Egypt aims for economic diversification, agility: minister

CAIRO - 14 December 2020: Minister of Planning and Economic Development Hala El-Said participated in a conference entitled "Major Global Transformations: Future Prospects for the Egyptian Economy" organized by the Faculty of Economics and Political Science at Cairo University.

In her speech, El-Said  reviewed the development experience of Egypt in recent years and the efforts of the Egyptian state to achieve economic reform, pointing to the great political, economic, and social changes and challenges that Egypt has witnessed and the consequent accumulation of structural imbalances that the Egyptian economy has suffered from for many decades, which negatively affected most macroeconomic indicators, as well as the severity of challenges having increased in light of the political and economic changes, both regionally and internationally, and the outbreak of the Covid-19 pandemic and its associated negative economic and social health effects.

El-Said added that the state has set the Egypt Vision 2030 “to represent the national version of the UN goals to achieve sustainable development and the general framework organizing interim plans and programs for work over the coming years.” The government's implementation of many reforms has led to the first phase of the national program for economic and social reform since November 2016, aimed at achieving macro stability and comprehensive growth, which was reflected in the positive indicators that the Egyptian economy witnessed during 2020 and before the outbreak of the Covid-19 crisis.

The minister noted that the rate of economic growth before the crisis reached about 5.6% in the first half of fiscal year 2019/20 and about 5% during the third quarter of 2019/20, with an average growth of 5.4% in the first nine months of the year, until the Covid-19 crisis came and affected the decline in several economic indicators.

She explained that the reform efforts and the diversity of the Egyptian economy in the sectors have contributed to the Egyptian economy becoming more flexible and able to absorb external economic shocks, including the increasing regional dangers and the emerging coronavirus crisis, so the expectations of international institutions were positive about the Egyptian economy, which is the only economy in the region that achieved positive growth rates in light of the crisis.

El-Said referred to the results of the "World Economic Outlook" report issued by the International Monetary Fund in October, in which it raised its forecast for the growth of Egypt's GDP to 3.5% for this year, compared to its previous forecast of 2% in the report of last June. Only three economies in the Middle East and Central Asia achieved economic growth in 2020, and in this context, the unemployment rate fell to 7.3% in the third quarter (July-September) of 2020 compared to 9.6% in the previous quarter (April-June) of the year.

El-Said stressed that the Egyptian government has taken a set of proactive policies that have relied on a clear and well-thought-out plan targeting all groups and sectors to mitigate the effects of the pandemic.This is based on several axes, on top of which is supporting the affected sectors by reducing the financial burdens and providing liquidity and credit to these sectors. Foremost among them is the tourism and aviation sector, as well as medium and small enterprises.

This is in addition to supporting sectors that have the flexibility and ability to withstand the crisis and working to maximize the benefits of the opportunities that may be available to them, such as the agricultural, communications and information technology, pharmaceutical and chemical products industry, and construction sectors, as well as supporting the affected groups through support for irregular employment and workingto adopt incentive monetary and fiscal policies that include lowering interest rates, postponing and rescheduling debts of some sectors, financing packages, and postponing tax payments and some sovereign dues.

ESaid emphasized that the corona crisis resulted in a rearrangement of the priorities of all countries and an emphasis on the importance of several areas, foremost of which are the sectors of health care and social protection, education, and digital transformation.This was reflected in the government's interest in social protection networks and job creation, by expanding the number of beneficiaries of the Takaful and Karama programs, and the expansion of the implementation of the "Dignified Life" initiative for the villages most in need and the "Survival Boats" initiative as the most prominent tools to enhance the umbrella of social protection.

The minister also indicated the interest in "localization of the sustainable development goals," intending to achieve the concept of "inclusive growth, sustainable growth, and balanced regional development" as one of the main pillars of Egypt's Vision 2030, which aims to maximize the benefit from the comparative advantages of the Egyptian governorates and regions, as well as direct investments within the framework of the general plan for the state, with a focus on the governorates that have larger development gaps according to the idea of ​​targeting, on which the state's efforts to implement development projects are based.

El-Said explained that the health and education sectors are of the utmost importance to the Egyptian state, as they are the main tool for development and building human capabilities and the main entry point for the progress of society.The state attaches importance to the telecommunications sector in the framework of enhancing the trend towards digital transformation, she said, noting the high volume of investments directed to this sector in the 2020/21 plan at about LE 10 billion, an increase of about 300%.

She added that the industrial sector is also one of the main sectors on which the state’s efforts are based to achieve sustainable growth, diversify the production structure, and create decent and productive work opportunities, as the corona crisis has demonstrated the necessity of localizing some industries, including medical products and increasing self-sufficiency ratios among them, in addition to deepening agricultural industrialization, localizing the products of the telecommunications sector, making trains and railway requirements, and manufacturing household appliances and the furniture industry, in order to take advantage of the changes in global supply chains to access new markets in which Egyptian products enjoy competitive advantages.

El-Said stressed the importance of the Egyptian state’s direction towards a green economy, as the government adopts a national strategy for the transition to the green economy, and the achievement of 30% of investment projects in the state’s plans for the concepts of environmental sustainability and green economy. The percentage rises to 100% in the next three years, withstandards for environmental sustainability that were approved by the Cabint last October.

Regarding Egypt's sovereign fund, El-Said explained that it is one of the mechanisms to create more opportunities for effective partnership between the public and private sectors to implement joint investments and to create wealth for future generations by maximizing the utilization of the value inherent in exploited and untapped assets in Egypt and achieving financial surpluses that enhance efforts to achieve sustainable development. She noted that the fund has succeeded in attracting investors and partners from home and abroad,in addition to signing agreements to enter into multiple partnerships despite the economic challenges that the recent period has witnessed. Egypt has witnessed the start of the investment activity of the fund and the conclusion of investment partnerships on all frameworks locally, regionally, and internationally. The fund also recently cooperated with the General Authority for the Suez Canal Economic Zone, as well as with private sector investors, to localize the railway carriage industry to meet Egypt's needs and provide great opportunities for export by signing a contract to establish the National Company for Railroad Industries (NERIC) between the General Authority for the Suez Canal Economic Zone and the Egypt Fund Sovereign, as well as several Egyptian private sector companies.

In the conclusion of her speech, Dr. El-Said emphasized that one of the most important challenges Egypt faces is the increase in population growth rates that devour the results and fruits of the achieved growth. Therefore, the state is working to manage the housing issue by controlling population growth and upgrading population characteristics such as education, health, job opportunities, and economic and cultural empowerment, while maximizing the utilization of the current human resources through the implementation of a different package of training programs, capacity building, and expansion of investment in people, indicating the state’s commitment to implementing the structural reforms program, which is the second phase of the economic reform program. It is a national program that stems from within the state's institutions and comes within the framework of the participatory approach adopted by the Egyptian state. Structural reforms aim to diversify the structure of the Egyptian economy, increase its flexibility, and raiseits ability to absorb external and internal shocks, as well as transform the Egyptian economy into a productive economy based on knowledge and with competitive capabilities in the global economy.

Followingthe minister’s speech, Mohamed Othman El-Khosht, President of Cairo University, presented the university’s golden shield to HalaEl-Said on the occasion of her winning the Best Arab Minister award.