For decades, Upper Egypt has been ignored by Egypt’s development projects. While the ministers have changed over the years, the view towards Upper Egypt remains the same.
Bureaucracy and the lack of services kept investors away from Upper Egypt, which resulted in increasing the unemployment rate. It has become the poorest area in the country and there is no predictable future for the next generations that will face inhumane situations growing up in Upper Egypt.
Despite the dire circumstances, Upper Egypt still has the chance to become developed.
On 29 September, the World Bank announced that it would provide a $500m loan in support of a government programme to create jobs and improve the delivery of services in Upper Egypt.
Experts and investors see that the only way to obtain the most benefit of the loan would happen if the money is spent on improving infrastructure and maintenance of roads to connect the area with more developed cities in Egypt.
Although the government’s programme will have financial support from the World Bank, it is still hard to guarantee the effectiveness of it.
Poor infrastructure means no investors, no jobs, no reforms: experts
The World Bank agreed in September to provide Egypt with $500m, a loan that will be directed towards helping create jobs in Upper Egypt by enhancing the business climate and improving infrastructure and the delivery of services, according to an official press release.
The Upper Egypt Local Development Programme, approved by the World Bank’s board of directors, will focus on two lagging regions, Qena and Sohag, which are among the poorest in the country but have an unrealised potential for growth.
This programme is part of the World Bank’s Country Partnership Framework (CPF) for 2015-2019. The CPF provides total World Bank support of about $8bn during this period for supporting vital sectors of the economy in order to reduce poverty and boost shared prosperity.
The operation, which uses the programme for a results financing instrument to disburse funds directly against benchmarked milestones, will support the government’s lagging regional development programme. The local governments in Qena and Sohag will be empowered to deliver better infrastructure and services for economic development, create jobs, and social wellbeing. Private sector coordination and investment, as well as local governance, will be improved, and a participatory approach that engages citizens at all levels will be followed.
Experts see that the way to achieve all the goals targeted by the World Bank and the government is by reforming the economic situations and improving living conditions in Upper Egypt.
Mohamed Abou Basha, a macroeconomic analyst at EFG Hermes, said that the loan must be used for making effective reforms, such as roads to link Upper Egypt with Cairo by creating more transportation and improving the capacity and the quality of the railways so investors in Upper Egypt have a chance to promote their products in the cities of Lower Egypt.
Abou Basha emphasised that Upper Egypt has been always been a dark spot for creating employment opportunities, with not enough jobs being created to fill the void of unemployment.
The reason investors don’t want to create projects in Upper Egypt is due to the lack of good services, such as water and electricity, and generally speaking there is poor infrastructure, added Abou Basha.
He said that the government has reformed the infrastructure in some areas and cities in Upper Egypt, but more work needs to be done in order to attract investments that would provide jobs and create serious room for development in an area that has been ignored for decades.
From another point of view, professor of economics at Cairo University Reem Abdel Halim said that Assiut and Sohag contain some of the highest rates of poverty in the country, which means that it’s hard to find adequate trained workers or employees in the largest two cities in Upper Egypt.
The government has issues developing Upper Egypt, because of corruption, she noted.
“As long as the government has no sustainable programme to develop Upper Egypt, it will remain the poorest part of the country,” she said, adding that the main problem for the area is that the people don’t have jobs.
The government must notice that its development initiatives and programmes in Upper Egypt are not effective, she said.
In turn, the United Nations must understand that local administrative systems, which too often have cumbersome and complex requirements, hamper the implementation of assistance programmes, she said.
The UN should hold talks with the Egyptian government to find a better way to measure the impact of their programmes, which is the only way to provide more effective programmes, Abdel Halim said.
Upper Egypt not attractive for investment due to bureaucracy, poor infrastructure, lack of incentives: experts
Why is Upper Egypt is not attractive for investments? The answer to that question has been known ever since the government of former prime minister Ahmed Nazif.
The main problem, according to investors and experts, lies in the notion that nothing would urge an investor to leave the industrial cities in Lower Egypt, as his investments then would be placed into the establishment a suitable infrastructure.
Aliaa Mamdouh, former economist at CI Capital Investment Bank, said that the economic climate in Egypt is currently not attractive for investments, adding that the government needs to solve the problems for investors, before seeking separate solutions for each region.
Upper Egypt does not have sufficient infrastructure, Mamdouh said, adding that no investor would think about establishing his own infrastructure due to the high cost of such endeavours. Yet, the government does not encourage investors by cutting taxes or partnering with them, she noted.
She believes that Upper Egypt needs to have a port to help investors in the area export their products, adding that the government must improve the railway structure to reduce the cost of transporting products or raw material between Lower and Upper Egypt.
Mamdouh emphasised the importance of providing fiscal incentives, such as tax holidays, tax reduction or exemption of profits, capital, labour, sales, imports, and exports.
Yet, she believes that these items would not attract investors into going to Upper Egypt.
She added that the government must train workers and employees to reduce the cost of production, which the investor has to pay for. In addition to that, it must provide special bank facilities and ensure the ability of trading in Egypt and other countries, in order to make Upper Egypt attractive.
The government doesn’t have a strategy for investments, Mamdouh noted. It must determine what it wants to produce and where, and the ministers must work on realising this vision—yet it seems to have nothing, she said.
It seems that investors are not interested in Egypt given the current conditions, Mamdouh said.
Regarding the infrastructure, she said that the government must give the private sector the chance to develop subsidised industrial cities in Upper Egypt, and ensure that the price of land plots would not pose an additional obstacle.
Infrastructure and bureaucracy are the two factors that make it difficult for an investor to succeed in Upper Egypt, according to Mohsen El-Gebaly, head of the Beni Suef Investors Association.
He believes that the industrial areas in Upper Egypt are not ready or developed for investors to start working in, adding that even land plots are not easily available.
It takes more than two years for investors to start their own business if they find the land and infrastructure, he noted, adding that bureaucracy kills the spirit to invest in Upper Egypt and maybe the country as a whole.
All industries in Upper Egypt would be great opportunities: investors
Upper Egypt, a relatively ignored area, possesses an abundance of raw materials which could be enough to create entire industrial chains.
Daily News Egypt asked investors in Upper Egypt about the region’s best industries for the private sector to dive in.
Ali Hamza, the head of Assiut Investors Association, said that Upper Egypt is suitable for many industrial and agricultural projects, such as cement, ceramic, iron, coal mining, iron works, heavy industries, manufacturing of train, cars, and trucks.
He added that investors could benefit from the sun’s strong rays in Upper Egypt and create solar energy power plants, and it’s also suitable for real estate projects due to the big population.
He believes that if the government developed the seaport of Safaga to allow import and export activities, it would enhance the industry, especially for small-, micro-, and medium-sized enterprises.
Mahmoud El-Shandawely, president of Sohag Investors Association, said that Upper Egypt is a great place for everything, from growing vegetables and fruits, to textiles and heavy industries.
He said that Upper Egypt is a great place to invest in textiles, especially as Egyptian cotton is known for its high quality.
El-Shandawely said that investors could use the limestone base for manufacturing cement, ceramic, red, or white bricks.
He also noted that Upper Egypt has a lot of gold mines in the Golden Triangle, which could help develop the economic situation of the whole country.
Mohsen El-Gebaly, head of Beni Suef Investors Association, said that Upper Egypt is a great place for agricultural industries, such as canned vegetables and fruits, jams, or any other type of food.
Investors in livestock, aquaculture, and fishery would find a great place in Upper Egypt, he said, adding that it has bodies of water and the ability to produce animal fodder.