It is not news that under its ousted dictator, Zein al-Abidine Ben Ali (left), Tunisia was a kleptocracy, its heavily-regulated economy milked by the disgraced ruler, his extended family and others with political connections.
But now three years after the revolution which toppled Ben Ali, the World Bank says that restrictions on economic participation which blocked competitors and allowed his cronies to feather their nests are still in place. These continue to stifle the private-sector, ensuring that only a small number of people benefit at the expense of the majority of Tunisians. The result is poor economic growth and high youth unemployment –the very reasons which drove much of the discontent that led to the 2011 revolt against Ben Ali.
It is not hard to find evidence of Egypt’s extensive informal economy. It is present everywhere from the rickety microbuses that are poor Egyptians’ main means of transport, to the myriad small businesses which repair, build, supply and otherwise serve the needs of this population of some 85m people.
A World Bank report on the Egyptian labour market released on Wednesday, finds that informality in employment has been deepening, meaning that the proportion of Egyptians in poor-quality jobs without written contracts or social security has been rising, even during years of higher economic growth in the past decade.
Citadel Capital has taken another step away from its private equity roots on Monday after it obtained regulatory permission to go ahead with a $528m share issue.
The group, which has $9.5bn under investment in Egypt and across Africa, is in the process of transforming its business model to that of an investment company, as the fallout from the turmoil of the Arab Spring continues to bite.
An Egyptian proverb says, “when the merchant goes bust, he starts searching through his old books,” in the hope, of course, of finding a debt or two that he can call in. To many Egyptians, their government is acting like the proverbial merchant as it aggressively pursues, over a tax claim suddenly conjured out of history, two of the country’s biggest businessmen, Nassef Sawiris (pictured), chairman of Orascom Construction Industries, and his father, Onsi Sawiris, former chairman.
If successful, the government could net a few much-needed billions. But to many critics, the action against OCI could seriously damage the prospects of restoring investor confidence in the country.
A delegation from the International Monetary Fund is due in Egypt next week to discuss a much-needed $4.8bn loan seen as a lifeline to an economy battered by almost two years of political turbulence. Crucial to securing the loan will be reforms to be unveiled by the Egyptian government aimed at helping it rein in an 11 per cent budget deficit. Cuts to the country’s costly energy subsidies (which suck in 20 per cent of the budget) are expected to be at the heart of these reforms.
Has the Egyptian government conducted a real social dialogue on its planned economic reforms? The government says it has just finished such a discussion over the programme it will submit later this month to the International Monetary Fund.
But some participants aren’t sure they were properly consulted.
Will Egypt implement much-needed energy reforms to free up government spending? It’s on the agenda given the discussions with the IMF – but Egypt has been here before.
Osama Kamal, Egypt’s oil minister, told Reuters recently that much-awaited energy subsidy cuts were still under review and would only be implemented after the government has conducted a “social dialogue” on the proposed reductions. He gave no time frame for reducing the costly subsidies which swallow up more than twenty per cent of government spending.
Just under a year ago, Vladimir Putin quipped about the resilience of his people noting that Russian tourists continued to head for Egypt even as revolutionary turmoil gripped the country and other foreign nationals fled.
Putin understands how to talk his people up. However, do the numbers bear him out? And how is Egyptian tourism faring?
The political turmoil in Egypt since the start of the year has taken a heavy toll on company earnings as first half results reveal. Compared to the mayhem, loss of life and physical destruction in Libya and Syria, Egyptians consider that they have suffered considerably less in their revolutionary transformation. While 850 people were killed and many others were injured, the state has survived and economic assets have emerged intact.
Even so tourism, investment and consumer confidence have been hit badly. That is largely the story being told, and in particular by one company’s H1 figures: Orascom Development.
A group of Egyptian expatriates who met online are behind a new initiative to support the economy of their home country, damaged by the political turmoil following the revolution which toppled Hosni Mubarak, the former president.
The idea behind the T6T scheme is simple according to Ahmed al-Daly, a software developer in Canada and one of the people who devised it.
Under Hosni Mubarak, Egypt’s construction companies did well from a stream of public sector contracts.
With the former president under investigation and his regime in tatters, one of the country’s most dynamic industries is in the doldrums, its future blighted by the political and economic instability.
Egypt has turned to the International Monetary Fund to help see it through a gap in financing that has loomed larger and larger since the revolution that toppled the regime of former president Hosni Mubarak.
But Samir Radwan, finance minister (pictured), said the hoped-for $10bn-$12bn package from the IMF and other lenders would provide only temporary relief. “I need support for six months to a year, but after that I need investment,” he commented after the IMF said on Thursday it would send a team to Cairo soon to examine the request.
The heady excitement on Cairo’s streets which followed the ouster last month of Hosni Mubarak, the former president, has been replaced by gloom, at least if you are an Egyptian shopkeeper having to cope with a dramatic drop in business.
As tourists fled and local and foreign investors took fright at the political uncertainty which followed the fall of the Mubarak regime, the economy has taken a hit.
After more than five weeks, it’s still unclear when Egypt’s stock exchange (pictured) will reopen. Trading was suspended on January 27, two days after the start of the protests which brought down the regime of Hosni Mubarak. Several reopening dates were set by officials, then missed.
The main reason, analysts speculate, is that the government expects the market to plummet as soon as it reopens. In the meantime, there’s frustration.