Corruption costs Egypt $25 billion a year
As Egypt tries to rebuild itself and turn page on political and security turmoil, experts fear rampant corruption could scare investors away.
Under a cloud
2015/09/18 Issue: 23 Page: 5
The Arab Weekly
Hassan Abdel Zaher
CAIRO - Egyptian President Abdel Fattah al-Sisi assigned Petroleum Minister Sherif Ismail to form a new government, hours after Egypt’s cabinet submitted its resignation hard on the heels of a high-profile corruption case.
The case involves agriculture minister Salah Helal, who allegedly wanted kickbacks for easing the illegal acquisition by a businessman of a plot of state land. The case was the latest in a long series of financial corruption allegations that have damaged Egypt’s reputation and economy.
Corruption costs Egypt approximately $25 billion a year, according to the state-run Central Agency for Public Mobilisation and Statistics.
Helal, who took over the Agriculture portfolio in March, was arrested September 7th, accused of demanding a villa worth $1 million, clothes valued at $28,000 and about $1,750 worth of food, allegedly to ease the acquisition by a businessman of 2,559 acres of state land.
The minister’s office manager was also accused in the case along with a former Ministry of Culture media adviser, who allegedly played the mediator.
Two days before Helal’s case became public, the head of a local anti-corruption society was named in an investigation. Hamdi al-Fakharani, who was known for filing lawsuits against what he described as “corrupt” firms and investors, allegedly accepted a bribe of $370,000 from a businessman. He was charged with demanding the payment in return for withdrawing a lawsuit filed against the businessman, challenging the acquisition of land in the southern province of Minya.
“There is a lack of accountability and sufficient supervision by the government,” Ain Shams University economics Professor Yumn al- Hamaqi said. “There are too many supervisory agencies here but little do these agencies enforce the law or bring corrupt people to account.”
The investigation into Helal and his subsequent arrest were reported to have been ordered by Sisi, who has made it a goal to erase corruption from the government.
On September 13th, one day after the cabinet submitted its resignation, Sisi told university students in the eastern province of Suez that his administration would not allow anybody to take a penny undeservedly.
The media reported that the Egyptian president had asked Egyptian supervisory agencies to submit reports about the financial integrity and the performance of senior government officials.
Egypt launched an anti-corruption strategy in 2014 to halt alleged widespread administrative corruption and massive financial violations. The Central Auditing Agency, Egypt’s highest supervisory authority, said there is a new case of corruption every 1.5 minutes in the country. According to Transparency International, increasing levels of corruption have bolstered Egypt’s informal economy to the point that it accounts for almost 70% of the economy.
In 2014, Egypt ranked 94th out of 175 countries assessed by Transparency International’s corruption perceptions index with a score of 37 (0 represents highly corrupt and 100 means little corruption). The country had a slight increase in its score compared to previous years.
The World Bank’s 2014 World Governance Indicators, however, show a decline in all Egyptian governance areas examined on accountability with a percentile rank of 32 with regard to control of corruption (compared to 41 in 2009), 34 for the rule of law (54 in 2009), 20 for government effectiveness (47 in 2009) and 26 for regulatory quality (47 in 2009).
As Egypt tries to rebuild itself and turn a page on political and security turmoil, experts fear rampant corruption could scare investors away.
“Investors cannot come to a country where corrupt people are out there waiting to share profits with them,” economist Mukhtar al-Sherif said. “Corruption actually kills investments and reduces to zero countries’ competitive edge as investment magnets.”
The 2015 Heritage Foundation Index of Economic Freedom said corruption poses a serious problem to the Egyptian economy, with “freedom from corruption” being the area in which the country receives its poorest score (32 on a scale from 0-100).
The World Economic Forum and The International Finance Corporation/World Bank also point to corruption impeding business in Egypt. The survey for the World Economic Forum’s 2014-15 Global Competitiveness Report indicates that corruption is the fifth biggest obstacle for doing business in Egypt.
Khaled Salah, a TV host, said almost all businessmen he had met recently told him they had been asked to pay some form of bribery to have paperwork finalised at state institutions. This is why experts such as Hamaqi said Egypt has no time to waste in the fight against corruption. “Supervisory agencies must work harder, the government must pick people for top jobs very carefully and punishment must be toughened in corruption cases,” Hamaqi said. “We are late already and we have to act now if we really want to save our country from this phenomenon.”