Egypt development strategy meets reality
Cairo - A growing number of observers find themselves obliged to question the practicality of a major development strategy unveiled by the Egyptian government, judging by what they describe as “depressing” realities.
The strategy, called Egypt’s Vision 2030, aims to accelerate economic development, reform education and the health system and introduce political changes to turn Egypt into one of the world’s top 30 countries in terms of economy, competitiveness and citizen happiness.
“Nevertheless, the government has not told us how it will execute this plan,” said Samir Ghattas, of the Middle East Forum for Strategic Studies. “Some things are better said than done, especially when it comes to a government lacking the will to effect real change.”
The strategy aspires to raise the average individual income from the current $3,050 to $12,000 by 2030, attract billions of dollars in investments and millions of tourists every year. It also seeks to reform the political system.
The government seems, however, to have forgotten to look at the realities before it designed the strategy. The economy is in shambles and recovery does not seem to be imminent. The budget deficit is growing; the Egyptian pound is losing ground against the US dollar; foreign currency reserves are decreasing precariously and exports have taken a downturn.
The government said it planned a series of “painful” measures to reform the economy and reduce the budget deficit, which is expected to be about $25 billion — 25% of the budget — in 2016.
The plan, economists say, threatens to directly affect millions of poor Egyptians already suffering from unrelenting price hikes.
“The measures will surely include a significant slashing of subsidies allocated to basic services, including water and electricity,” said Rashad Abdo, head of the Egyptian Forum for Economic Studies think-tank. “This is why it is the poor who will pay at the end of the day.”
Egypt spends almost 25% of its budget to subsidise water, electricity and fuel. In recent months, however, a gradual cutting of subsidies started, putting additional financial burdens on citizens, about 26% of whom are considered poor.
Coupled with the deteriorating conditions of water and electricity services, the Egypt’s Vision 2030 plan is expected to trigger nationwide anger.
Egyptians say they pay more in water and electricity bills already and that a rise in those bills will only make their lives more difficult.
“I pay for water and electricity three times more than what I used to pay in the past,” street hawker Ashraf Mahrous said. “Raising the prices of these services will only mean that I have to work to pay the bills, not feed my children.”
The feeling among the general public is that the government is forcing it to pay for services that are either poor or non-existent.
Electricity outages are common due to the wide gap between production and demand. The government says it tries to end the outages by establishing new electricity plants and utilising solar energy and wind power.
A growing number of citizens complain about the poor quality of potable water, with specialists attributing a dramatic rise in cases of kidney failure and liver problems to unsafe drinking water.
Some Egyptian legislators say they will reject the plan.
“As far as I am concerned, I will reject it as long as it will negatively affect the majority of the people,” MP Haitham al-Hariri said. “Before it resorts to raising the prices of services, the government needs to think of other measures to increase revenues, including the revival of important sectors of the economy.”
That revival is uneasy with the tourism sector deeply affected by flight suspensions in place by the United Kingdom and Russia after a terrorist bombing of a plane in October. The two countries used to send Egypt 3 million tourists every year.
Egypt’s exports dropped almost 20% in 2015 and revenues from the Suez Canal declined because of an international economic slump. Egypt also has its security problems with terrorist groups active in the Sinai peninsula and western border.
All these realities are on the minds of observers such as Ghattas while judging the Egypt’s Vision 2030. They say for the plan to be practical, the government needs to address the needs of the people before thinking of goals that might be far larger than realities can allow.
“Our government does not have a real vision for what it has and what it can do,” Ghattas said. “This means that the strategies that keep appearing every now and then will only give false hope to the people.”