International investment

MENA-OECD Business Forum

 

Dinner Remarks by Angel Gurría, OECD Secretary-General

Cairo, Egypt, 27 November 2007
 
Good evening Ladies and Gentlemen,

Thank you for the opportunity to say a few words to conclude this highly stimulating and productive business forum, but also to start warming up for tomorrow’s Second MENA-OECD Ministerial Investment Meeting.

Before we start our dinner, I would like to touch upon the growing economic importance of the MENA region; the recent economic achievements of Egypt; and the role of the MENA-OECD Investment Programme in accompanying the remarkable transformation of these countries.

The OECD has been responding to the recent evolutions in the world economy by becoming a more global organisation. We have worked very hard to reinforce the relevance of the OECD and to become the “hub for a dialogue on global issues”. In this strategy, our work with the MENA countries is an excellent example of good co-operation for development.

The MENA region stands out as one of the most dynamic emerging regional economies in the world. With a solid 5 per cent annual average growth during the past six years , more than 700 billion dollars of exports in 2006 and foreign direct investment inflows that have more than quadrupled in the past three years to reach 59 billion dollars in 2006,  the region has become a genuine turbine of globalisation.

There are still wide variations among countries within the region, and many MENA economies still face important structural socio-economic challenges. But it is undeniable that we are talking about one of the most dynamic regions in the world. This progress (Arabic “TAKHADOUM”) has been based on major opening and adjustment efforts in most countries in the region.

Take Egypt, for example. After decades of recurring macroeconomic turmoil and stabilisation efforts, it is on track to build solid foundations for a long-term, vigorous and private investment-led growth. The far-reaching reform programme of the current administration is making good progress in creating a more open and competitive market economy.

Let me highlight some important recent reform measures:  1) tax rates have been lowered and the base broadened; 2) privatisation has been revived; and 3) significant progress has been achieved in the implementation of the “financial sector reform program”.  Egypt has also made remarkable progress in reducing red tape and facilitating entrepreneurship. In fact, the World Bank’s “Doing Business 2008” study has just placed Egypt as this year’s top reformer globally.

These efforts have already started to bear fruit. Economic growth surged to a twenty-year high of 7 per cent in 2006.  Inflation fell sharply in 2005 and real interest rates turned positive. Foreign direct investment inflows increased more than fifteen-fold between 2001 and 2006, and reached over USD 9 billion in just the first three quarters of the 2007 financial year.

And this time the expansion has become more broad-based, with construction and services now growing at a healthy pace.  Private investment has steadily increased from 8 per cent of GDP in 2003 to a projected 14 per cent in 2006/07; while Egypt’s stock market has been the strongest performer in the region in recent years.

Privatisation revenue has exceeded expectations, and reforms in the fiscal area have prepared the ground for fiscal consolidation to go forward.
 
The big challenge is to turn these achievements into social progress. The gains must be shared throughout the population, in particular by supporting the youth in education and employment. This will allow Egypt to take full advantage from the global economic integration.

Egypt has advanced steadily in achieving the Millennium Development Goals related to water and sanitation, infant and child mortality, and maternal mortality. However, combating poverty is still a major challenge. Regional disparities in education and health remain relatively large. Environmental policies are still at the margin. And progress is slow in promoting gender equality and women’s empowerment.

This brings me to the subject of this morning’s forum: the role of women in business and economic activities. This is an area where Egypt and the MENA region in general still face important challenges. Let me say a few words on this relevant issue.

As I mentioned this morning in my opening remarks, the active participation of women in the economy is a sine-qua-non condition for achieving sustainable growth and development. Structural reforms won’t give the best results if women do not participate. Women represent half the strength of our national human capital. To hold them back is to hold back the full potential of our economies and societies.

There is strong evidence that links increases in women’s productivity and earnings to better health and education. All this eventually leads to higher overall productivity.  Giving women access to credit boosts health and education outcomes, but it is also a good business, as their repayment rates tend to be much higher than those of men.

In recent years, the MENA region has made important progress in this area, incorporating women to the labour force at an increasing pace. But the participation of women in the work force is still one of the lowest in the world: 28% of women in 2006.

In several MENA countries, promoting a greater participation of women will require a change of mindset and attitudes. This will need to be led from the top, but supported at the grassroots level. A broad dialogue which includes civil society organisations, decision-makers, the business community and academic institutions is critical.

Today’s event is an encouraging example, and I was pleased to learn that a Business Statement was agreed, involving MENA organisations and the member organisations of the OECD’s Business and Industry Advisory Committee.

Let me conclude by saying a few words on how the OECD is working with the MENA countries to make the most of globalisation.

For the past three years, the OECD has been cooperating with the MENA countries in their efforts to improve their investment climate and increase private sector participation in their economies. On the request of several governments of the region, we developed the MENA-OECD Initiative on Good Governance and Investment for Development with the participation of 18 MENA countries. The MENA-OECD Investment Programme, one of the two pillars of this Initiative, has provided policy advice to improve the investment climate in the region.

During the first phase of this Programme we have taken stock of the relevant legal and regulatory framework in the region. We have established time-bound targets to reform investment policies in the participating countries. And the regional networks created to bring together private sector participants, investment promotion agencies, Ministries and other key organisations in the MENA countries have met in three rounds of meetings since 2005. 

Most MENA governments have now developed National Investment Reform Agendas, with concrete, measurable targets. The recently created MENA-OECD Enterprise Financing Network is helping to improve regulatory conditions for financing entrepreneurship.

The first Regional Centre for promoting best practices and improving business climate are already operating in countries like Bahrain, the United Arab Emirates and Egypt.

These are all important achievements. But it is just the beginning. In the coming years, it is crucial to advance on the implementation of the investment climate reforms.

Like in every OECD country, advancing structural reforms with wide political and social support will be a highly difficult task; but it will be crucial to achieve the vigorous economic growth required to meet the region’s employment needs. Let’s not forget that the MENA region must create 100 million additional jobs by 2020, only to maintain the 2003 levels of employment and reduce unemployment.  Our experience with the political economy of reform can be used to inform the ongoing reform process in the region.

Ladies and Gentlemen:

The MENA-OECD Investment Programme is a prototype of the new co-operation between economies at different stages of development; one that provides policy advice instead of financial aid; efficient government technology instead of foreign debt.

We don’t have any lessons to teach; we have policy experiences to share. Policy experience in virtually all areas of government. Very few organisations can provide the integral partnership offered by the MENA-OECD Investment Programme. The emergence of the MENA region as a group of stable and prosperous economies is a win-win proposition.

Progress in your region will be beneficial for both MENA and OECD countries, through increased opportunities for trade partnerships and joint ventures. It will also help us achieve our ultimate objective of turning globalisation into a more inclusive process for the benefit of all.

This is a region that has contributed to the world’s progress with major economic, scientific and artistic achievements; a millenary source of knowledge and civilisation. It is a region with enormous human and economic potential which has not yet been fully unleashed. The OECD continues to be your partner in this important pursuit.

Thank you very much – Shukran.

Et bon appétit.

 

 

 

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