Egypt could manufacture for Africa’s market

As Egypt prepares for presidential elections this year, the interim government this week announced its second stimulus package in six months, injecting billions of dirhams into the economy.

The bulk of the money will be spent on development projects and, the government hopes, this should stave off public disquiet, three years on from the uprising that toppled Hosni Mubarak. The stimulus plan, while important, is not the end of the story. It is barely the beginning. Because once there is a new president in Egypt – and therefore, one hopes, some measure of stability – the country will have to start asking itself some serious questions.

The first of these is, “What type of economy must we build?” Egyptians have, rightly, bemoaned the collapse of tourism since the start of the 2011 uprising. This vital sector has been decimated. Yet tourism only accounts for 10-15 per cent of the country’s economy. What about the rest?

What Egypt needs is a way of creating low- to mid-level jobs that can provide enough training for workers to progress. Tourism doesn’t do that. Although tourism brings money into the economy (a great deal of money, in fact), this money is not evenly distributed. Workers in tourist hotels don’t earn much and, crucially, can rarely progress to higher-paid jobs. Due to years of stagnation in the education system in Egypt – another major problem for Egypt’s leaders – there are many people who have not had the educational opportunities they deserve, and so would need jobs commensurate with their current skills, but with the ability to progress.

One option is manufacturing. Egypt used to make things. But the rise of China and India meant that many industries closed, strangled by a lack of demand and government bureaucracy. Egypt must discover manufacturing again, with government support.

If it does so, there is a vast continent hungry for goods. Not Europe, which is struggling itself, but Africa, which is a rising giant that Egypt should aspire to sell to. There is a whole continent in Africa that could buy the things Egypt could make, and there are long-standing links of trade that could make it happen. But it won’t happen without government support and vision. Egypt has spent many years looking inwards. When it finally looks up, it should look south for its future.