On the 9th of October, the Egyptian Center for Economic Studies (ECES) held a seminar on Egypt’s ranking in the World Economic Forum’s Global Competitiveness Report 2019. Key figures were invited to discuss the findings, including Dr. Gehan Saleh, who advises the Egyptian prime minister on economic affairs; Mr. Seif Allah Fahmy, the chairman of the Egyptian National Competitiveness Council (ENCC); Engineer Hany Tawfik, the former president of the Egyptian and Arab Private Equity Association; Dr. Ahmed Fikry Abdel Wahab, general manager and CEO of Egyptian German Automotive (EGA); and Dr Khaled Ismail, the founder and chairman of the angel investment fund, Kiangel.
The seminar was also attended by Engineer Tarek Tawfik, the ECES’s vice chairman, as well as Dr Abla Abdel Latif, the centre’s executive director and director of research.
Being the Egyptian partner of the World Economic Forum, much of the data compiled in the report was gathered by the ECES through questionnaires they sent out to executives of companies in Egypt to fill out. Abdel Latif added that most of the data was also drawn from international indices and statistical data from specialised international bodies and institutions.
All the Egyptian companies were from across the country’s agricultural, industrial, and service sectors. All business sizes were contacted including small, medium-sized, and large corporations. 11 percent of the companies were from the agricultural sector; 33 percent were from the industrial sector; while 56 percent of them were in the service sector.
The four main global competitiveness indicators are 1) Enabling Environment; 2) Human Capital; 3) Markets; and 4) Innovation Environment. Each of these indicators are broken down into several pillars which amount to a total of 12.
- Enabling Environment:
- Pillar 1: Institutions
- Pillar 2: Infrastructure
- Pillar 3: Information & Communications Technology (ICT) adoption
- Pillar 4: Macroeconomic Stability
- Human Capital:
- Education & Skills
- Product Markets
- Labour Market
- Financial System
- Market Size
- Innovation Environment:
- Business Dynamics
- Ability to Innovate
Each of these 12 pillars are then broken down into a total of 103 sub-indicators. A given country’s competitiveness indicator is measured out of a figure of 100, with 0 being the worst score and 100 being the best.
How did Egypt fare?
Egypt’s score for 2019 was 54.5, a 0.9 increase from it’s score of 53.6 in 2018. This score ranks Egypt 94 out of 141 countries surveyed. 15 of the countries are from the Middle East and North Africa (MENA), where Egypt ranks 13th, ahead of Iran and bottom-ranked Yemen.
Out of the 12 pillars, Egypt performed higher than the regional average in Infrastructure and Market Size, scoring 73.1 and 73.6 respectively, while the MENA averages were 70.5 and 69.9 respectively. However, Egypt performed below average on all other pillars, particularly in ICT (40.6), Health (65), Macroeconomic Stability (44.7), and Education & Skills (53.2). Egypt’s lowest score was in the Ability to Innovate pillar at 39.6, against a regional average of 41.3.
Taking global rankings in each pillar into account, Egypt’s highest ranking of 23 came in market size, while it’s lowest ranking was its macroeconomic stability at 135 out of 141.
Egypt’s global rankings in eight of the 12 pillars improved in 2019 from last year, while it remained the same for Macroeconomic Stability and Education & Skills. However, Egypt’s ranking slipped this year in ICT and Health, falling from 100 to 106 in the former, and from 99 to 103 in the latter.
Regarding the sub-indicators (which are each ranked globally) within each of the pillars, here are some details of some of the ones that stood out:
Under the pillar of Institutions, among the sub-indicators Egypt performed well in were the Government’s Response to Change (23), Management of Shareholders’ Equity (28), Property Rights (34), and Renewable Energy Regulation (32). However, Egypt performed very poorly when it came to Quality of Land Management (111), Social Capital (128), Freedom of the Press (132), and Incidence of Terrorism (136).
Under Infrastructure, Egypt ranked in the top 20 of the world with regards to Communications with International Shipping Networks (18). Other well performed areas were Road Infrastructure (28), Efficiency of Seaport (41) and Air Freight (46) services, as well as Quality of Road Networks (48).
Under ICT, Egypt ranked in the bottom 40 in all but one of the sub-indicators, among them the Percentage of the Population That Uses the Internet (98).
Egypt is also in the bottom five globally when it comes to Inflation Rate (136), one of the sub-indicators for Macroeconomic Stability.
In terms of Health, there was only one sub-indicator, that of the life expectancy of individuals in good health in which Egypt ranked 103.
In Education & Skills, Egypt did well in the Digital Skills Among the Active Population (44) sub-indicator, yet ranked below the top 100 with regards to Teaching of Critical Thinking Skills (123), Quality of Vocational Training (129), and Graduate Skills (133).
Out of the 12 sub-indicators under Labour Market, Egypt ranked in the top 50 in four of them, which among them include Flexibility of Determining Wages (14), Cooperation in Employer-Worker Relations (46), and Internal Labour Movement (46). Contrastingly, Egypt ranked poorly in five of them including Worker’s Rights (104), Income Tax Rates (121), and the Gender Pay Gap (131).
Under Financial System, Egypt had a healthy ranking of 41 on the sub-indicator of Financing of Small-to-Medium Sized Enterprises.
In the Business Dynamics sub-indicator of Growth of Innovative Companies, Egypt enjoys a positive ranking of 29 in the world. Yet is within the bottom 30 with regards to Dealing with Entrepreneurial Risks (117) and Cost of Starting a Business as a % of GNP (124).
In the pillar of Ability to Innovate, Egypt ranked quite well in the sub-indicators of Workforce Diversity (12), Excellence of Research Institutions (38), and Scientific Publications (48).
After the report was presented to the participants and attendees, the prime minister’s economic advisor stressed that improving the rankings isn’t and shouldn’t be the ultimate goal. Instead, Saleh emphasised that improving standards of living and overall quality of life across the country is the government’s main economic priority. She explained that there needed to be a focus on training to boost individual workers’ productivity. By upgrading the skills of Egypt’s workforce, wages would increase and living standards would improve as a result.
Since Egypt’s GDP per capita and savings rates are low, this doesn’t make the country attractive to investors, she revealed.
Adding to that, Dr Ahmed Fikry discussed the importance of what he thought were two main aspects of the labour market. One was the quality of vocational and technical education, which he said needs to be improved, pointing out that the stigma around those kinds of education has to be tackled. The second aspect was the workforce falling behind on digital skills, which reflects how the Egyptian economy may be overall falling behind in digitalisation. Fikry also stressed on the importance of readying Egyptian workers for the Fourth Industrial Revolution, a term widely used to describe the current era of sweeping technological change and innovation, which includes artificial intelligence, robotics, and the internet of things (IoT), among others.
Kiangel’s founder and chairman, Dr Khaled Ismail, weighed in with his views on how important the internet and tech sectors are to Egypt’s economy, criticising the report for not showing how much tech start-ups have contributed so far. He shared a conversation he had with Eric Schmidt, the former CEO of Google, years ago at a conference they both attended. Ismail said that Schmidt had told him that there was too much focus on traditional and physical infrastructure such as roads and bridges in Egypt. “Bad internet is a huge obstacle,” he said. What should be prioritised is providing Egyptians with high-speed internet and the education to use it effectively and exploit its full potential. With higher levels of internet access and literacy, Ismail continued, more Egyptians would create business opportunities and new industries that would contribute to the economy in a way which would negate improvements to traditional infrastructure.
Focusing his view on startups, he went on to say that the report’s figures didn’t take into account any of the achievements reached in Egypt’s tech scene. Ismail’s view was that entrepreneurship had significantly developed in Egypt, something that the report didn’t reflect. He explained that by turning things such as recycling into an industry, startups have been able to make many improvements to productivity in areas that the government hasn’t been able to approach for decades. On improving Egypt’s competitiveness, Ismail added that the space for youth and establishing startups needs to be freed up.
Putting a positive spin on where Egypt performed poorly in the report, Abdel Latif said that these weaknesses and issues should be seen as opportunities for investment and areas to be targeted for improvement.