Maged Amin Eino Sorry it was from Economist: Recent Egypt Business Report ................... Today is Groundhog Day in Egypt. The country woke up this morning back where it was two years ago. The big difference being the country is today in a much worse state. Recovery will now take much longer. In the space of a year, president Morsi managed to squander the legitimacy he earned at the ballot box. Under his startlingly inept leadership, the Muslim Brotherhood managed not only to alienate would-be supporters, but also many within its ranks. Indeed, almost everyone was surprised by the Brotherhood’s weakness and incompetence once it assumed power, having believed that its years of grass-roots welfare work endowed it with the necessary experience to manage the high offices of state. The Brotherhood made many mistakes. It quickly became autocratic and started unnecessary battles. It marginalised minorities and isolated itself. But its main failing was to put the needs of the Brotherhood above those of the rest of the country. The silver lining in Morsi’s failure is that Egypt gets a second chance. The army, in consultation with key opposition figures has laid out a roadmap that provides for a short transition period followed by new parliamentary and presidential elections. But it is a roadmap fraught with risk; tanks remain on the streets and after seven polls in two years, many Egyptians question the credibility of elections. Particularly given the fact that Morsi’s ousting has questionable legal grounding when he himself was freely elected. His removal from office may have been necessary, but it sets a dangerous precedent. The new government faces daunting challenges. Like the Morsi administration, it will have had no experience of exercising political power. But it must find swift solutions to Egypt’s dire economic problems. Crucially, it must regain investor confidence. President Morsi was able to rely to a degree on the support of his Qatari benefactors, but the new government will have no such financial lifeline. It must restart talks with the IMF and sign a deal as quickly as possible. But even then, it will risk the wrath of the Egyptian street as it will inevitably be forced to ease subsidies. But perhaps after suffering petrol rationing, Egyptians will now be prepared to pay a little more for it. What does this mean for you in business? Having spoken to a number of you in recent days, it seems that little will change in the near term. For those of you in the B2B and B2G space, business will remain sluggish. Order books will remain low-to-empty as local customers lack the hard currency to pay for products and the government continues to defer payments. Production among local producers and suppliers will remain well below capacity as they are unable to access hard currency to pay for necessary imported inputs. But the B2C space continues to defy all logic. It seems there is plenty of cash in the market at the consumer level – Egypt’s parallel economy is estimated by some to be double that of the formal economy – so strong double digit growth remains achievable for many of you this year. That growth comes from getting basics right and maintaining a strong localised presence giving you good visibility. Getting the basics right is probably the best advice for Egypt’s next government. Let’s hope it learns something from the business community and, crucially, involves business in Egypt’s reconstruction. The next few months will be a bumpy ride. With best wishes,
Posted on: Sun, 07 Jul 2013 17:05:17 +0000
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