World View: Focus on Egypt
By Jean Abinader, Senior Associate, Global Dynamics Inc.
Egypt’s future at the center of regional Arab and European business activity based on its large domestic market and critical geographic position is in transition. Although the Muslim Brotherhood-led government is bullish on business, there is a vocal minority distrustful of Western companies with previous regime connections.
U.S. and EU companies literally are holding their collective breath as the political players, including key business personalities, rotate in and out of favor, while disagreements over constitutional reforms continue to roil advocates on all sides, who loudly proclaim their positions, sometimes through militant actions. The recent return of leading Egyptian business leaders who have negotiated settlements with the government may be a sign of better times ahead.
How does this instability affect companies that want to do “business as usual”? There are many caveats when pursuing opportunities and challenges, and there is no more contentious area than the workforce. Useful Websites include U.S.-Egypt Business Council (http://www.usegyptcouncil.org) and the U.S. Embassy Website (http://egypt.usembassy.gov/business.html) in Cairo. And there is no better source of information than the individual members of the American Chamber of Commerce in Egypt (http://www.amcham.org.eg/education_training). Their general impressions fall into four areas of concern:
- Rural Egyptians, neglected by companies and state industries, are agitating for more decentralized economic development, which then requires training at an elementary level with factory or value-added agricultural skills that match jobs. The government is determined to improve job prospects but has taken a sharp hit in revenues that could be directed toward supporting private-sector job creation incentives.
- Labor unions are in flux and spend as much time on politics as economics; at this point in time, they are part of the same issues. New unions have emerged since the Arab uprising, and they are progressive, entrepreneurial organizations earning high marks for efforts to close the gap between education and employment, which is a huge burden for the workforce.
- The industrial base is stagnant or shrinking due to supply issues, uncertainty due to the lack of clear government regulations, fewer customers from the EU, and increased competition in the region. Attracting foreign direct investment (FDI) is problematic in the uncertain environment, despite claims by Egypt’s supporters. The Gulf countries, particularly Saudi Arabia, are investing in Egypt and note a high degree of trust in the country’s leaders, an impression that is more ambivalent with others.
- Companies are aware that the primary labor incentives are related to wages, retention, and training. If companies can develop with their workforces both short- and long-term solutions, they will be able to the dampen voices of those who want to disrupt operations, which will encourage companies to take more risks.
Western companies in Egypt must take the long view through a collaborative business model that strongly embeds training at all levels. There is a great demand for vocational and technical training that responds to market demands. Egyptians already have demonstrated strong IT and manufacturing skills that can be leveraged. While there is an uncertain political climate, the economic need to satisfy 85 million Egyptians and millions more in the region cannot be overlooked. Training can be the value-added competitive edge when tied to investments and job opportunities.
Jean Abinader is a senior associate at Global Dynamics Inc., a training and development firm specializing in globalization, cultural intelligence, effective virtual workplaces, and diversity and inclusion. For more information, visit http://www.global-dynamics.com.