Tuesday, September 23, 2008

An Overview of the Economic Situation in Egypt

Many say that the economic situation in Egypt has started its decline since Nasser's nationalization back in the the 50s. Others say it has been declining greatly nowadays because of the unprofessional privatisation steps taken in Mubarak's reign. The former opinion is rather extreme because most of the people saying that are already criticizing Nasser's decisions in many other aspects than the communist economy. I believe privatization has led to many unfavourable consequences in the Egyptian economy, such as monopolies and inflation.

Nasser's nationalization was not a bad step as he aimed for "Egyptianizing" the economy, as it was mainly dominated by foreign private capital back in King Farouk's era. He redistributed the country's wealth, gave the poor new life opportunities and encouraged local industries. The criticism on Nasser's actions were mainly about the unjust take over of personal belongings and assets, but it was a time in the history of Egypt when drastic decisions were to be made in order to accomplish change.

On the other hand, privatisation has brought many domestic and foreign private capital for investment on many industries. It has caused profit-seeking businesses to take advantage and create monopolies. With many of them being members of the parliament, they get lots of illegal support from the state, due to corruption. With that put aside, external factors affecting Egypt, including the rise in global prices and the economic problems in the United States, are also a major cause of economic problems in Egypt.

Plus, there are no business ethics any more. The morals Allah teaches us in the Qur'an are no longer followed. Egyptian markets are suffering everyday from monopolies, with them are the poor who cannot afford some goods and services they used to afford before any more. The one very example of monopoly in Egypt is Dikheila's in iron and steel. Another problem Egyptians suffer from is cruel and unfair traders. It is known that on the first of Ramadan, demand on food supplies becomes very, very high. For that reason, local supermarkets (and traders with no business ethics) have increased prices on these necessities, taking advantage of high demand and forcing Egyptian consumers to spend more.

The Egyptian economy is heading towards inflation. Rising prices of food and petrol are the main indicators of merciless inflation on the horizon. The costs of living more than doubled, whereas the earnings remain stagnant. With 25% of Egyptians living under poverty line, it has become very difficult for bottom-feeders to cope with price increases. Necessities now cost more than they did a couple of years ago, and much, much more than 5-10 years ago. Also, the income of most residents in the rural areas does not exceed $2 (11 EGP) a day, that is $60 (330 EGP) a month.

Daily News Chief Editor suggests that despite the current economic crisis gripping Egypt and the world, the government and its citizens must look to the future.
"Huge social subsidies and quick fixes are not enough," she begins. "Forward vision and sound planning, with the express aim of lifting the struggling masses from adverse poverty, is the only way to guarantee political, social and economic stability in a country teeming with the disappointment of millions of disenfranchised youth whose small buried dreams will soon turn into bitterness and violence."

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