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MONEy AND POwER
When real performance
pays off
Few Egyptians benefited from the upswing of the past few years.
In their desperation, most of them did not feel responsible for
their country. Mubarak‘s downfall offers some new chances –
for German entrepreneurs too
by Rainer Herret
They demonstrated for 18 days.
Hundreds of them were brutally
killed, run over or shot to death.
Now there is hope of a new, democratic
Egypt. The army has agreed to make this
wish come true. The young Facebook revolutionaries
want far more than the resignation
of their President. They are calling
for a new system, an end to the old-boys
network that stood for corruption and misuse
of power, and an economic policy that
ensures humane working conditions and
appropriate remuneration. That list of demands
earned the young protestors the
support of the middle classes and eventually
that of the working class and [peasant]
farmers. Whoever governs on the Nile in
future will have to face up to the challenges
the old regime failed to address.
Egypt was praised by the World Bank as
the most reform-hungry land in the world.
Entrepreneurial expertise within the government
and a bold policy of liberalisation triggered
growth rates of seven percent and attracted
direct foreign investment. The reforms
were designed to stimulate competition.
The social goal of combining economic performance
with social progress, however, was
quite simply – or perhaps deliberately – forgotten.
What emerged was predatory capitalism
instead of a social market economy. The
fruits of the reforms were reaped by a few
entrepreneurs and politicians.
Inflation of 14 percent is now decimating
the purchasing power of the population. Over
80 percent of the around two million unemployed
are under 29 years of age and the number
of people working under miserable condi-
10 BusinessReport 1/2011
tions has steadily increased over the past few
years. So it comes as no surprise that nobody
felt responsible for the country. Dirt and decay
dominated the streetscape. Now young
people are beginning to clean up Tahrir
Square. It was already apparent that rubbish
was being collected during the demonstra-
tions. The people have won back their country.
Doing away with corruption and rewarding
people for effort will strengthen democratic
conditions, productivity and efficiency.
Motivated young entrepreneurs now have the
chance to prove themselves under fair market
conditions.
The agricultural industry in particular
needs to be completely restructured and modernised.
That would benefit some 40 percent
of the population who have to survive on two
dollars a day or less, and can be achieved wit-
hout undue effort. Better cultivation methods
to boost crop yields and modernisation of the
hydraulic infrastructure offer a host of potential
areas for German companies to become
involved.
Apart from stemming the mass migration
to the cities, this strategy would also lower the
current need for subsidies on imported foodstuffs
of around USD 1.6 billion. Modernisation
of industrial production facilities will
generate an increased demand for energy-
efficient technologies.
If the outcome of the elections in September
is a moderate, religiously tolerant government,
the state of the economy will improve
considerably from the fourth quarter of the
year onward, because there is still plenty of
growth potential. Mechanical engineering,
the automotive sector, medical technology,
ICT, the chemical industry, the electrical en-
Dr. Rainer Herret
is CEO of the German-Arab Chamber of Industry and Commerce in Cairo and
witnessed the revolution that took place in Egypt in the month of February. Here
seen standing left of a tank after joining the demonstrators in Tahrir Square.
gineering and electronics industry as well as
environmental technology are the growth
sectors of the country. The position of the
German government during the revolution
was welcomed by the people of Egypt, and
German companies can now benefit from
that goodwill. Visitors to the country over the
next few months can not only count on increased
interest from their Egyptian business
partners and customers – they can also demonstrate
a sense of solidarity in this new
beginning.
picture: private