Egypt's economy soars; so does misery

With a fast-growing population, Egypt must produce more than 600,000 new jobs each year just to keep pace with new entrants into the labor force. "That is a challenge," acknowledges Neveen El Shafei, vice chairman of the General Authority for Investment and Free Zones.

World-class traffic jams

One major Egyptian success grew out of a provision in U.S. trade law designed to promote Arab-Israeli reconciliation. In 2004, the U.S. approved plans for Egypt to export to the USA products made in special export zones. So long as the goods derived at least 11.7% of their value from Israeli inputs, they could enter the USA duty-free.

That's been a boon for companies such as Cairo Cotton Center, which makes shirts, sweatshirts and trousers for U.S. retailers such as Macy's and The Gap. From annual sales of $14.7 million in 2005, the company has grown steadily and expects this year to hit $32 million. That's expanded the workforce to about 3,000 from 1,700 four years ago and brought owner Magdy Tolba a life most Egyptians can barely imagine. One of the city's most prominent businessmen, Tolba is chauffeured through Cairo's horrific traffic in a gleaming Mercedes sedan. His son is an accomplished equestrian. His daughter enjoys a college education abroad.

Still, Tolba says Egypt hasn't fully capitalized on its opportunities. Cairo's inadequate infrastructure, which gives rise to chronic, world-class traffic jams, poses a particular hurdle in an era of just-in-time delivery. Tolba lost his entire profit on a recent order for The Gap because four of his trucks were stuck in traffic. When they were late for a rendezvous at the port, Tolba was forced to absorb the cost of shipping them via air.

The successful entrepreneur also bemoans a feeble educational system that has left the workforce desperately short of needed skills. Young Egyptians, Tolba says, want to work in a government office where little is demanded of them. That's limited the garment industry's ability to expand. "Our American buyers need capacity out of Egypt, and they don't find it. … Egypt has potential, but I am sorry to say we are not using this potential," he says.

The absence of hope

Today's popular frustrations over flat-lining living standards have been building for years. The recent boom, felt only by the already well-off, has done little to change that discontent.

In 1970, the monthly starting government salary for entry-level college graduates was enough to buy about 750 pounds of rice, according to economist Ahmed El-Naggar of Al-Ahram Center for Political and Strategic Studies. Almost four decades later, reflecting soaring food prices and wages that have barely advanced, an entry-level government clerk's pay buys little more than 100 pounds of rice.

Labor unrest has been growing for months; violent protests erupted in early April in the textile capital of Mahalla, north of Cairo. At the end of the month, President Hosni Mubarak ordered a 30% salary increase for public-sector workers. Corporate taxes will be raised and gasoline subsidies cut to pay the rising wage bill. The move was designed to take the steam out of boiling anti-government sentiment. And it may succeed; Egyptians have a reputation for bearing their burdens.

Reform backers say it may take a few more years before the benefits of the country's economic growth are felt at street level. Few here seem to anticipate any tangible improvement in their own circumstances any time soon.

On a clear, hot day last month, two brothers, Abdel Bari Hadila, 40, and Ibrahim Hadila, 32, stood in a field in the rich farmland of the Nile Delta. They spoke of the difficulty of scratching a living from the soil — at a time when the cost of fertilizer and everything else is steadily ticking upward — and their hopes to one day afford a simple brick home.

Reminded that Egypt's economy has been expanding for several years, the elder brother erupted. "This is what the government says. But we're not feeling what the government says. The likes of us who are have-nots can work for 60 years and still end up as have-nots," grumbled Abdel Bari. "People are having to resort to any means to earn a living, whether legitimate or illegitimate. Times are very difficult."

  • 1
  • |
  • 2
  • |
  • 3
Join the Discussion
blog comments powered by Disqus
You Might Also Like...