The world before the novel coronavirus (COVID-19) pandemic is one thing, and the world after it is quite another.
The post-COVID-19 economy will aim to attract capital and investment from abroad, through exporting local products or expanding and developing some services such as tourism, and strategic transportation such as the Suez Canal.
So success in a post-COVID-19 economy depends on excellence in productivity, to achieve the highest competitive value among countries. This is the challenge we face now, as the productivity gap remains large between what we import and what we export.
There has indeed been a boom and jump in some commodities, especially agricultural crops and non-oil products, but we need to reconsider the priorities.
Many countries have begun to rearrange their priorities to face the repercussions of the disaster that has been the global health crisis, and which has affected all global economies.
Although Egypt is one of the few countries that succeeded in overcoming the crisis due to its economic reform programme, which it began in 2016, the country has also begun to rearrange its priorities.
To do this, The Sovereign Fund of Egypt (TSFE) has established four sub-funds, one of which specialises in infrastructure investments. The fund has shown keen interest by participating in investments amounting to EGP 30bn for a new strategic plan implemented by the Ministry of Housing, Utilities and Urban Communities.
The plan aims to establish water desalination plants worth EGP 134bn across the country. It also looks to make investments in several other sectors, such as healthcare, the food sector, food security, and logistics.
According to data issued by major financial institutions such as Bloomberg, the growth of Egypt’s non-oil private sector index has also reflected the improvement in the country’s strong business climate, the growth of domestic demand, and the recovery of exports. This gives investors more optimism and confidence in the performance of the Egyptian economy.
Many international reports provide more confidence in the Egyptian business climate, as the domestic economy is recovering following the negative global repercussions of the coronavirus outbreak.
For example, Arab and foreign media published a report issued by the International Monetary Fund (IMF) last week, in which it praised the rapid measures taken by Egypt to confront the health and economic impacts of the pandemic.
The report pointed out that Egypt has allocated a total of $6.13bn until last June, as part of a set of rapid measures taken by the countries of the Middle East and Central Asia to respond to the repercussions of the pandemic.
The report also pointed to the provision of monthly grants for three months at EGP 500 per month for daily and irregular workers. This was in addition to increasing pensions by 14%, and allocating additional resources to increase cash grants to the neediest families.
There is no doubt that the Egyptian business climate has witnessed a remarkable improvement during the recent period, despite the continuing economic challenges resulting from the coronavirus pandemic.
This has come through the government’s efforts to support companies and reduce the burden of measures to combat the spread of the virus infection. It is also worth noting that, while Egypt is witnessing an improvement in its business climate, other economies in the Middle East are facing a fragile recovery, along with more challenges resulting from the jump in the numbers of new coronavirus infections.
Some sectors will benefit and will not be affected by the coronavirus crisis, the most important of which is digital marketing and digital trade. Even distance education will become one of the sources of investment attraction.
Pharmaceutical companies, especially those manufacturing “useful” drugs, will also benefit from the crisis. The information technology sectors that are still used daily in homes will benefit the most, along with mobile phone companies, telecommunications, and video intelligence that is used for virtual meetings.
These are all areas that may become the most preferred for any investor seeking more gains. I believe that Egypt is well aware of the importance of these sectors in the post-COVID-19 economy.
By Dr Hatem Sadiq, Professor at Helwan University