Two years under Sisi: An economy of promises

Two years under Sisi: An economy of promises
6 min read
06 Jun, 2016
Two years under Sisi and the Egyptian economy does not feel like it is improving, writes Mohamed ElMeshad.
Two years under Sisi and the economy is far from improving [Getty]
Over two years ago, while campaigning for his guaranteed spot as the would-be President of Egypt, Abdel Fattah al-Sisi continuously dodged any of the quite basic inquiries as to what he plans to do once in power.

One of the only promises he made, was that, "in two years (with him) Egypt will transform into something else." When pressed on his economic programme during one televised interview, his only response was that the government may create some jobs by offering loans to unemployed graduates comprised of refrigerated trucks to transport produce. Sure enough, the truck project was announced (although with no news of implementation).

However, two years on and the Egyptian general public are still waiting for an economic platform, a plan with goals in the short-medium and long term, and most importantly ways to quantify the success of these goals and hold government accountable.

Looking at the state of the economy now, major indicators have barely budged: youth unemployment remains steadily at 26 percent, 2016 GDP growth projections went down to 4.5 percent from 6 percent; compared to last year’s 4.2 percent), inflation is still high at 10 percent, poverty remains at a staggering 25 percent-30 percent, with huge disparity between the much higher rural poverty rates.

For the average Egyptian’s economic circumstances, Egypt is pretty much still the same.

Two years on and the Egyptian general public are still waiting for an economic platform, a plan with goals in the short-medium and long term, and most importantly ways to quantify the success of these goals and hold government accountable

Steps were taken for sure, and the best one can do now is to retrospectively surmise how this regime views economic development.

The latest government Budget proposed to the parliament for ratification involves attempts at decreasing spending and searching for more revenue. It suggests a desire to adhere to the IMF and World Bank stipulations (for a loan), which tend to entail decreasing fiscal spending, steering away from fiscal deficits and encouraging open markets.

Calling for austerity measures has been a hallmark of Sisi’s presidency so far. He had already begun decreasing fuel subsidies and hiking up the costs of energy for the general public early on in his term. With increasing poverty rates, deficient government welfare, and the already high inflation rates it is difficult to see how this would be sustainable.

Plans for progress and moving the economy forward had been centered on mid-twentieth century notions that the state’s active role in encouraging development is what advancement is all about. As a result, the last two years had been littered grand public gestures: national projects, international conferences, globetrotting salesmanship, and an incessant crusade for grants, loans and benevolent investors.

In almost every case, these endeavours were style over substance. Last year, a business/economic conference in Sharm el-Sheikh brought numerous global political and economic leaders together to highlight investment opportunities in Egypt.

Much was made over the $33 billion in contracts – mostly Memoranda of Understanding or MOU – that were agree during the conference (this number was revised after conference organisers announced the potential figure to be around $100, including grants).

However, a year after that and only a small fraction of these MOU’s moved beyond that. The conference’s flagship investment project, a new administrative capital for Cairo, lost its major contractors from the UAE, only to be taken over by the military, which has been the fate of most major infrastructure projects in Egypt.

A case in point is the Suez Canal expansion project, which from start to finish had the military stamp on it. It was touted as Egypt’s “gift to the world” and a marquee vehicle for development in the future.

In reality, it did not offer the riches it promised. Its economic viability did not take into account the effect decreased prices, which would make it cheaper for ships to circumvent Africa, rather than pay the Suez Canal crossing tariff.

It also simply didn’t have a clear enough proposition of its upside. The over the top celebrations at the completion of the project, became a caricature of itself. It was a regime that was patting itself on the back (and inviting everyone else in the world to join) for digging a really big hole really, really fast. And, in all fairness, it did do that, but at what expense and at what benefit, specifically? No one knows.

Egypt has turned into lab rat, for the military and its self-anointed Field Marshall to experiment on with absolutely no supervision.

The problem is, Egypt’s economy has been held back as much as anything by the inhibitive deficiencies of its everyday details, rather than the country’s prospect as a regional commercial powerhouse. The government put unrealistic expectations on grand projects that overinflated the aspirations of the public, and the result has been a dual pronged sword of disappointment and destitution.

The problem is, Egypt's economy has been held back as much as anything by the inhibitive deficiencies of its everyday details, rather than the country's prospect as a regional commercial powerhouse

Corruption, clientalism and bureaucratic inefficiencies are as rampant as ever. The state does not seem to have a grasp on what would truly encourage the trust of investors in the Egyptian market.

Frequent police corruption and transgressions are making it difficult to trust in the security and internal stability of markets. Egypt’s most active (ever) anti-corruption watchdog, Hesham Geneina, is now on trial for doing his job and reporting on corruption in government. Meanwhile, the military’s grip on the economy is expanding by the day, while the private sector is marginalised.

The drivers behind the 25 January Revolution, rectifying social inequality and police brutality have been forgotten, and replaced with the faint promise of a better tomorrow (always tomorrow) and being thankful to the military and police for not engaging in daily mass murders.

It would be dishonest to turn a blind eye to the fact that any government taking over during this of time, would be facing immense challenges.

The economy has been stagnant since 2011, and the thirty years of Mubarak’s rule have left the country with immense class divisions, institutionalised corruption, and lacklustre infrastructure. Also, the the very real security issues such as the two bombings of EgyptAir planes and sporadic terrorist attacks greatly increase the burden of any official attempt to revive tourism.

Two years under Sisi and the economy does not feel like it is improving. Perhaps there are plans that could have some positive effects on the long run, or the unlikely scenario that the long term development plan, Egypt 2030 plan has any mettle or genuine, achievable goals to it. There’s no way to know, details, planning and accountability in Egypt are all confidential matters of national security now.

Mohamed ElMeshad is a journalist and a PhD candidate at SOAS, focusing on the political economy of the media. He has worked extensively in Egypt, Bahrain, West Africa, the UK and US. Recently, he contributed to the Committee to Protect Journalists' book, Attacks on the Press (2015).

Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.