As It Shifts, Egypt's Economy Retains Some Oddities

Nearly 30 years in office, Egypt's President Hosni Mubarak has become a strong proponent of a market economy. Only vestiges remain of the state socialism that for decades defined Egypt.

Enterprises like banks that were once state-owned are now firmly in private hands. Foreign investment, construction and tourism are growing and Egypt's stock exchange, said to be the oldest in the Middle East, is thriving.

But Egypt's economy has some unusual elements, at least when looking at them with a Western eye.

 

Consider Egypt's army, which serves as a manufacturer of goods consumed by the Egyptian people. In the Sahara region, for example, the military has a factory that produces what some say is the best-tasting bottled water in Egypt.

Retired Maj. Gen. Mohamed Kadry Said says a lot of what the army manufactures, such as cement, it deems to be strategic.

Said, who is a military adviser to the Al-Ahram Center for Political and Strategic Studies in Cairo, says the army believed the move would prevent foreign companies from controlling cement prices.

Yet the days of the army acting as an economic power in Egypt are drawing to a close, the retired general says. He estimates that at least 85 percent of the economy is now privatized.

"I think it [army manufacturing] is shrinking because this point is now sensitive with investors," he says, adding that investors worry the army or police will put undue pressure of them if they compete.

The booming black market in Egypt is another area of concern, certainly to Egyptian businessmen.

Those include Sammy, who sells clothes from his store near Cairo's Ataba Square. (He would only give his first name.) Sammy  complains that the hundreds of illegal vendors who crowd the sidewalk and street outside his door for up to 18 hours each day have severely cut into his business.

"I pay rent, I pay electricity, I pay sales taxes, OK?" Sammy says. The illegal vendors don't.

"I sell Egyptian clothes; they sell cheaper Chinese ones. So they are destroying the Egyptian economy, the internal economy," Sammy says.

Surprisingly, he doesn't think the answer is the frequent police raids here that chase the vendors away temporarily.

He says it's better to give them a legal place to set up and work, rather than taking away their livelihoods, which he fears will drive up crime.

NPR's Soraya Sarhaddi Nelson is based in Cairo and covers the Arab world from the Middle East to Africa. On Monday's Morning Edition, she reported about the growing number of Egyptians who are tired of Mubarak's iron-fisted rule and hope next Sunday's parliamentary elections will produce some change. We're expecting more reports from her later this week about life and the pace of change in Egypt.