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BUILDING POLITICAL CAPITAL
Sound government polices get a positive response.
That’s why economic reforms are starting to show some return,
especially fiscal policy adjustments. This year, individual tax
filing doubled and returns look like they’re up 40 percent.
The flat tax seems to be working and the next indication will come
when corporate taxes are filed this month. Promising results are
expected. But this is just a beginning, a sign that policies targeting
people’s needs will win their approval, and consequently bolster
support for the government that formulates and enforces them.
Economic reform takes time to devise and to work. The trickle-down
effect, whereby reform impacts every average citizen’s life,
is yet to come. The point is not to wait for this to happen, but
to formulate more policies that provide for people’s direct
needs. As I’ve written in the past, people need something they
can feel, that confirms the government’s intentions. What’s
more, they need to participate in reform to have a stake in its
success.
Participation is crucial because Egypt is in the midst of a far-reaching
political transition. When it’s time to vote, people will decide
whether or not economic policies have proved advantageous and are
worth safeguarding by supporting the party that instituted them.
We’re advocating a party system, and parties need programs
that people can identify with, and that serve their interests. No
party can deepen its agenda without public support.
I’ve long argued for giving people title to their homes, as
a means of offering security for themselves and their families.
Give people an asset they can pass on to their children. Give them
a cheap and easy means of registering their ownership. Then give
them a banking system that allows them to mortgage their titles
for loans to start businesses, and encourage them to take an active
role in Egypt’s economic revival. The trickle-down effect is
one thing, but there’s no substitute for enabling people to
act as the agents of their own economic well-being and providing
the framework that allows them to lead productive lives. As the
saying goes, “Don’t give people fish, give them fishing
rods.”
I am optimistic that Egypt’s current annual growth rate of
6.1 percent could be increased by at least a percentage point by
this action alone, giving people title and the possibility to act
on their own initiatives. Right now, the informal sector (over 8
million) is larger than the private one (approximately 6 million).
The informal sector is a marginalized economic segment, people acting
outside the system. It comprises a large portion of the voters who
did not go to the polls, and therefore a big percentage of the silent
political majority. To bring them in, they need an economic stake
in their country they will protect with their vote. If people have
nothing to lose, they will make the wrong decisions or no decisions
at all.
When the idea of offering substantial tax reductions came up, some
thought it was too drastic, but it is working because it filled
specific needs. We need more bold actions such as this. A large
part of Egypt’s population lives in houses they cannot register,
much of it unlicensed building on agricultural land. This unplanned
growth must stop, the line must be drawn, but the reality of what
is already there must also be dealt with. Government has already
recognized this by starting to supply these areas with water and
electricity. Titling should be next. This does not mean sanctioning
building on precious agricultural land, but preventing the loss
of more arable land to uncontrolled growth.
The time is long overdue to reorganize our land registration system,
alongside titles and urban planning, so that people can be told
where and what they can and cannot build. We not only need laws
to regulate building but enforcement of these laws. Let’s provide
affordable housing alternatives and facilitate building and registering
with user-friendly bureaucracy. People only act illegally when legal
means have been denied or are too expensive and cumbersome. Providing
the legal means for people to own their homes means offering security
and hope. This is how you win the silent majority, and create political
capital.
As we have learned, economic reform is not easy. It requires courage
and commitment, and we have a long way to go. Political reform is
still more demanding, as it will shape the fabric of society and
embody our values and hopes for the future. As Egypt pursues economic
reform and lays the groundwork for political and social change,
people’s needs must be brought to the forefront, prioritized
and addressed. People must have a stake in government in order for
it to succeed. But the government must likewise have a stake in
the people, and feel the same urgency they do to find solutions.
TAHER HELMY
President, AmCham Egypt
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