I’ve been asked to offer my 2 cents quite a bit, so here, all my cents in one post. I am not claiming there is an absolute truth when it comes to economics, yet this post is about what I would do if I were calling the shots to steer this economy to a safe harbour.
- Ease of Doing Business: The economy is going through a tough time, fresh graduates can’t find a job, several of the really big businessmen are in jail or are facing the danger of being jailed, companies are downsizing and cutting costs to stay afloat. In this environment opportunities get born and the brave and entrepreneurial aim to capitalise on these opportunities. Yet the current legislative and regulatory environment makes their life hell. So if I were the policy maker I would make starting a business the easiest thing on the planet, slash down the time required to 24 hours and cut all the unnecessary red tape. Objective is to encourage people to do business, to generate output and to create employment. Moreover, those starting a business are doing it in unstable times, so whatever incentives you can throw their way would go a long way.
- Trials: You don’t quite follow why there is still so much dissatisfaction in the Egyptian streets? It is because Egyptians don’t feel vindicated, they feel trials are being dragged out and retribution is not swift. Those in charge should expedite these trials, repossess all unlawful and illegal gains (with interest); take back lands, operating licenses, factories, cash and whatever else was extorted or obtained through abuse of power. Then, let all those who have been steam-rolled over the years have a shot at taking them to the cleaners, install a speedy system by which they could be sued and let justice take its course.
- Attract investments: A couple of months ago a guest at CAC asked me why we were focusing so much on the fear of driving away investments when Lebanon was doing just great despite all the unrest. CNN Ben was quick to point out that most FDI flowing into Lebanon came from Lebanese origins and all the entrepreneurial Lebanese around the globe. Yet fact remains, we stand a shot at attracting FDI amongst all this madness. The trick is to stop dividing internally and show a united front. If I were the policy maker I would start selling licenses, the right to operate here in Egypt, especially in areas that in the past were monopolised either by the government or by some of the names in Porto Torah. I would give foreign investors a shot at buying a license to operate and offer private sector transport and logistics within Egypt. Imagine a second railway service, a private sector bus company, and privately designed and operated cargo ports.
- Cost of funds: Interest rates in Egypt are on the rise, while as a depositor that is great news (despite the fact that it still a good solid 2% lower than inflation so the value of my money is still declining), it does not sound too promising to investors. The cost of funds is an integral part of the investment decision. Steps should be taken to reduce the cost of funds and to improve the access to finance to enable businesses in Egypt to operate smoothly and to enjoy enhanced liquidity.
- Food safety: We are down around 8 billion dollars in foreign reserves and doomsday sayers will have you believe we are rapidly running out and soon won’t have enough reserves to cover our imports of basic necessities. That may well be true, but rather than zone in on that fact, efforts should be orchestrated and directed towards achieving some sort of internal independence with regard to food. Or, in the short-term, get foreign assistance in the form of supplies that will last the season until we can re-plan our approach to agriculture.
- Prioritize policies: I can say this one with a great deal of personal interest and passion vested into it. For the past couple of months I’ve dreamed of having the likes of http://www.kiva.org operate in Egypt. Yet this dream has been made difficult by the strict (and sometimes excessively rigid) money laundering regulations and restrictions on transfer of funds. So I can’t help but wonder, what is more important at this particular moment in time? Potential money laundering versus potential inflow of funds to finance SMEs around the republic. This is one example, I’m sure there are others which are hindering a speedier economic recovery.
- Wages: If enforcing a minimum wage is proving that difficult, a maximum wage should level the playing field a bit. As in this case the person making the measly wage will be relatively better off as the gap is bridged. I would take the time to revise all public sector and government wages and salaries (whether formal government contracts or under the table OUDA ones). I would slash down the ridiculous ones to meet the maximum wage criteria and I would channel those excess funds to better uses. Moreover, I would do all of this with a great deal of transparency.
- Transparency: I would extend that transparency to all aspects of government economic policy in the coming period. I belive we have had enough “constructive ambiguity”, some old-fashioned constructive clarity would be nice. The people should get a say regarding the tax structure, the government budget and how any incoming aid money should be spent. A say we get through the People’s Assembly, yet a say we only get if information stops being asymmetric and we all have a fair chance of knowing where things stand.