Last week's fifth Cairo Euromoney conference on 'Emerging Arab Economies' left many Egyptian businessmen emerging with a sinking feeling that seems to have been echoed on the stock market.
It was hoped the conference would provide opportunities for Egypt's business leaders to meet overseas investors interested in seeking bargains in Egypt and the Middle East for their investments. It was also a chance for the business leaders, local and foreign, to hear how the government's privatization plans are progressing, and how soon it intends to dismantle some of the myriad of legal and bureaucratic barriers blocking investment and market recovery.
However, most local participants said ministerial speeches were bland and complacent and failed to address their real concerns, like the lack of investment and the economic liquidity squeeze. The businessmen said the small number of foreign delegates only underlined government complacency over the future.
These concerns became obvious during the week as investors sold heavily on the Cairo stock market which continued the downward slide that has been obvious for three months.
However, if domestic investors were disheartened by the lack of stimulation at the Euromoney conference, much was still said that could be of comfort to them.
Several analysts, Egyptian and foreign, said that Egypt's economy was showing signs of recovery, and that, in spite of the market's slump this summer, there was much to be positive about.
Analyst Angus Blair, a long-time watcher of the Egyptian economy, raised a critical issue when he pointed to the lack of investment by Egyptians in their own country.
A hallmark of Egyptian and other closed economies during the 1970s and 1980s was that those with access to money would often squirrel it away abroad, effectively investing it in other countries. This was, at the time, for sensible practical and precautionary reasons: there was little worth buying in Egypt, and little chance of making a worthwhile return on domestic investment.
The economic reforms of the 1990s saw a flood of money return to Egypt, and a good deal of investment from foreigners followed it - the economy boomed.
The danger now is that Egyptians are once again failing to invest in Egypt. High interest rates and a moribund bourse are not encouraging, but long-term investments must be made, at every level of business, if Egypt wants to attract foreign money.
This point was made again and again at the Euromoney conference, this year and last year - how can Egyptians expect to attract foreign money into the country if they themselves demonstrate have no faith in making investments for the future?
This does not apply to business only, but to government too. Red tape strangles small Egyptian businesses. Consequently, the black economy is vast, and is an untapped source of revenue and abilities.
Watchers of the Egyptian market know that most Egyptian companies are undervalued, that is they have plenty of potential hidden within them. Experts say these must be supported and encouraged before the nation's family jewels end up going to the highest bidder. –(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)
