment of its necessary vision without foreign investment, finance and expertise. Foreign partnership from all over the world is vital – Egypt cannot be restrictive with whom it partners. So the playing field for foreign capital needs to be level and the processes need to be transparent. The investment-driving arms of the government need to be resourced and skilled appropriately and the local private sector needs to be incentivised to take risks and take the lead. Without local investors investing, far fewer foreign investors will be attracted by Egypt’s opportunities. In the modern economy – partnerships are essential.
I confess that, despite my abiding love for the country, I sometimes find Egypt a frustrating place. The publicly stated desire for inclusive growth and sustained investment is too often not followed-through at an operational level.
It is not easy to invest successfully in Egypt. That must change.
Foreign capital, expertise and technology like the Egyptian opportunity. They want to come. They expect and welcome prudent regulation. They no longer view contributing to the local community or ensuring economic inclusion as a burden. They still, however, hate uncertainty, opacity and bureaucracy.
If Egypt truly wants to take its place in middle-income nations by 2035 it can. All it needs is to have a consistent best-practice approach to investment promotion – and for the bureaucrats to become regulators not roadblocks.
Richard M Banks is Consulting Editor for Euromoney Conferences and CEO of RMBanks & Co, a global investment communications consultancy. He will be chairing and co-moderating the 20th Euromoney Egypt Conference in Cairo on 7-8 September. The views expressed in this piece are his own.