By Philip Whitfield
Who’d be in the president’s shoes? Adly schleps in the shadows. Morsi shuffles round prison in his. Mubarak hobbles in hospital pumps. Sadat died with his on. Nasser wore his out on socialism’s slippery slope.
Who’s got the courage to give the old ways a kicking? The economist Felix Inmonti says rent-funded Egypt puts the source of wealth beyond the state’s control.
What does he mean by that? The Suez Canal, tourists, Egyptians abroad and foreigners prop up the state. That’s what did it for Mubarak and Morsi. It’s downing the current lot. Mubarak Mark II bears all the hallmarks.
The government says it’s absolutely fabulous. Just like the army of cleaning ladies. One popped her head round the door on Saturday morning. She offered to take EGP 35 an hour flicking a duster. I’d do better with the government. They lose EGP 25 million a minute.
They’re not Ab Fabs they’re Ab Recs – absolute recidivists.
Their numbers are cockamamie. They expected to get EGP 390bn in revenues. They missed by a long chalk. They spent EGP 50bn more. They’re relying on revenues from taxation increasing by 43% to pay the bills. Tell that to the marines.
Suez Canal fees are up, income down. The Israelis are well on their way with their alternative. The tourism minister whistle-stops the world singing the same old tunes.
Ignorance is at the root of it. Profitable companies set their prices according to demand. If you want more taxes, lower them, don’t raise them. If you want to fill a hotel, auction empty rooms on eBay.
If you want to fill a restaurant it’s as easy as 1-2-3, the marvellous new deal at the Semiramis, for example. You pay more for a coffee in Cairo than London. Bean counters tell me the cost of coffee is 4 piastres a cup. Wise up baristas. You need a top line to generate a bottom line.
Egypt’s playing Russian roulette. Qatar’s holstered $2bn. The EU’s hotshot, Cathy Ashton, is firing blanks. The Chinese are serving yum cha. The Brits? Kibitzing in KidZania. On Friday, America picked up sticks. The State Department told Obama the $500 million tagged for Egypt should be used instead to help American companies wind up assistance programs.
Pride comes before the fall. Are you enjoying blackouts?
Morsi drained the pot. EGP 36bn soon became EGP 14bn. He should be tried for treason. Since the revolution began in January 2011 a million jobs have gone. Egypt is up to its lugs in debt with no Plan B. They’re offering spuds and tomatoes for wheat.
Here’s a plan. Invest in the best: Egypt’s entrepreneurs and women. The World Bank says up to 97% of new jobs are created by small to medium sized enterprises (MSMEs) in the Middle East. They’ve allocated $30m to get them off the ground.
Why isn’t the government biting? It threatens the time-servers hanging on for their pensions.
The West says they’ll jump in to lift people out of the poverty trap. They’ll help start-ups and small businesses. They say it’s the best way to create jobs. They want banks to lend and microfinance to flourish. They’re offering to give innovative companies business training. They want to empower women and entrepreneurs.
Bankers agree. While conferencing in London last week, they were subjected to the restless rat-a-tat. The future of banking is supporting MSMEs. Risk it or rack it. We’ve got 80% of the world’s wealth; the drumbeat sounds.
Is Egypt among them? Absolutely. Young people with bright ideas lined up to take a course for would-be entrepreneurs in Alexandria a couple of weeks ago. They urged their hosts, ALROWAD, to come back soon.
The most successful innovators in MENA use technology. It’s best backed by formal training, an international quality certification, a website and 5% or more of the workforce with a university degree.
What’s the government doing? Draining blood out of a stone. They collect EGP 250bn in taxes, then chuck most of it away on subsidies.
Where’s the initiative to create jobs? Why don’t they turn round the woefully underperforming portfolio of companies they run? Their only profitable manufacturer is Eastern Tobacco.
Put this in your pipe and smoke it. Public sector industries can take their pick. Parcel them up as a job lot and sell them off on the stock exchange. Or hack them up into little bits. Offer them to the workers to run profitably as MSMEs.
It’s been done all over the world after revolutions. It works. Either scheme attracts billions of foreign investment, the World Bank and the EU, too. Egypt’s national debt would evaporate overnight.
Harmony would shutter the police armoury.
The government’s role is regulation not operation. Bureaucrats cringe at the thought. They’d lose the billions of baksheesh they filch. Political reform is key, according to every think-tank. That means revising the constitution, election law and judiciary reform.
Anything else? Without property ownership, the opportunity for accumulating wealth is a pipe dream. Inmonti points out that only 8% of the land is registered. The remaining 92% is out of bounds. The military, state businesses and their cronies hold on to it.
The first few revolutions provided jobs for the boys. Of course they did. King Djoser and his vizier created the first bureaucracy 5,000 years ago to build step pyramids. History repeats. The government’s running a gigantic pyramid scheme. They’re insolvent while the top honchos are raking it in.
A government big enough to supply everything you need is big enough to take everything you have – Thomas Jefferson.
Philip Whitfield is a Cairo commentator.