It seems that a change of economic policy is about to occur in Egypt, part of the anticipated economic reform program, aiming to attract private investment, mobilise its resources, and “rehabilitate” its reputation. If true, this would be a welcome change because Egypt is in desperate, almost existential need for private investment.
But merely attracting investment will not be enough. Rather, awareness of the type of investment we seek to attract must go along with that program. Countries of the world today are not satisfied with simply increasing their rates of investment, but rather interested in attracting the type of investment that would lead to economic and social development, instead of deepening already existing crises and gaps. In the past, commentators used the term “race to the top” to describe countries that attract investment in a manner leading to sustainable economic development, while the term “race to the bottom” was used to describe countries that scrambled to attract the type of investment that results in the depletion of natural resources, deepening the social gap, increasing debt, and reliance on incoming technology from abroad.
Let us then imagine that Egyptian economic decision makers are not only concerned with increasing private investment, but also with it being of the “right” type. What would this be based on? I suggest ten criteria for the classification of investment:
First, the investment must be successful and able to contribute to our national income and economic growth. This also means that it should contribute to tax returns that fund developmental efforts, hence my reservations about tax exemptions that deprive society of its fair share of investors’ success .
Second, it should lead to an increase in job opportunities and reduction in unemployment. However, merely increasing the number of workers is not enough. This should be achieved by availing good job opportunities, fair wages, and appropriate working conditions.
Third, it must be compatible with national security. It is not unusual, nor against principles of free trade and investment, that countries define areas of economic activity considered prohibited or restricted, especially to foreign investment, such as ports, airports, strategic industries and some sectors of information and communication technologies. These restrictions, however, must be officially declared so as not to surprise investors.
Fourth, it should drive industrial growth and increase the added value of our national economy. There is no need for investments that only aims at extracting natural resources and exporting them without value addition. Rather, the percentage of local manufacturing and assembly must be increased, so that the country benefits from the added manufacturing value.
Fifth, it should be exportable and able to compete in global markets, bringing us the foreign currency we need and reducing our reliance on external borrowing. This is a goal that is difficult to achieve by itself. Rather, it must be supported by policies that encourage exports, and programs that help those willing to compete internationally.
Sixth, it needs to contribute to the transfer of knowledge and technology, and raise the levels of professional training and national scientific research, so that we do not remain importers of knowledge, fascinated by it, and consumers of it , without local addition.
Seventh, it must be environmentally friendly, not only to comply with the requirements of international funding bodies, but more importantly to preserve our health, the health of our children, and the environmental elements that we look forward to enjoying in the future.
Eighth, it must also protect natural resources from rapid depletion or heavy and unjustified exploitation. Our natural resources are not ours alone, we are guardians keeping them for future generations that do not deserve to be left with depleted wells, ruined beaches, salty soil, and mines whose bounties have gone.
Ninth, it should be conducive to improvement in human development. This is undoubtedly the best investment, in the advancement, safety and happiness of people. Therefore, investment in education, health, housing, sports, culture and information technology should be at the top of the priorities of investments we aspire to attract and encourage.
Tenth, it must be based on sound economic values, the values of encouraging competition and resisting monopoly, respecting the rights of workers and consumers, combating corruption and nepotism, respecting privacy and other elements of what is a modern value system for investment.
I can almost see a smile of sarcasm and denunciation on the faces of some of those who will read these words, and I hear them wondering: What is this pointless philosophy? What is this idealistic proposition when we are in dire need of any investment and any money from inside and outside Egypt? How can we concern ourselves with the rights of workers and the preservation of resources and investment values while we are in the midst of an economic crisis? Let us leave this to academics and dreamers, because our priority is to attract any available investment, on any terms, as long as we are not in a position to choose or impose conditions.
This is undoubtedly an important and valid argument, which I do not dismiss or belittle. The current economic crisis does not allow us the luxury of choice. But let us also not give in completely and accept anything on offer. What I have described is perhaps an ideal framework for attracting investment. It may not be fully realised, but awareness of it may help us achieve part of it, and then gradually let it grow. This is a call not to apply all the previous criteria at once. We cannot do this. Rather, it is a call to civil society, unions, political parties, business associations, and of course the government, to put together a “new investment contract”, one which may be partially achieved now, as long as it remains an accepted and agreed-on standard for what we hope to achieve in the future. The important thing is to agree on what’s right and what’s best for us, and then gradually to progress along its path. But let us not ignore those standards altogether.
*A version of this article appears in print in the 20 October, 2022 edition of Al-Ahram Weekly.
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