x Abu Dhabi, UAEWednesday 26 July 2017

Brave new world beckons for Egypt and Tunisia

Optimism is high that the governments to emerge from the ashes of unrest will right decades of wrongs. But it will not be easy, write Asa Fitch from Tunis and Bradley Hope from Cairo

Locals sit outside a coffee bar in the centre of Tunis as stability returned to the country after the fall of Zine el Abidine Ben Ali's regime.
Locals sit outside a coffee bar in the centre of Tunis as stability returned to the country after the fall of Zine el Abidine Ben Ali's regime.

Chedi Gatri spends his days in the internet cafes of Tunis, wondering what comes next.

Mr Gatri, 22, speaks three languages but like many educated Tunisians his age, he hasn't been able to find a steady job.

"I hope to have a business like this [cafe]," he says. "I hope to start a business but there are some problems with money. Now if I go to the government and say I want to open a cybernet cafe it's easy, but the problem is the money."

How to help people such as Mr Gatri overcome financial obstacles and get their businesses off the ground will be an important question for the governments that emerge from popular upheavals that have swept through Tunisia and Egypt.

Political change may make it easier for people to set up businesses but, with youth unemployment rising and money scarce for investment in small enterprises, the future is far from certain.

And as Egypt and Tunisia start to plot their next political steps, such as calling elections and orchestrating transitions to democracy, putting together a business environment that is appealing to an uneasy population will be a challenge.

"What we need is venture capital funds that are not huge but that provide the financing for new creators, mainly in the IT sector," says Moncef Cheikh Rouhou, a prominent Tunisian economist who teaches at the HEC business school in Paris.

"What we need now is a huge move by this type of risk-taking investor."

But a more pressing question now is whether the people of Egypt and Tunisia will give their new leadership the time it needs to formulate such policies and reignite their economies and spur business growth.

Protesters in both countries have yet to leave the streets. They are unsatisfied with the speed of reform, despite the fact that their caretaker governments - the army in Egypt and a recently dissolved "unity government" in Tunisia - have had little time to make serious progress.

Protesters gathered on Friday in the tens of thousands in Cairo's Tahrir Square - the centre of Egypt's popular uprising that toppled Hosni Mubarak, the president - as they pressed for more political reforms.

On a makeshift bulletin board at the side of the square is a list of nine demands protesters say must be met before they will return home and the country can get back to normal.

They range the dismantling of the Mabahith Amn al Dawla al 'Ulya, Egypt's notorious state security intelligence agency, to the dismissal of more cabinet members connected to the Mubarak regime.

Not one directly relates to economic reform, yet the incipient political groups hope that political reforms will lead to greater opportunities.

"We see political and economic as the same," says Yasser el Hawary, a spokesman for a protest group called Youth Justice and Freedom. "Now we are removing all the corruption. When we rebuild good policies for the new government, it will have an impact on the economic situation."

Mr el Hawary says Egyptian youth expect the government to play a bigger role in the economy by investing in projects that speedily create jobs and by bringing in policies that encourage economic growth.

"The most important challenge for the elected government is to quickly come up with solutions," says Dr Hakim Ben Hammouda, a Tunisian economist who lives in Switzerland. "I think people have a lot of expectations, and there's a need for them to see a quick change in the situation."

The issues at play in Egypt and Tunisia are similar: people are fed up with corruption and want a voice in politics. They also want jobs and opportunities to start businesses and prosper.

Tunisians are well educated, at least by regional standards. About 78 per cent of people over the age of 10 have had some schooling, according to official government statistics from 2005. School enrolment rates for children aged between six and 14 were 95 per cent.

Couple that with rates of unemployment estimated at more than 20 per cent among young workers and you have a recipe for popular discontent.

In a survey conducted last year by Silatech, a non-profit social enterprise organisation in Qatar, 72 per cent of young Tunisians said they were happy with the educational system, but 78 per cent said they were still "struggling".

Mohamed Bouazizi, a vegetable seller in the interior city of Sidi Bouzeid, may have started the uprising when he immolated himself outside a government building in December. But the combination of high levels of education and few jobs maintained the momentum.

"Young Tunisians are not only struggling to find employment in general, but they are also frustrated with the few jobs that are available," Silatech concluded in its survey last year. "Sixty-one per cent of young Tunisians say they are dissatisfied with the availability of good job opportunities in the city or area where they live … another 47 per cent are dissatisfied with efforts to increase the number of quality jobs."

The pain was equally visible in Egypt, where about 37 per cent of young people polled by Silatech said they were neither in work nor in full-time education, a worryingly large slice of the population bereft of a regular income. As with the Tunisians, they said they were dissatisfied with the availability of good jobs, and 86 per cent said they were either "struggling" or "suffering". The median age in Egypt is 24, meaning half of the population is younger than that.

The solutions to tackling underlying economic problems are elusive. While corruption can theoretically be dealt with in short order, it is likely to take far longer to create jobs for unemployed young people and change an economic system laced with graft and greed.

The deposed Tunisian president Zine el Abidine Ben Ali and his family controlled large swathes of the Tunisian economy by acting as partners with foreign investors and dipping their fingers into businesses. Mr Mubarak had a similar grip over Egyptian politics and economics.

For Tunisia, a major priority for reform will be correcting an imbalance between its wealthy coastline and ramshackle interior, an issue the former government did not take seriously.

Residents of inland cities have long complained that the Ben Ali regime cast them aside, letting infrastructure rot and focusing instead on the development of Tunis and tourism on the coast. "There is a really big gap," Dr Ben Hammouda says. "The regions on the coast are benefiting from the infrastructure of the airports and the ports that make it easy to export. It's a historical divide. The different governments tried to deal with it but not in a very energetic way. The result is these regions are less developed than the ones on the coast."

As with Egypt, another key to the success of Tunisia's new reform agenda will be convincing the international community to give aid and invest in funds designed to help entrepreneurs get businesses going.

Its ability to do so will hinge on perceptions of the legitimacy of the government that emerges after planned elections in July. Mustapha Kamel Nabli, the country's new central bank governor, said last week he was already in talks with the IMF, the World Bank and other institutions about the possibility of extending financial assistance. Mr Nabli said the country's fiscal position was stable but a rise in government spending to finance reform and development could require outside assistance.

"We're trying to determine what is the best way to proceed," he said.

The economic future for Egypt and Tunisia has grown murkier, however, following recent political developments. Tunisia's transitional government dissolved last week as protests continued to flare, and there is widespread concern among Egyptians about the army honouring its promise to oversee a democratic transition.

But many executives from both countries appear optimistic about the longer-term prospects for economic growth in post-Mubarak and post-Ben Ali worlds.

Fathi ben Grira, the Tunisian head of Abu Dhabi's Menacorp, says he is hopeful reform can put his country on the map as a centre for outsourcing and high-tech industry.

"It's a well-educated population," Mr ben Grira says, adding the country has the capacity to become the India of Europe.

Mr Gatri, who participated in the demonstrations that led to Mr Ben Ali's fall, has similar hopes.

"The government [of Ben Ali] took so much money - millions of dollars," he says, adding he hopes the new government will now "start many new projects".

Mohammed Sanadilly, 33, a Cairo cultural critic who has stood alongside the protesters in Tahrir since the early days of the revolution, says Egyptians feel it is time to regain their rightful position in the Middle East's economies as a force to be reckoned with.

"For years we were sleeping," Mr Sanadilly says. "Now it is our turn to come back."