The Arabist

The Arabist

By Issandr El Amrani and friends.

Questions for Egyptian capitalists

For the economically minded, Business Today editor Patrick Fitzpatrick's introduction to their "bt100" issue, which provides rankings of the top 100 companies in Egypt, is an interesting read. The picture it shows, as Patrick explains, is one of tremendous growth for corporate Egypt. Particularly notable is the growth in the petrochemical, construction and tourism sectors, which is indicative of more long-term wealth creation.

Yet this is also a growth that by far and large is not shared by the average Egyptian. No doubt there will be some trickle down effect from the growth seen above, and official (notoriously unreliable) unemployment statistics are down. For a while they cruised steadily at 9.9%, as if the government was afraid to breach some symbolic point. Real unemployment, for all we know, is around 20% or more, depending how you count the problem of under-employment. And then there's the problem about whether the jobs that are created are as attractive as previous types of jobs, the strength of labor welfare in an increasingly competitive world (but one in which labor, not management, gets downsized), and a million other questions.

All of this is of political interest. How will the growth in the income gap will affect politics in a country with, despite its social stratification, a strong egalitarian fiber? (Egyptians, you might not realize this, but take it from a Moroccan: Nasser made you more egalitarian than many, many Arab countries.) What role will an increasingly powerful capitalist class will play in politics, from which it was until recently excluded? What market transparency do you have, as a serious capitalist, in a country where finance and investment banking is dominated by one firm (EFG-Hermes) that has strong ties to the government? What of individuals whose business acumen and personal wealth make them, to a certain extent, untouchable by the state (Naguib Sawiris, perhaps?) And how long will capitalists make do with a corrupt system (some have benefited from it, of course, but at a certain point corruption becomes an obstacle to business) or accept that economic fiefdoms are formed only due to proximity to the presidency? In the future, will it be tolerable that a Gamal or Alaa Mubarak should be able to become a partner in a venture simply by bullying his way in?

As Patrick says, it is true that there is more corporate governance in Egypt today than there was five years ago. But where do corporations and capitalists position themselves on the day's political questions? Thus far, they don't. In the future, we'll see. I once asked a prominent Egyptian businessman who has played a not unimportant role in promoting corporate governance (hint: he's mentioned by Patrick) in the country how he felt about Gamal Mubarak's possible inheritance to the presidency. "Well, it would mean we're not a democracy," he said, before shrugging: "that would be too bad."