Interview: President Abdel Fattah El Sisi
How is Egypt working to balance the demand for higher economic growth with the need for social justice and inclusiveness?
ABDEL FATTAH EL SISI: The Egyptian government has a set of clear priorities and objectives embodied in the sustainable development strategy Egypt’s Vision 2030. This multi-dimensional strategy includes achieving both economic and social goals, whereby social justice should be established in tandem with realising higher economic growth rates. The vision is to have a fair, interdependent society that reinforces the principle of citizenship, and ensures the rights of every Egyptian to participate in rebuilding a new modern Egypt based on equal chances and the rule of law. Our aim is to establish a society that also provides protection and support to marginalised and vulnerable citizens.
The government of Egypt is committed to pursuing equitable economic growth. It has embarked on an economic reform programme to address long-standing challenges, as it seeks to recover from the severe economic and financial losses it incurred due to political instability between 2011 and 2014, in addition to a fierce battle against terrorism, both of which led to the build-up of macroeconomic imbalances that needed to be addressed. Therefore, Egypt began the implementation of a series of stimulus packages and national mega-projects to spur the economy, and draw local and foreign investments. In November 2016 the IMF approved a $12bn loan for Egypt to support its homegrown economic reform programme.
In this context, several reform measures have been adopted, including the government’s dual move in November 2016 to float the currency and cut energy subsidies. Other measures necessary for the success of this programme include critical structural reforms and the introduction of a new investment law, which are set to eliminate impediments to growth and job creation, help restore investor confidence and create an environment conducive to investment. We are aware that the impact of the economic measures is quite harsh; therefore, the government is working on mitigating the impact of the reforms on the poor and the economically disadvantaged.
Our drive to improve the economy should not compromise the most vulnerable segments and low-income brackets of the Egyptian society. The Egyptian government is committed to providing its citizens with basic goods and services at affordable prices, and providing them with access to quality health and education services. Ultimately, our aim is to see higher growth rates have a positive impact on all Egyptians and provide better opportunities for them.
The social dimension has been integral in the economic reform programme. Strengthening social safety nets by increasing spending on food subsidies and cash transfers was one the programme’s key pillars. The government launched Takaful and Karama (Solidarity and Pride), a social programme aimed at addressing the issue of poverty in Egypt. The programme is designed to reach out to the neediest segments of society, such as the elderly, the severely handicapped and families with children that live in extreme poverty, and to alleviate their suffering by injecting cash transfers that help them lead better lives. Development plans are not exclusive to certain parts of Egypt; instead, we will target all parts of the country, some of which were marginalised in the past, such as Upper Egypt and Sinai. We are launching a number of development projects and constructing new fully integrated cities to ensure all Egyptians enjoy better services and opportunities.
How has the security situation in Egypt improved over the past two years?
EL SISI: Terrorism continues to be the world’s most pressing threat. We have seen innocent people in different parts of the world suffer from its scourge and economies incur severe losses. The international community has to unite its efforts to confront and eradicate terrorism, and stop the invaluable human losses and economic deterioration. Egypt is fighting a ferocious battle against terrorism, but significant progress has been made in northern Sinai by the Egyptian armed forces. Our armed forces and police remain vigilant against attempts to undermine our national security, and they ensure that our borders are secure.
It is equally important to consider Egypt’s security from a regional perspective. The rising tensions and conflicts in the Middle East and Africa have a direct impact on Egypt’s security situation. Therefore, addressing these issues is of extreme importance for us to be able to maintain our security and pursue development goals.
It is our mission as members of the UN Security Council and the African Union Peace and Security Council to warn against the dangers of the expansion of terrorism and push for recommendations aimed at resolving many of the crises in the region through permanent political solutions, and in a peaceful manner so as to maintain these countries’ lasting unity and territorial integrity. Achieving security and stability is a comprehensive process that requires both national and international efforts.
Our long-term strategy to combat terrorism is to address it from economic, social, cultural and religious aspects. The initiative to renew the religious discourse is key to clearing up many of the misconceptions that associate violence with Islam, luring the youth into joining extremist and terrorist groups.
The youth’s energy should be positively channelled into production by creating more jobs and encouraging them to participate in social, cultural and political activities. The government has been active in this domain by developing facilities and programmes to engage the youth and raise their awareness. The Presidential Leadership Programme was developed to equip the youth for leadership positions by providing them with the necessary training and skills. We need to fundamentally address economic, social and cultural concerns in order to curb the threat of terrorism. The world should unite to confront and resist these extremist ideologies by emphasising the importance of engaging and empowering the youth.
In your opinion, what role will the private sector and foreign investors play in aiding Egypt’s current economic recovery?
EL SISI: The private sector is a key partner in Egypt’s sustainable growth and development, and foreign direct investment (FDI) is one of Egypt’s primary sources of foreign currency. In 2015 Egypt’s FDI rose to more than $6bn from $4.7bn in 2014, following the introduction of a series of economic and legislative measures to create more favourable conditions for attracting more investments. These included combatting corruption, streamlining bureaucratic procedures, issuing the unified investment law and adopting a market-led economic approach, in which the state is committed to working with the private sector.
Government funding alone cannot sustain our development plans and mega-projects; therefore, we are looking forward to the private sector’s partnership and investors’ active contribution. The government aims to increase FDI by improving the overall investment climate. A Higher Council for Investment was established to oversee the state’s investment policies. As a result, we have seen an expansion in the size and scope of business activities of major multinational companies. We are keen on increasing the flow of investment to Egypt by improving the infrastructure, stabilising the foreign exchange market, eliminating administrative impediments and putting in place a mechanism to resolve investment disputes.
Investors in Egypt can always benefit from the advantages its strategic location offers as a gateway to European, Arab and African markets, in addition to the free trade and preferential arrangements it shares with a number of countries. Egypt’s population of more than 92m offers an attractive market as well as a huge labour force, adding to Egypt’s qualities as an attractive destination for foreign investment.
At the same time, Egypt is implementing several mega-projects aimed at fostering economic growth and attracting foreign investment. For example, we have completed the New Suez Canal in record time as part of a more comprehensive project to develop the Suez Canal area, which will help enhance Egypt’s world trade position in the long run by providing multiple investment opportunities. We have successfully overcome energy shortage problems while working on diversifying energy sources, such as nuclear energy, with the establishment of the Dabaa power plant. This will cater to our growing energy needs, which is crucial to unlocking faster economic and social development.
What must Egypt do to further reduce its reliance on foreign aid inflows?
EL SISI: Egypt has embarked on an ambitious series of structural reform policies and development projects to restore macroeconomic stability and promote sustainable growth that will help Egypt reduce its dependence on foreign aid in the long run.
Funds have been channelled towards investing in development projects to create more jobs and generate income. Teaming up with the private sector and encouraging the flow of local and foreign investment by enhancing the efficiency and transparency of government institutions will contribute to increasing national income in foreign currency.
Restoring tourism is also key to reinvigorating the Egyptian economy and creating jobs for the millions of people working in this sector and related activities. The government is working on improving security measures and restoring the flow of tourists.
In parallel, the Egyptian government is putting a particular emphasis on small and medium-sized enterprises (SMEs) to create more jobs, especially for the youth, in addition to their role as an engine in driving economic development.
The government is taking the necessary measures to support the establishment of SMEs and help integrate them into the economy. This includes allocating LE200bn (equivalent to $10.6bn as of December 2016) over five years at a low interest rate, providing the youth with support to implement their projects through the help of the Ministry of Trade and Industry affiliate body, the Social Fund for Development.
What do you see as the biggest challenges facing foreign investors coming to Egypt?
EL SISI: Security has been one of the major concerns that foreign investors have had in mind when deciding to do business in Egypt over the last few years. This has caused a slowdown in FDI flows during the transitional phase. Today, a more stable political atmosphere allows us to pursue our economic development plans. Economic indicators show progress, and international financial institutions have expressed confidence in our potential, while international companies are interested in increasing the size and scope of their activities and investment in Egypt. Still, we are seeking to further streamline bureaucratic procedures and implement a mechanism to swiftly resolve investment disputes, listen closely to the concerns of foreign investors and take the necessary measures to dispel them.
The IMF loan agreement, as well as other economic measures that the Egyptian government has adopted, have received positive acknowledgment from various regional and international institutions and investment funds. There is a strong will from foreign investors as well as political leaders to see investments grow in Egypt. Foreign delegations that visit Egypt reiterate interest in increasing investments from their countries in Egypt, and commend the recent economic decisions and measures that the government has adopted.
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