Egypt is facing a tough economic situation because of its own internal challenges as well as global ones. The government of President Abdel-Fattah Al-Sisi wants to find a solution by encouraging greater involvement by the private sector in both investment and in setting up businesses to create jobs and increase exports.

The Supreme Council for Investment (SCI) in a meeting last week presided over by Al-Sisi has issued 22 policy directives to push for private sector to undertake the task of turning around the Egyptian economy. Prime Minister Musatafa Madbouli explained in a press conference after the SCI meeting: “Our goal is to speed up and facilitate the investment process and ensure the private sector increases its investments until they are on par with the government’s or even bigger.”

It is seen as a positive development, but there is the view that this cannot happen unless the rules making the setting up of businesses easier are implemented along with other issues. Prime Minister Madbouli conceded that the three issues that came up at the meeting were setting up companies, securing land for industries and getting the necessary permits quickly. He also said that the State Ownership Policy document issued in December 2022 wants to raise private sector investment in the economy to 65 per cent in three years’ time and there is also the expectation that the private sector will help boost Egyptian exports to $100 billion.

The share of private sector in exports is at 1 per cent as of now.  Sherif Fahmi of the N.Gage group, which is a government relations and business lobbying firm, says the decisions of the government show that the authorities are keen to improve the business environment and make Egypt attractive for investors.

But there is recognition that there are plenty of hurdles on the way. According to Ziad Bahaa-Eldin, a former deputy to the prime minister and a legal and economic expert, there are some pressing issues troubling the private sector in Egypt which have not been addressed. Al Ahram, the Egyptian paper quotes from a column he wrote for Al-Masry Al-Youm, saying the government’s decisions “do not address the most pressing investment impediments which are the unstable forex market, the difficulties investors face in importing machinery, raw materials and repaying their dues abroad, and high interest rates which make borrowing to start a new business or expand existing activities very costly.” While the issues raised by Bahaa-Eldin are real, there is not much that the government can do because the global economic situation is in many ways bleak even in advanced economies of Europe and North America. It would be tricky for the Al-Sisi government to allow Egyptian banks to lend to the private sector because that could drag the banks into trouble if the global market volatility were to continue.

Egypt is one of the larger economies in the region and it is possible for it to create a business environment which is less dependent on Western markets, and look for regional outlets like Africa or Asia. A collective effort by Africa and the Arab states in the region to support each other could bring positive benefits for all. The investments then should flow from the Arab states rather than from Europe, and trade linkages in the region will improve the situation further. It is now clear that there is need for greater South-South cooperation – a concept that was quite popular in the 1970s and 1980s after the Brandt Report was published where the North-South divide between the developed and the developing economies was seen as a fact. There are more countries in the Global South which are in a position to support investment and trade without having to look to the West for economic help.