Egypt rises once again to stake its claim as the top Arab state

The streets of Cairo are bustling, the bazaars are crowded, and tourists are thronging the Pyramids of Giza.

It looks as if Egypt is witnessing a resurgence, and the growth rate shows it, after dipping from 7.4% of GDP to 4% during the global recession, it is now expected to rise to 6% in the current fiscal ending June 2011.

But all is not yet well in the country that was once the leader of the Arab world. Inflation is high at 10% with food inflation at around 17% and there are pockets of poverty. It was in this backdrop that the last round of parliamentary elections was held at the end of November 2010 while the run-offs took place on December 4.

The end result was as expected with the monolithic National Democratic Party emerging with an overwhelming majority in Egypt’s parliament. Predictably, there were protests from opposition parties, citing rigging and irregularities, but these have been taken lightly by the government headed by 82-year-old president, Hosni Mubarak, who may yet to go in for another term when presidential elections are due this year.

According to Dr Gamal Soltan of the Al Ahram Centre for Political and Strategic Studies, the media buzz over irregularities in the elections is intriguing as there have been similar issues in previous rounds of parliamentary elections. The fact is that the elections decimated the opposition parties, including the Muslim Brotherhood, which had captured 20% of seats in the last round of elections in 2005. The entire process saw little enthusiasm from the general public, though Cairo streets witnessed jubilant scenes of festivity by successful candidates at the end. 

But high food prices are more of a concern for the general public. Inflation at around 9% to 10%, much like in India, is a worry. The recent spurt in meat prices, a basic consumption item, can be compared to the latest phenomenon of high onion prices in this country. To offset such high prices, bread is being supplied at subsidised rates for the general public.

Despite inflation, however, experts now expect Egypt to come out of the recession by the middle of this year, though the official projections of a growth rate at 7% of GDP are rated as somewhat optimistic. Even so, it is clear that one of Egypt’s biggest industries — tourism — is rebounding. Officials say that over 12 million tourists visited the country during 2010 (the final figure is still to come out), as against only 10 million during the recessionary slump last year. Hordes of visitors from all countries are visible, not just at Giza, but also at Luxor and Aswan, the Valley of Kings, and Abu Simbel. Incidentally, Egypt has been rated as the world’s top tourist destination, notwithstanding terror threats and attacks.

No wonder then that it has a sophisticated tourist guide system, a profession that has attracted many from lesser-paying government jobs, and giving tourists viewing 3000-year-old monuments a highly rewarding experience. The flight of talent to tourism may not cheer Egypt’s Supreme Council of Antiquities, but it certainly helps in educating the ordinary tourist.

Even more cheering is a recent poll by 12 economists that predicted steady growth due to higher private investment over the next two years. Though it does not expect economic growth to reach the officially projected figure of 7%, Egypt is expected to grow faster than all the other Arab states barring Qatar. This is largely due to additional private investment, recovery of revenues from the Suez Canal, and burgeoning tourism. The expected growth in 2010 was 5.5%, according to a private survey, rising to 6% in 2011, a little lower than the Egyptian finance ministry’s projection of 6% in 2010 and 7% this year.

As for ties with India, they may not be at the highs of the Nasser-Nehru friendship era, but retain a traditional warmth and closeness, bolstered by a growing economic relationship. Egypt is fast becoming a business process outsourcing centre for Africa and Indian firms are helping create jobs in this sector.

Senior officials at the foreign ministry say there was initial hesitation at the entry of Indian information technology (IT) firms but the reserve vanished when it was found that they were creating business process outsourcing (BPO) jobs rather than taking them away. The Oil and Natural Gas Corporation (ONGC) Ltd and Gail, both Indian government-owned gas companies, have also found their way into Egypt and are taking part in the growing oil and petrochemical business.

For the average Indian, however, visiting Egypt is like coming home. Cairo, with its din and desert dust, is much like present day New Delhi. And Bollywood, along with Amitabh Bachchan and Kareena Kapoor, reigns supreme among the young and old alike. Indians are thus welcome, but beware — once you have drunk the waters of the Nile, you may end up going there over and over again.