Egypt reopens slowly to revive coronavirus pandemic-hit economy

Egypt shuttered shops and cafes in late March but is slowly reversing some of these measures. (Reuters)
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Updated 06 May 2020

Egypt reopens slowly to revive coronavirus pandemic-hit economy

  • ‘Many other businesses continue to remain open, albeit with reduced staff, and construction is continuing’
  • ‘The state must encourage the private sector on a macroeconomic scale so that it can overcome the crisis’

CAIRO: Egypt’s economy had just started to recover after years of political turmoil and militant attacks when the coronavirus crisis hit, impacting especially its vital tourism sector.
Now President Abdel Fattah El-Sisi’s government has loosened a strict curfew for the Muslim holy month of Ramadan in an effort to kickstart North Africa’s largest economy.
Having shuttered shops and cafes in late March and forced millions of civil servants to stay home, it is slowly reversing some of these measures, bringing back many state workers and extending the trading hours of shops and malls.
The blessing for the emerging economy of more than 100 million people, experts say, is that activity has kept ticking over in agriculture and construction, and especially in the vast informal sector.
“Twenty-five percent of the workforce is in agriculture, which remains unaffected,” said Angus Blair, a business professor at the American University in Cairo.
“Many other businesses continue to remain open, albeit with reduced staff, and construction is continuing.”
Egypt’s main sources of foreign currency have been tourism, remittances sent home from workers abroad, and Suez Canal revenues — which have all dropped sharply during the global lockdown in travel and trade.
But more than half of Egypt’s private sector is made up of the so-called informal economy — ranging from streetside fruit sellers to day laborers on construction sites to one-man auto repair businesses.
Around four million workers make up this shadow economy comprised of low-paid irregular laborers.
“The large informal sector, while finding conditions slower, will continue to function,” predicted Blair.
The challenge is huge for Egypt, where nearly a third of people live below the poverty line, many more face precarious conditions and social order has traditionally been maintained by a strict military apparatus.
Slow growth and fewer jobs may have “a temporary impact on poverty rates in the country,” warned Alia El-Mahdi, former dean of Cairo University’s faculty of economics and political science.
“The state must encourage the private sector on a macroeconomic scale so that it can overcome the crisis.”
The El-Sisi government approved a $6 billion (100 billion Egyptian pounds) aid package to stem the fallout of the coronavirus, which has caused 400 deaths and nearly 7,000 infections according to official data.
This included payments of 500 pounds a month to informal workers who lack any social insurance to fall back on.
Cairo also sought a fresh loan from the International Monetary Fund last month and cut its interest rates in March to encourage lending for individuals and businesses.
The biggest cash-cow, tourism, has however taken a heavy blow as the COVID-19 pandemic shuttered travel worldwide.
It was all the more painful after the country famed for the Pyramids, Nile river cruises and Red Sea resorts had last year booked tourism revenues topping $12.6 billion, the highest in a decade.
Mahmoud Al-Dabaa, a travel agent in the popular seaside resort of Sharm el-Sheikh, said he was shocked at how the once bustling travel destination had turned into a ghost town with deserted beaches.
“It’s the first time I see Sharm completely empty like this,” he said.
Dabaa had expected this season to also be profitable, but a string of canceled bookings signals a bumpy road to recovery.
On Sunday, the government announced that hotels may start operating again for domestic tourists, provided they stick to a limit of 25 percent of capacity until the end of May.
From the start of June, this will rise to 50 percent, reflecting the authorities’ confidence they can keep infections under control while jump-starting the tourism sector.
Egypt hopes to get back to the relatively better times of recent years, which saw annual economic growth rates above five percent.
The government has been implementing financial reforms since 2016 when it secured a $12 billion IMF loan, and investors have flocked back in recent years, driving a booming construction sector.
As recently as January, Egypt was ranked among the top ten countries in Morgan Stanley’s Emerging Markets Index.
Planning Minister Hala El-Saeed has estimated that the economy will slow down to about 4.5 percent growth in the third quarter because of the aftershocks of the virus.
But Blair said he was optimistic of a gradual recovery, judging that, if the constraints loosen further in June, a broader revival of commercial activity could “drive economic growth further late in the third and fourth quarters this year.”


‘Political paralysis’: Lebanese patriarch points at Shiite leaders for cabinet delay

Updated 3 min 19 sec ago

‘Political paralysis’: Lebanese patriarch points at Shiite leaders for cabinet delay

  • PM-designate Mustapha Adib, a Sunni Muslim, wants to appoint specialists and shake up the leadership of ministries
  • Sunday’s sermon adds to tensions in a nation facing its worst crisis since a civil war ended in 1990

BEIRUT: Lebanon’s top Christian cleric took a swipe at leaders of the Shiite Muslim community on Sunday for making demands he said were blocking the formation of a new government and causing political paralysis in a nation in deep crisis.
Patriarch Bechara Boutros Al-Rai, leader of the Maronite church, did not mention Shiites directly but asked how one sect can demand “a certain ministry.” Shiite politicians have said they must name the finance minister.
Sunday’s sermon adds to tensions in a nation facing its worst crisis since a civil war ended in 1990 and where power is traditionally shared out between Muslims and Christians.
France has been pushing Lebanon to form a new cabinet fast. But a deadline of Sept. 15 that politicians told Paris they would meet has been missed amid a row over appointments, notably the finance minister, a post Shiites controlled for years.
Shiite politicians say they must choose some posts because rivals are trying to use “foreign leverage” to push them aside.
“In what capacity does a sect demand a certain ministry as if it is its own, and obstruct the formation of the government, until it achieves its goals, and so causes political paralysis?” the patriarch of Lebanon’s biggest Christian community said.
He said the Taif agreement, a pact that ended the 1975-1990 civil war, did not hand specific ministries to specific sects.
Prime Minister-designate Mustapha Adib, a Sunni Muslim, wants to appoint specialists and shake up the leadership of ministries.
The main Shiite groups — the Amal Movement and the heavily armed, Iranian-backed Hezbollah — want to select the figures to fill several posts, including the finance minister, a vital position as Lebanon navigates through its economic crisis.
A French roadmap for Lebanon includes the swift resumption of talks with the International Monetary Fund, a first step to helping deal with a mountain of debt and fix Lebanon’s broken banking sector. But it first needs a government.