{"id":550199,"date":"2022-10-18T03:51:15","date_gmt":"2022-10-18T03:51:15","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/2022\/10\/18\/egypt-has-a-once-a-century-chance-to-build-an-export-led-economy-that-makes-us-a-magnet-for-foreign-direct-investment\/"},"modified":"2022-10-18T03:51:15","modified_gmt":"2022-10-18T03:51:15","slug":"egypt-has-a-once-a-century-chance-to-build-an-export-led-economy-that-makes-us-a-magnet-for-foreign-direct-investment","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/egypt\/2022\/10\/18\/egypt-has-a-once-a-century-chance-to-build-an-export-led-economy-that-makes-us-a-magnet-for-foreign-direct-investment\/","title":{"rendered":"Egypt has a once-a-century chance to build an export-led economy that makes us a magnet for foreign direct investment"},"content":{"rendered":"

<\/a> Good morning, wonderful people, and welcome to a very special issue of EnterpriseAM <\/strong>\u2014 it\u2019s a single story, about a single topic, with a singular call to action.<\/p>\n

Readers of a certain age know what \u201cvery special issue\u201d means<\/strong> (particularly if you, as a kid, spent any time exposed to \u201cafterschool specials\u201d in the States or Canada): There\u2019s a moral in this morning\u2019s edition. We hope you\u2019ll speak about it with those closest to you before \u2014 and while \u2014 you attend next week\u2019s three-day Egypt economic conference.<\/p>\n

We\u2019re also hoping that some of you will want to help us turn this idea into action. <\/strong>How? For starters, by making a cup of coffee and then giving this morning\u2019s issue a good read. Then, if you agree with us, talk about it non-stop \u2026 at next week\u2019s Egypt economic conference. (See a theme emerging here?)<\/p>\n

(Oh, and speaking of the conference:<\/strong> Cabinet has yet to make an official statement, but this is the conference website online<\/a><\/strong>, including what appears to be a fairly advanced version of an agenda. We understand right now that while cabinet and senior officials from the EGX, FRA and SFE are leading the sessions, other attendees will include heads of industry groups and chambers of commerce, academics, MPs, and select members of the diplomatic community. It\u2019s unclear to us right now how many C-suite execs will be invited.)<\/p>\n

SO, HERE\u2019S THE PROBLEM: That IMF package (and devaluation) we\u2019re all sitting here <\/strong>waiting for this week or next? <\/strong>They\u2019re necessary to get us out of the pickle we\u2019re in at the moment \u2014 but they\u2019re not sufficient to ensure we won\u2019t be doing this again in five years\u2019 time.<\/p>\n

AND THE SOLUTION: Egypt has a once-in-a-century chance to build an export-led <\/strong>economy that will make us a global hotspot for foreign direct investment<\/strong> (FDI). We\u2019ve spoken with some of the smartest people we know in the private sector, and they all agree that it\u2019s not only possible \u2014 the recipe is simple. The challenge? Staying laser-focused on execution over a multi-year period, and in doing so, make sure we never again have to ask the IMF for a single red cent.<\/p>\n

WHAT WE WANT A PIECE OF: Multinational corporations are scrambling to re-engineer their s<\/strong>upply chains all around the world \u2014 and we\u2019re a natural partner in that process<\/strong>, says Helmy Ghazi, deputy CEO of HSBC in Egypt. \u201cFrom energy to manufacturing, countries and major corporations need alternatives. They need to bring production closer to home. They need to lock in reliable energy supplies. And they need to do both things with partners they can count on,\u201d he says.<\/p>\n

By virtue of geography, culture, and foreign policy, Egypt is that partner.<\/strong> The question is how fast we can get serious about a handful of industries that experience in other countries can become magnets for FDI, that create meaningful employment, and that turn net importers like us into export powerhouses.<\/p>\n

What\u2019s more, we already have a huge base of multinationals here<\/strong> to help us make our business case to their headquarters. That\u2019s to say nothing of the Egyptians working at multinationals across the globe. What out-of-the-box ideas could they bring to the table?<\/p>\n

There\u2019s a roadmap already in place: <\/strong>Look no further than what policymakers in India, Morocco and Vietnam have each done in the past decade.<\/p>\n

It<\/strong> all revolves around business clusters: Big businesses around the world want a <\/strong>regulatory framework they can count on \u2014 and easy access to land, suppliers, energy, talent, and infrastructure.<\/strong> Clusters are geographical concentrations of businesses, suppliers, and associated institutions that create true ecosystems within priority industries \u2014 and that plug small and medium-sized businesses into the supply chains of larger entities that are themselves feeding into the global marketplace.<\/p>\n

BONUS:<\/strong> By linking SMEs to companies and markets that are otherwise well out of their reach, this approach is also entirely in line with the Sisi administration\u2019s SME development strategy.<\/p>\n

Capturing a piece of those global supply chains could change our economic destiny<\/strong>, suggests Simon Kitchen, MD and head of strategy at EFG Hermes Research. \u201cLook at the experience in Vietnam, where they have created single-industry economic zones,\u201d he says. \u201cYou see people in low-income jobs suddenly having opportunities to get their heads above water. They save and have disposable income. They invest in education \u2014 their own and that of their kids. They buy consumer goods and start to participate in the formal financial system. Then service businesses build up around the zones to serve this emerging middle class. The multiplier is formidable. When you\u2019re a nation of more than 100 mn people, it\u2019s not about the 10k jobs in a given subsector \u2014 it\u2019s about the multiplier effect. You want clusters close to centers of population so they can create opportunity for marginally employed people and kick off this virtuous cycle.\u201d<\/p>\n

We never should have taken notes on economic policy from \u2026 people who don\u2019t get <\/strong>what <\/strong>an economy is all about:<\/strong> It\u2019s time we stop worrying that we need to build everything from
\u201cneedles to missiles.\u201d If our competitive advantage is in making needles \u2014 and if doing so will generate bns of USD in export sales \u2014 let that be our only focus. No nation can escape the need to import.<\/p>\n

IN SHORT- Building a (focused) export-oriented economy that is a magnet for global <\/strong>strategic investors<\/strong> is key to making sure we don\u2019t find ourselves five years down the road in the same place as we are today: Grappling with an economic crisis and going hat-in-hand to the IMF and our rich friends asking for help. Our challenge: Building a long-term industrial strategy that is rooted in a deep understanding of our absolute and competitive advantages \u2014 and that allows us to become an export powerhouse while pursuing import substitution where doing so makes sense.<\/p>\n

So, what do we need to do? We think there are five steps:<\/strong><\/p>\n