Egyptian Revolution: From Businessman's Perspective

Sherif El Naggar

28/03/2011

The Egyptian Revolution: From a Business Perspective

Before starting my analysis I would like to say that as an Egyptian citizen I am for the revolution and am very happy for what has happened in Egypt. However, thinking for selfish reasons, up until now, I have not benefited from the revolution in any way. So I thought to myself, who are the people who always think about what is best for them and I came up with the answer, Businessmen. Businessmen are always looking for their next paycheck or how they can make an extra dollar no matter who or how many people are affected. Hence the term "Its nothing personal, its just business". So I am writing this paper to discuss how, from a business perspective, the revolution in Egypt was a bad thing for the people and the country.

Firstly I will analyze the current situation of the Egyptian economy and compare it to how it was before the revolution using before and after charts and numbers of the Egyptian economy.

Another important thing to look at are foreign investors, their thoughts on business in Egypt and their willingness to re-invest in Egypt. This is a very important thing because for any countries having foreign investors always helps your economy grow.

Egypt relies heavily on the income they get from tourism; the absence of tourism even for this short period of time will definitely have had a large negative effect on the Egyptian economy. This is another thing to look at carefully.

Since this is not the first revolution in Egypt before and after data of the Egyptian economy after the previous revolution is available to give me an idea of what could happen.

I will use recent news articles, TV programs and official numbers from the Egyptian economy, I will also use historical articles that show the Egyptian economy over the last few years and how it progressed before the revolution.

Also being Egyptian and having family businesses and investments there I can give examples of things that are actually occurring because I cannot always assume that an article is telling the truth.

I will then try to find the possible solutions or future predictions based on what I have read and have seen from my research, and make my conclusion based on these statements.

It all started in the 25th of January, the people were tired of being under the rule of Hosni Mubarak for the past thirty years. Most of the population was and still is living in poverty and grew tired of waiting for something to happen for them and so they decided to take matters into their own hands. It took 15 days of protests and violence but in the end they succeeded, Hosni Mubarak stepped down as president of Egypt. During the revolution I saw on the Al-Arabiya TV channel people who did not care about money or food and water because they were so fed up. However, since the revolution has ended all that people are concentrating on is how they are going to make more money to cover their losses and how they can recover from the damages of the revolution. Unfortunately, from that moment on, economically, this have only gotten worse.

The current economic situation in Egypt has taken a turn for the worse. An article written by Diner Standards shows the negative effects that the revolution has had on the economy. The study Dinar Standards have carried out shows that the Egyptian stock market has one hundred and eighty-nine listed companies; of those one hundred and eighty-nine companies one hundred and eighty-one have declined. "The main Egyptian share market index has dropped more than 21 percent since the start of the year"(Arabian Businesses). Even though Egypt is the only country in Northern Africa and the Middle East to get into the MSCI emerging market index its stock market is still pretty small compared to other developed countries so the decline of 181 companies from 189 is a pretty significant economic blow for Egypt. Also to prevent too much selling of shares and the decline of share prices the stock market officials decided to apply circuit breakers to stop people having access to the stock market, which could exclude them from the MSCI emerging market index and that would be and even bigger blow to the economy "Egypt is the only stock market in the Middle East and North Africa to be included in that index and its removal would likely trigger more selling by foreign investors" (Nikhil Lohade and Tim Falconer). Being removed from that index would make it easier and more likely for foreign investors to withdraw from the country.

During the revolution there has been an estimated loss to the Egyptian economy of about thirty billion USD. "The analysts say that each day of the 18-day uprising cost Egypt's economy $1 billion in capital outflow, as foreign investors took money out. The uprising also affected the country's infrastructures, key institutions, and its tourism industry, which accounts for 11% of GDP and 10% of jobs. Banks estimate the total loss to the Egyptian economy at over $30 billion"(Globes Online). Losing thirty billion USD in the course of 18 days is a lot of money especially for an undeveloped economy such as Egypt; also these are the first post-revolution days the more days go by the more the economy is predicted to suffer.

The Egyptian economy was predicted by foreign analysts to grow by seven percent this year, however, with the economic effect of the revolution this figure has gone down to a predicted three percent or less.

Now more and more people are going on strike and refusing to work until they get a pay raise, this only disturbs the economy even more because during these difficult economic times and uncertainty in what the future holds for Egypt very few people will give pay raises. "Thousands of Egyptian state employees, from ambulance drivers to policemen and transport workers, protested Monday in Cairo to demand better pay and conditions in a wave of labour unrest unleashed by the uprising that ousted President Hosni Mubarak" (The Huffington Post). What I believe will end up happening is these people will either get fired and replaced by people looking for any job they can get or they will go back so that they are able to feed themselves and their families and will have slowed down the economy for no reason.

Egypt has a relatively small economy it has a total output of about 217 billion USD. However, The interesting thing that I found out is that Egypt having problems with its economy and political issues causes many businesses in the world to suffer. "Apart from oil, about 8% of the world's seaborne trade passes through the Suez canal, according to Egyptian government figures...But if the violence in Egypt spreads to its oil-producing