PGI Insight - Egypt: Stellar economic headlines mask enduring risks


06 Sep 2019

PGI Insight - Egypt: Stellar economic headlines ma...

 

  • Recent headlines painting Egypt as an economic success story fail to take account of the enduring structural flaws fuelling discontent in the country.
  • President Sisi’s austerity programme has inflicted real hardship on much of the population and many of the key concerns that animated the 2011 revolution remain unresolved.
  • Although mass unrest is unlikely in the short term, the country will remain unstable and could be subject to sporadic episodes of unrest and violence. 

Background

On 6 August, the IMF released the last tranche of a USD 12 bn loan to Egypt amid positive reviews of President Abdel Fatah el-Sisi’s handling of the economy. The loan was agreed in 2016 as part of an IMF-led reform programme designed to turn around an economy battered by five years of political turmoil and instability. Based on some key metrics, the government has succeeded: the country’s finances have stabilised with a reduction in public debt and the budget moving into surplus; inflation is beginning to trend down and employment is trending up; and the economy is growing at more than five percent a year. The investment bank JP Morgan recently stated that Egypt is “the best reform story in the Middle East [and] perhaps any emerging market.”

Getting the country’s finances in order, however, has come at a cost. The tools long used to create a safety net for the population are gradually being dismantled. Public sector job cuts and subsidy reductions may be essential for long term growth, but the government has done little to implement necessary alternatives to mitigate the effects of austerity. The savings from the su bsidy reduction programme have been spent on questionable prestige projects, such as the USD 8 bn Suez Canal expansion and the USD 45 bn new capital, rather than social spending, which has fallen as a percentage of GDP since 2016.

This all means that the ‘inclusive growth’ promised by the IMF has yet to materialise and some of the fundamental flaws that have constrained Egypt for decades persist. The poverty level in the country has risen since 2015, with the World Bank estimating 60 percent of the population is either poor or vulnerable. Inequality is also on the rise and the middle class has been squeezed. Wealth remains concentrated among a small politically connected elite and the military, which controls anywhere from five percent to more than half of the Egyptian economy.

Worrying Parallels

Egypt has faced similar conditions in the recent past. In the first decade of the new millennium, President Hosni Mubarak was praised by international investors for his economic liberalisation programme. Yet despite positive economic reports, one of the most popular chants during the Egyptian revolution of 2011 was “bread, freedom and dignity.”

Mubarak-era reforms failed to address the real economic hardships facing many Egyptians. Between 1998 and 2012, the public sector, a key provider of jobs, shrunk by 16 percent, but the formal private sector only took in 4 percent of these laid-off workers. At the time of the revolution, the country’s poverty rate was estimated at 40 percent, and a substantial proportion of the population was dependent on subsidies.

Many of these indicators remain troubling or have even got worse. Since 2010, poverty has increased, perception of corruption has grown, and youth unemployment has risen from 24.4 percent in 2010 to 32.6 percent in 2018. The informal sector, where three quarters of workers earn less than the minimum wage, is still a primary means of employment and accounts for more than half of economic activity in the c ountry. Given that the working age population will grow by 20 percent by 2028, inadequate job creation is a key security issue and risk factor.

Potential Risks and Outlook

President Sisi has repeatedly urged Egyptians to embrace austerity for the good of the country, but there is compelling evidence that the measures are causing discontent. Most Egyptians have never supported Sisi’s reform programme, with a 2012 poll showing that more than three quarters of Egyptians wanted state control of the economy to protect jobs and subsidies during a difficult political transition.

More recently, other polls have shown that Egyptians are much more concerned about feeding themselves and their families than ideas of rebu ilding the country. The president is much less popular among Egyptians under 30, who make up more than 60 percent of the population and who were a key constituency in the revolution, than among the older generation.

These sentiments are unlikely to lead to widespread unrest in the short term. Sisi’s government has been even more repressive than Mubarak’s, embarking on a massive crackdown on dissent including targeting labour activism to an unprecedented level. This attack on speech and assembly, combined with the fresh memory of the real turmoil and violence experienced by the population in the immediate aftermath of the revolution, has led to a degree of political apathy.

Dissent continues

However, despite the overwhelming use of state violence and repression, signs of dissent persist. A Cairo train crash in February in which 25 people died was instructive in this regard. Following the detention of a protestor who was holding a placard reading “Step down, Sisi” in Tahrir square in response to the crash, a social media campaign using the hashtag “Be assured, you’re not alone” to orchestrate minor acts of civil disobedience went viral, reaching an audience of more than 410 mn.

Small-scale demonstrations have also followed other major events, such as former president Mohammed Morsi’s death in June, the passage of constitutional amendments in April and the Egyptian handover of Red Sea islands to Saudi Arabia in June 2017.

While there is the potential for some improvement in con ditions for ordinary Egyptians if inflation continues to trend downwards and a recent interest rate cut stimulates private sector investment and job growth, discontent is likely to continue. The scars of the post-revolution period, and Sisi’s crackdown on dissent, make widespread unrest unlikely in the short term, but entrenched economic problems and structural challenges mean that Egypt will remain inherently unstable and may be subject to sporadic unrest.

PGI’s Intelligence specialists provide business intelligence and geopolitical risk analysis to multinational corporations and governments worldwide. For more information on how they can assist your organisation, please contact us: riskanalysis@pgitl.com

Share this article

RISK PORTAL

Your free global geopolitical
risk dashboard

PGI’s Risk Portal tool provides daily intelligence feeds, country threat assessments and analytical insights, enabling clients to track, understand and navigate geopolitical threats.

The Risk Portal gives users up-to-date information and analysis on global affairs.

The Risk Portal allows users to visualise information in a unique and instantly understandable way. Mapping filters enable the visualisation of incidents by threat category, time period, perpetrator and target type.

Risk Portal users can upgrade their accounts to include the Report Builder and Country Profile Generator features. The Report Builder allows users to select information, data and images from the Risk Portal and create bespoke reports and emails.

Subscribers to PGI’s Bespoke services receive tailored analysis on specific sectors and geographies of interest, delivered at a frequency they determine.

Visit the Risk Portal

GDPR Services

Making ongoing compliance easier for you and your business

GDPR is now in force. Make sure your business meets the necessary requirements, providing assurance for all of your customers and employees.

PGI GDPR Services

A full audit of your business to assess the level of your compliance against GDPR requirements.

Become GDPR compliant with minimal work. We will conduct an analysis, review, report and implement any necessary changes to your business.

We will conduct simple security assessments to help you understand and mitigate the potential risks to your business.

Find out more on GDPR

Compliance Services

Get your business ready to face the cyber challenge.

We provide a full range of accredited, certified and bespoke services that assess the resilience of your cyber security posture.

PGI GDPR Services

PGI’s Qualified Security Assessors (QSA) will help you meet Payment Card Industry Data Security Standards (PCI DSS).

Find out more on PCI DSS

Demonstrate your commitment to cyber security by achieving and maintaining accreditation for the globally-recognised information security standard.

Find out more on ISO 27001

Expert assistance on the implementation and maintenance of governance requirements for personal data.

Find out more on GDPR

Find out more on Compliance

Vulnerability Testing

Understand the threats of phishing and malware to avoid being targeted.

Undertake our phishing vulnerability assessment to reduce your organisation’s risk of attack, by measuring the cyber awareness of your workforce.

Malware & Phishing Services

PGI will conduct a tailored phishing campaign, using multiple methods, to identify realism and train employees where necessary to mitigate future attacks.

PGI monitor multiple metrics to identify the types of phishing, generate in-depth analytical reports and provide an informed decision to help improve your organisation’s level of security and awareness.

Find out more on Vulnerability Testing

Cyber Security

Prevent attacks, respond to breaches and protect your business.

Our bespoke range of cyber security services not only protect your critical assets but provide the education you need to keep your operations and data safe.

Cyber Security Services

Implement this cost-effective cyber security measure launched by the government to prevent cyber-attacks, demonstrate information security commitment to your clients, and attract new business by being recognised as a secure organisation.

Find out more on Cyber Essentials Accreditation

The most effective way to identify how attackers target your organisation’s weaknesses is by evaluating your system, your network security, and reporting on any vulnerabilities that could have an impact on your business.

Find out more on Penetration Testing

If your business has experienced breaches, network compromises or operational disruption, our team of cyber security specialists can deploy quickly, and will begin the process of detecting and eliminating the threat efficiently.

Find out more on Data Breach Response & Recovery

In the event of a computer security investigation, a vital part of the response process is making a copy of your data for safe forensic analysis. We will work with you to preserve and use this evidence to discover the extent of an intrusion.

Find out more on Digital Forensics

Browse our Cyber Security services

Data Breach Response & Recovery

We prevent attacks, respond to security breaches, and protect your business

Our team of specialists can deploy quickly and efficiently to begin the process of detecting, eliminating and preventing future threats of a breach.

Malware & Phishing Services

A vital part of the response process is making a copy of your data for safe forensic analysis. We will work with you to preserve and use this evidence to discover the extent of an intrusion.

Find out more on Digital Forensics

We will identify and minimise the risks, as well as the possibility of future risks to your business.

Consistent interaction with your management team and recommendations on how to approach all outcomes that need attention.

Find out more on Data Breaches

Subscribe to our Cyber Bytes Newsletter

Keep yourself in the loop with PGI by signing up to our Monthly Cyber Bytes email. You will receive updates, tips and narrative around what has been happening in the world of information security.

Get in touch today

For more information on how we can help you or your business, please contact us via:

Related News

International Womens Day - Pioneering Women in Tec...

08 Mar 2017

Pioneering Women in Technology – Katherine JohnsonThe Oscar season has been and gone. The...

Read news article

Law Firms and why they need cyber security

07 Sep 2018

Why Law Firms need Cyber Security. Suffering a data breach can be devastating! From the experts at P...

Read news article

Content from the expert - GDPR and Cyber Governanc...

12 Jul 2017

Will there be a knock on effect regarding the General Data Protection Regulation (GDPR) after the UK...

Read news article
Back to the News Hub

+44 (0)207 887 2699
©2019 PGI - Protection Group International Ltd. All rights reserved.
PGI - Protection Group International Ltd is registered in England & Wales, reg. no. 07967865
Address: Unit 13/14, Swallow Court, Sampford Peverell, Tiverton, England, EX16 7EJ