Laissez faire, laissez passer!

 

Laissez faire, laissez passer!

 

By Ahmed Kamel

The classical economic slogan ‘laissez, fair, laissez passer’ simply means ironing out obstacles facing the private sector to increase investment, create jobs and push the national economy ahead. The economic liberalization, transparency and clear-cut legislations are pillars for the private sector to play a strong role in socioeconomic development.

Four years ago, the monetary and fiscal policymakers launched what the International Monetary Fund labeled as “a homegrown, economic reform program”. On November 3, 2016, the Central Bank of Egypt (CBE) free floated the pound, marking a milestone step for true economic reforms based on the creation of a market friendly environment.

The reforms included fiscal measures to rein the state budget deficit, and to close the nation's financing gap.  The macroeconomic objectives were to permanently adjust the fiscal and monetary imbalances through an overall economic program.

The foreign exchange liberalization has opened the door wide for more measures that have curbed inflationary pressures, which emanated from the currency float, and improved the domestic business climate. Over the past four years, the government has enacted clear-cut legislations for investment, repatriation of profits, bankruptcy and dispute settlement.

All of these measures, ultimately, shore up the private sector’s role in socioeconomic development. However, the market needs more steps to strengthen such a role, especially in infrastructure, education and healthcare.

It is imperative to empower the private sector by embracing market-orientated economic policies for all-inclusive growth. To this end, it is a must to revamp the business climate via more and more investment incentives, especially for local investors.

A universal recipe of policies include tax cuts, enhancement of access to finance, anti-dumping preventive measures – seriously required to protect the national industrialization – and an elastic labor market. The private sector needs skillful labor for the blue-collar duties, as well as highly qualified staffers for white-collar positions.

From a macroeconomic perspective, education should serve the long-term development needs. In the 1960s, the public sector was the only driver of economic growth in Egypt during the socialist era under late president Gamal Abdel Nasser. Back then, graduates had no other options but to be hired by state-run entities.

In the 1970s, when late president Anwar el-Sadat adopted an open-door policy, the private sector offered higher wages to lure jobseekers. Sadat’s aim was to create a two-wing economy led by both the public and private sectors. His vision did not work out as planned simply because a dual economy is short-lived without a fair business competition.

The public and private sectors cannot coexist in a county unless rules of the business games are fair for all players. In this regard, France serves as the best example, where the public and private sectors, on equal footing, complement one another.  

For private sector-led growth, there should be a sophisticated strategy for education that ensures adequate employment of production factors nationwide in the long run.

Moreover, there should be a mechanism -- in the short term -- to urgently help graduates of schools, institutes and universities to acquire skills required by the labor market.