The World Economic Forum (WEF) issued its annual global competitive report, showing that Egypt’s competitive rating slipping 13 places to 107th place.
The Egyptian market, in the view of many economic experts, lacks discipline and transparency. The price of goods and services’ do not represent actual patterns of supply and demand, in addition to other structural problems, stemming from the lack of supervisory or regulatory frameworks with enough capacity to guarantee discipline and transparency, experts say.
“The Egyptian Economy is highly monopolistic in all sectors,” Magdy Toulba, veteran economic and financial expert, commented on the report. Toulba added that Egypt is far behind in developing its legal structure and bolstering its supervisory capacity.
“Transparency and market discipline are dramatically lacking in Egypt,” Toulba said.
The Egyptian Financial Supervisory Authority (EFSA) is reported to have recently completed its restructuring. Ashraf el-Sarqqawy, chairman of the EFSA, extolled the restructuring as a move toward a more robust and efficient supervisory service, according to state-run MENA reported.
In the Egyptian government’s quest to build confidence in the Egyptian economy to attract foreign investments, government officials have vowed, on several occasions, to restore market integrity through countering smuggling of low-quality goods, regularising goods and services prices, and revitalising the taxation authority. However, in the view of many observers, the government has not taken actual steps towards realising these goals.
‘Too little too late,’ Toulba pronounced, arguing that there are not enough regulations in place to thwart monopolistic practices, that supervisory authorities move after the harm is done and that heavy losses are incurred by the market. “It is a serious defect, and the world is right to distrust the Egyptian economy,” Toulba concluded.
“Monopolistic practices are not criminalised in Egypt, according the current competition protection and monopoly prevention act, but rather they are considered as violations and penalised through fines,” Mahmud Askalani, coordinator of Citizens Against Price Rises, stated.
The definition of monopoly as a violation is absolutely ineffective, according to Askalani. Fining monopolists is not an efficient measure to prevent monopoly as the profits a monopolist can achieve surmount any fine the might incur if caught.
“We need to replace the current law, with a more robust one, which stipulates the criminalisation of monopolistic practices, and the confiscation of all profits resulting from such practices,” Askalani said. He added that a new law that guarantees the rights of producers, consumers and traders is desperately needed.