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Friday, 18 September 2020

Egypt's Sharm conference raises hopes while benefits remain unclear

With billions promised in investment and aid at the Sharm conference, the details of the deals signed are yet to be made clear

Salma Shukrallah , Thursday 19 Mar 2015
Egyptians walk
Egyptians walk on a main street in central Cairo, June 20, 2008 (Photo: Reuters)
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The three-day economic development conference in Sharm El-Sheikh that took place earlier this week saw promises of billions of dollars of investment and was hailed by the Egyptian authorities and by much of the media as a roaring success.

But while expectations are sky high, many of the details of the pledged investments and aid, and the overall effect they will have on Egypt's economy and on ordinary Egyptians, remain to be seen.

"If [the conference] will benefit us then we welcome it…if it will only benefit rich people then we don’t need it," Wafaa, a cleaner in her early forties, told Ahram Online.

Over a quarter of Egypt's population of 90 million are below the poverty line, while another 20 percent hover around it.

After four years of political turmoil which has taken its toll on the economy, deals signed and celebrated at the conference promise billions of dollars in investment and aid.

Investment deals worth $36.2 billion were signed, according to Prime Minister Ibrahim Mahlab, in addition to $18.6 billion in engineering, procurement and construction (EPC) contracts, and loans totaling $5.2 billion.

In addition, Saudi Arabia, the UAE, Kuwait and Oman pledged a total of $12.5 billion in aid and investment.

But economist and former minister Ziad Bahaa El-Din argues that little is yet known about the details.

He told Ahram Online that there is "little distinction made between pledges and obligations, grants and deposits, financing and partnership."

"Transparency is needed to address the massive expectations of the Egyptian people," he argued.

According to economic expert and former director of research at the National Bank of Egypt Salwa El-Antary, while it remains unclear what agreements have actually been signed, the initial numbers are promising.

"The minister announced around $60 billion in investments…that alone is a huge number and can create real change, but it will depend on the type of projects and how they are implemented," said El-Antary.

The promised investments are focused on two main sectors: energy and real estate.

"Regarding energy, we are experiencing a shortage and there is a need for such projects…its significance is clear and is a must for any real [economic] expansion," she said.

"Real estate requires heavy labour, can create jobs and increase employment… and it is also a sector that requires several other industries including steel manufacturing and cement as well as many more, and thus can give a push [to the economy]."

The question that remains for El-Antary is how will these projects be implemented.

"Are these real estate projects going to the building of compounds and resorts again? Or will they be invested in creating lower income housing? Will the labour used be Egyptian or will they depend on cheaper foreign labour? Will the industries used in the real estate projects be Egyptian or will they depend on imported products?"

These are all questions that need to be answered for a proper assessment, says El-Antary.

This is in addition to the complete absence of investments in industrial and agricultural projects, she added. 

According to Bahaa El-Din, it has not been shown that the development plan put forth at the conference gave enough attention to social policies.

Similarly, prominent economist and Ahram CEO Ahmed El-Naggar argues that while the conference created a positive impression that Egypt is heading towards an economic take off, the desired development should be geared towards social justice.

"[There needs to be] a balanced relation between the state and the investors, guided by policies that will fairly distribute the fruits of economic development… or in other words that would achieve the social justice which was the main goal of the January 25 revolution and its second wave in 30 June," El-Naggar argued in his weekly column.

In an interview with Ahram Online, Nasserist figure and political commentator Abdallah El-Sennawy opined that a lot of money is coming in but that not all will be directly beneficial.

"You are telling people that some of the population will get everything now and others (the poorer sectors) will benefit in 15 years, by 2030 -- this threatens the stability of the country. The lack of social justice is dangerous at the moment as it threatens security and stability," he said.

According to El-Sennawy, the most alarming sign was the statements made by "Mubarak-era businessmen" who he believes dominate the scene.

"Their statements show that they believe that whatever they could not achieve with [Hosni Mubarak's son and a key political operator during his presidency] Gamal Mubarak they can achieve now…a complete removal of state subsidies and full privatisation of the public sector," he said.

Sayed, a father of two in his thirties, is sceptical about the impact the influx of investments will have on his daily life.

"Maybe (the projects) will benefit certain people," he says.

Sayed, like many Cairenes, works two jobs to make ends meet. He is an employee with the health ministry who moonlights as a part-time taxi driver.

"I don't think I will see anything from the conference, but maybe my children will," he told Ahram Online.

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