Covering Egypt’s Conference of the Business Climate Development Strategy

In a new strategy adopted by the Organisation for Economic Co-operation and Development (OECD), European governments appear more willing to play an expanded role in the MENA region. This is evident in the in-depth analysis of Egypt’s economy presented at the OECD’s introductory conference, titled Business Climate Development Strategy of Egypt, which serves as a prelude to broader regional involvement.

Hosted by the Ministry of Investment, the Egyptian Minister, Dr. Mahmoud Mohieldin, inaugurated the conference, which aims to promote Egypt’s economy while highlighting urgent areas for development.

The event gathered over 270 directors of Egyptian and foreign companies, official representatives from 15 countries cooperating with the MENA-OECD Investment Programme, ambassadors from OECD member countries, and representatives of international and regional development organisations operating in the region.

The strategy seeks to support business climate development in targeted countries—starting with Egypt and Morocco—to enhance competitiveness and growth rates by assessing and advising on government reform policies aimed at improving the business environment.

In his speech, Mohieldin affirmed Egypt’s commitment to reform policies despite the global economic crisis, stressing the government’s focus on decisions that foster a more favourable investment environment and create job opportunities.

Infrastructure remained a key priority, with Mohieldin noting that directing investments into this sector would help establish a climate conducive to attracting further investments. He also highlighted initiatives to improve the quality of education and training through collaboration with EU countries, including sending students to European universities and providing vocational training in various production fields.

Accelerating reform processes, he said, is the primary objective of the business climate strategy, with the aim of boosting development rates, employment, and competitiveness. The strategy will unfold in three stages: first, evaluating the strengths and weaknesses of the current business environment; second, identifying priority sectors for support; and finally, providing the technical assistance needed to design and implement reforms. These efforts are to be coordinated with the relevant ministries, aid agencies, international organisations, chambers of commerce, business communities, and investors’ associations.

During his address, Mohieldin also highlighted Egypt’s economic achievements, including how the government managed the economic crisis while maintaining growth. He pointed out that Egypt achieved a 4.7% growth rate during the crisis and retained its position among the world’s top ten reforming countries for the fourth consecutive year.

The European Union had strong representation at the conference, with its Ambassador, Mr. Marc Franco, emphasising that cooperation between Egypt and the EU should extend beyond trade to include laws and regulations that facilitate Egypt’s access to European markets. Franco also stressed the importance of private sector involvement in shaping these regulations.

Mr. David Craig, recently appointed as the World Bank’s country director for Egypt, Yemen, and Djibouti, outlined the bank’s intention to establish a long-term partnership with Egypt to support its reform trajectory. He particularly highlighted Egypt’s ambitions to increase investment, growth, job creation, and poverty eradication, while enhancing the role of the private sector and refining the government’s function as a market regulator.

Meanwhile, Mr. Anthony O’Sullivan, Head of the Private Sector Development Division at the OECD, explained that the business climate development strategy focuses on identifying challenges and crafting reform plans. He noted that the findings presented at the conference have factored in the role of Egypt’s private sector.

Business Operational Environment

O’Sullivan transitioned from the opening speeches to the conference’s first and second panels, which focused on various aspects and assessments of Egypt’s business operational environment.

Investment policy and promotion were the initial topics introduced by O’Sullivan. He noted that in 2007, Egypt became the first country in the MENA region to adopt OECD international regulations. ‘In doing so, Egypt had to undergo challenging procedures to achieve this,’ he remarked.

According to O’Sullivan, Egypt subsequently established a national communication point to maintain relations with the OECD, facilitate investments, and act as a mediator in cases of conflict. ‘For the OECD, Egypt is compared to other emerging markets like Russia and India,’ he added.

Privatisation policy and the Public-Private Partnership (PPP) approach implemented by the Egyptian government were presented by Mr. Alexander Bohmer, Head of the MENA-OECD Investment Programme. ‘Privatisation is a highly political and national issue, which is why countries adopt different approaches to it,’ Bohmer stated.

Since 1999, Egypt’s privatisation of the public sector—which once provided over 40% of employment—has undergone multiple phases, initially proceeding successfully. By 2002, privatisation extended to the sale of shares in public commercial companies, and significant progress was made between 2005 and 2007. However, Bohmer offered some criticism, noting, ‘There is a lack of transparency and detail in the privatisation process.’

Regarding PPP initiatives, Bohmer highlighted Egypt’s progress in sectors such as services, transportation, and communication. He pointed to projects like the construction of airports and roads as examples. ‘In 2005, the government established two units for PPP investments: one within the Ministry of Finance and the other in the Ministry of Investment,’ he added.

Rule of Law

Mrs. Nicola Ehlermann-Cache, Senior Anti-Corruption Expert at the OECD, opened the third panel, which addressed the rule of law in Egypt’s business environment. The discussion began with the sensitive topic of corruption. Ehlermann remarked, ‘In the anti-corruption area, the world began to change around 10 to 15 years ago due to shifts in the business environment, as many businesses became embroiled in corruption scandals.’

Ehlermann commended Egypt for participating in several international initiatives and anti-corruption networks. However, she noted that Egypt is still at an early stage, requiring stronger actions and better communication to enhance anti-corruption efforts, particularly as new legislation is introduced.

The subject of business law and commercial conflict resolution was introduced by Alexander Bohmer, who highlighted the link between corporate governance, anti-corruption, and the broader business sector, including the potential conflicts that may arise.

Bohmer pointed out that business law cannot be isolated from social laws, particularly in relation to labour issues. ‘There has been some legal recognition of labour issues, but enforcement remains a challenge, especially in small and medium-sized enterprises. The Egyptian judicial system is advanced in terms of criminal law, but commercial law prosecutors require further training,’ he stated.

Before transitioning to the next panel, Anthony O’Sullivan praised Egypt’s recent programme to review all commercial legislation as a positive step toward a more developed business environment. The initiative aims to reduce the existing 25,000 pieces of legislation by half, streamlining the legal framework.

Factor Markets

As the conference began running short on time, O’Sullivan had to quickly conclude with the final panel, which addressed factor markets in Egypt. He began by highlighting infrastructure policy, particularly the telecommunications sector, with a focus on mobile companies. ‘Egypt has good quality services and competitive national rates,’ O’Sullivan remarked. However, he criticised both the mobile and fixed-line sectors for their excessively high rates for international calls, averaging €0.5 per minute, which he described as a burden on foreign investors.

On the subject of human capital, where Egypt’s young population represents more than 50% of the total, O’Sullivan recommended providing opportunities for overseas training. He noted that Egypt allocates a significant budget to education compared to other OECD members, yet the outcomes fall short. ‘It’s not a question of spending more on education; it’s about breaking that down and understanding why we’re not seeing the desired return on this investment,’ he advised.

O’Sullivan also reviewed the progression of financial services since 2004 under the Financial Services Reform Programme. However, he criticised the concentration of 50% of the financial sector within just three banks, describing this level as disproportionately high. He concluded by emphasising the importance of small and medium-sized enterprises (SMEs), which featured prominently in all discussions. Providing access to finance for SMEs, he argued, remains a fundamental issue. ‘Centralising financial services for SMEs under one ministry, rather than five, could enable a more coordinated approach,’ he suggested.

In his closing remarks, O’Sullivan quoted Minister Mohieldin, referring to the conference as ‘phase one.’ He explained that this initial phase involved assessment, while the next step would focus on defining and implementing specific projects. This promise positions the OECD differently with respect to Egypt’s economy and the MENA region as a whole. According to O’Sullivan, the organisation’s upcoming assessment report, set to be released in mid-November, will determine how far it can go in shaping future developments, as he assured the audience in his concluding remarks.

Another version of this article is published by the German Arab Trade magazine.