Egypt must tackle cronyism phenomenon at its roots

Egypt must tackle cronyism phenomenon at its roots

Wealth naturally empowers people and, in a nation with many legal loopholes, it also authorizes citizens to live above the law. Egypt is a nation that effectively enables cronies to expand their businesses within a short timeframe, helping to inflate their egos and encouraging them to believe they are considerably more important than the rest of the population. Nevertheless, Egypt’s history demonstrates that cronies’ empires can decline substantially in no time.

Egyptian cronies who move within and around government circles are often citizens of limited education and competence (if they knew any better, they would have pursued a different life path). Nevertheless, their talent lies in their deep understanding of how Egypt is governed, including awareness of economic drawbacks and knowing how to make the most of them. The wealth and influence of individual cronies in society determines the circle they will penetrate and inhabit — whether this is an inner circle or a peripheral one depends on the respective cronies’ usefulness to the state at any given moment.

The Egyptian state enjoys dealing with cronies because they are easily manipulated and their wealth can help them to make significant political and economic moves that ordinary professionals cannot afford — we are a nation where money matters more than knowledge. While cronyism is widespread in Egypt, cronies today have less power than they did in the old days, when they used to publicly vaunt their friendship with senior government officials. Nowadays, they try to sustain their wealth smartly and quietly.
 
In Egypt, industrial or financial rumors have a significant impact on citizens
Mohammed Nosseir
 
Business expansion in Egypt goes through a number of bureaucratic milestones that cronies know how to overcome smoothly and at minimal cost, sometimes more efficiently than the government. They carefully delegate all risky and illegal undertakings to a number of business affiliates, thus protecting themselves against legal liability. Meanwhile, ordinary citizens who try to compete with our cronies become completely lost in costly government bureaucracy and end up being less competitive than the cronies (in terms of real product values). 
 
Egyptian cronies know how to influence decision-makers in various authoritative and legislative circles so they produce laws that explicitly favor them. For example, the Egyptian anti-corruption law punishes government employees who receive bribes, while bribers and their mediators are exempt from all penalties as long as they admit to the crime. In other words, whenever it is needed, cronies can easily and explicitly try to bribe government employees without being legally liable.
 
Cronies’ business dominance gives them an edge that allows them to drive their respective industries in a direction that maximizes their profits. In Egypt, industrial or financial rumors have a significant impact on citizens. We are a society that is driven by gossip, in which cronies know how to create the kind of speculation that best serves their interest. Meanwhile, the Egyptian government believes that real estate growth is an indication of a solid economy; thus it always wants citizens to invest in real estate, despite the fact there are 10 million housing units and apartments closed or unoccupied, according to a government source. 
 
Nowadays, hundreds of thousands of Egyptians are cashing their certificates of deposit along with their high interest; they have the option of either renewing the certificates or using the funds in alternative investments. Correspondingly, real estate tycoons have publicly stated that the value of real estate projects in Egypt is anticipated to increase by 30 percent following the Eid Al-Fitr holidays — a clear attempt to prompt people to switch their savings from certificates of deposit to real estate projects that are rumored to produce higher returns.  
 
Egyptian cronies may constitute a short-term solution that boosts the economy; however, keeping money and power in the hands of a few business people who have the ability to expand significantly leads to more manipulation of industry and to shrinking SME business activities. The equal empowerment of all business people based on the rule of law leads to better economic returns on investment. Our government therefore needs to tackle the cronyism phenomenon at its roots. 
  • Mohammed Nosseir, a liberal politician from Egypt, is a strong advocate of political participation and economic freedom. Twitter: @MohammedNosseir
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