Micro Commercial Components

Taking Advantage of the Revolution

Perhaps this maxim is true: If Egypt can be hurt by the events surrounding the revolution, then it stands to reason that the country can also benefit from the revolution. Finding the real-life mathematical proof, however, is understandably difficult to piece together for the country’s integral components, especially tourism, unemployment and the economy in general. In the August 13 issue of The Economist, the magazine addresses the business climate in Egypt by asking: ‘Is the revolution good for business?’ Undoubtedly, tourism has been hurt a great deal, but in the medium term, there is hope. Although broken, it can be fixed. Looking at unemployment and young entrepreneurs’ ventures, I believe, should be Egypt’s other important challenge. If the country can focus on these two talking points it can seriously consider moving forward. An active electorate that is heavily invested in the country, both financially and emotionally, will make the country that much more attractive for residents and foreign visitors. Tourism, or the lack thereof, has been analyzed over several issues of both Business Today and Egypt Today and need not be further bludgeoned to death. I will say this, however: Tourism numbers will rebound in the long term, that is a certainty. We must believe in this because the sector is the backbone of the state’s economy. However, what may not be a constant is whether in the medium term numbers will spike during Western European and North America’s winter months — the two regions accounting for a majority of tourist numbers. This begs the question, ‘how then can the revolution be good for tourism?’ In speaking with a small cross-section of people from Oman, Germany, Canada, US, Finland and China, among others, over the past couple of months, all have shown moderate to great interest in visiting Egypt, and specifically Cairo. Granted, these travelers are in the 18–35 age bracket, have for the most part ignored their various governments’ travel warnings and may display a greater affinity to risk-taking than others, but still, their concentrated interest is telling. The common reason for traveling to Egypt now, besides cheap travel, is to be part of history and see how events unfold. In examining the ‘fight or flight’ response in our brain, my hypothesis is that visitors over the short term and in the medium term are more inclined to ‘fight’, whereas honeymooners and seniors who will account for the long-term success are more prone to ‘flight’ when encountering danger. It is this natural psychological response that will determine whether tourism takes a large hit or, alternatively, a small setback. I will admit that, for myself, in traveling to Afghanistan, Pakistan and Iran, experiencing the unknown was a great appeal. However, in visiting, I also eliminated any ‘what ifs?’ and when confronted, I chose to ‘fight’ and not take ‘flight’. Should tourists-cum-adventure-seekers instinctually select the former rather than the latter, Egypt will be in solid shape. However, this tackles only one aspect of the Egyptian economy. Should tourism figures fix all that is broke? What about the ‘man on the street?’ The Economist makes an excellent point in exposing what is occurring in both Egypt and across the world — the mass movement of do it yourself or DIY entrepreneurs. Men, but especially women and young people are tired of consistently trying to exercise their basic right in making money — that is, being able to open up their own business. Hernando de Soto, one of the titans of modern day economics and a specialist in championing the rights of those wishing to enter the formal economy, says that it takes nearly one year and a half “to register a small bakery in Egypt, or 10 years to obtain legal title to a vacant plot of land.” Providing a way out of this seemingly unending, tedious process has been de Soto’s mission for the past 25 years, and for those living in Egypt, the revolution potentially illustrates a way to earn a living without becoming victims of the system. The movement toward a black market economy in post-revolution Egypt is hardly a reality, but the amount of businessmen and women profiting by believing that they do not have to pay commercial taxes or wait years to own their own bona fide business has markedly increased. So, has the revolution been good for business? The immediate answer for those who are outside of the law is a resounding ‘yes.’ Yet the caveat remains — that the revolution’s enticing lure in making money now without being part of a fully functioning labor force in the future could be a double-edged sword of unfortunate proportions. If the nationwide determination to become successful in an enterprise metaphorically feeds the people dinner tonight with fish but fails to teach the people how to fish on their own, the distant future could be very rocky at best. A solution that has worked here and in a number of third- and fourth-world countries is micro-financing and micro-loans, usually doled out in small amounts at 20–30% interest rates. Whether this approach can continue to work within a post-revolution Egypt is debatable, but providing women that live in large cities (men have been found to more likely spend the money on personal items) with small loans will tempt more to become independent and as de Soto champions, entrance into the legitimate workforce. The Economist’s author concludes the analysis of Egypt by saying, “The revolution could make Egypt more prosperous, if it leads to less corruption, stronger institutions, greater diaspora goodwill and a more motivated population.” I posit that if Egyptian entrepreneurs become open to the firm belief that the legitimization of their ‘cash cow’ leads to widespread regulation where they are protected by the law, convincing them to do so over time will be an achievable target. The challenge by the end of 2011 and beginning of 2012 will be for democratic institutions to promote these acts of virtue by rewarding those ready to seek a better Egypt. As for visitors coming to Egypt, they will come to prove Marx wrong — that capitalism will be able to extend its existence and reconcile its inner contradictions, a proof certainly worth a shrewd investment.

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