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Jams, red tape and graft obstruct business in Egypt

Jams, red tape and graft obstruct business in Egypt

Slack infrastructure investment leads to gridlock; State education fails to provide the right skills; Bribes necessary for success, say some managers.

January 27, 2011 2:35 by



CRISIS POINT

The reforms also helped Egypt jump 5 places this year in a World Bank table comparing the ease of doing business in different countries (www.doingbusiness.org), placing it 94th out of 183 economies.

But smog-ridden Cairo’s gridlock shows investment in roads, railways and ports is failing to keep pace with economic growth, menacing public health and threatening economic asphyxiation.

Around 12,000 deaths occur every year in Egypt because of road accidents, the highest rate in the world per head of population bar Eritrea and the Cook Islands, according to the World Health Organization’s most recent report in 2009.

The capital’s congested roads come to a standstill daily as infrastructure fails to support population growth of 2 percent a year and as thousands of new cars hit the streets every year.

Poor transport has inflated prices as goods take longer to reach market, making it harder to maintain the low interest rates that have spurred private lending and consumer demand.

“It is becoming a crisis,” said Blair. “If Egypt … had a very efficient mass public transport in place within the major cities and in intra-city movements … you could increase growth by several percentage points per year.”

An even thornier problem lies in Egypt’s state schools, where a lot of teaching is still done by rote and teachers are failing to develop the critical thinking and practical skills demanded by the job market.

Entrepreneurs say Egypt has also failed to reverse a welfare mentality inherited from the socialist era of the 1950s and 1960s, leading to a lax work ethic among much of the population.

“We came from decades … in which the government was responsible for giving you free education, giving you a job. Whether you perform in your job or not, it still (gave) you food,” says Ashraf El Gazayerli, Chairman of the Egyptian Junior Business Association. “We are still in this mindset.”



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