Forbes: Ahead Of Egypt Investment Conference, Cautious Optimism For Economic Reforms

President Abdel Fattah al-Sisi
AP Photo

This article originally appeared at Forbes:

On March 13-15, Egypt will hold an economic investment conference at Sharm el-Sheikh, with a major focus on the energy sector. Egypt’s President Abdel Fattah al-Sisi’s government sees the conference as an important component of a strategy to improve the economy through attracting private investment.

Sisi is no democrat. The U.S. State Department and rights organizations such asFreedom House and Human Rights  Watch have criticized his government for excessive use of force against political opposition  and civil society since the military ouster of Sisi’s predecessor Mohamed Morsi in July 2013.  The Egyptian military also took an unusually active role in Egyptian politics during the coup.

Yet unlike, for example, Russia’s president Vladimir Putin, an authoritarian ruler who for years coasted on high oil and gas prices, Sisi appears truly committed to improving Egypt’s battered economy.  “Sisi gets some genuine credit,” said Egypt expert Robert Rook, director of interdisciplinary studies and a professor of history at Towson University when we spoke on the phone this month, “Egypt may be a better bet for investment than under Morsi or even under [his predecessor Hosni] Mubarak in his last decade in power.”

Massive corruption, cronyism, and weak legislation, have drained the Egyptian economy for generations and brought little happiness to the Egyptian people. One component of this system has been heavy food and energy subsidies. To give one example, the government provided bakeries with cheap flour to feed the public. This system was corrupt and encouraged massive inefficiencies.  According to Reuters, this system required Cairo to spend $3 billion a year on wheat imports, not only making it the world’s largest wheat importer but also draining the country’s foreign currency reserves. When Sisi took office in June 2014, over a quarter of Egyptians lived below the poverty line according to the International Monetary Fund (IMF).

Sisi has gone after corruption and put in place reforms to gradually ease out subsidies on food and energy. One successful example of this is a new smart card system which reduced corruption, encouraged accountability and efficiency. “Under the new system, families are issued plastic cards allowing them to buy five loaves per family member per day,” writes Reuters, “Buyers no longer have to queue. Bakeries are paid for the subsidized loaves they sell, rather than being given a fixed allotment of cheap flour, making it harder to siphon off subsidies.”  Firsthand accounts from Egyptians and experts who travel to the region confirm this assessment.

Read the full story at Forbes.