OECD workshop looks at local business climate

Egypt’s Ministry of Investment, in partnership with the European Commission, has hired the Organization for Economic Cooperation and Development (OECD) to study its current investment policies and issue recommendations on how to improve the country’s overall business climate and on what reforms the government should implement.

In the second part of its three-phase Business Climate Development Strategy (BCDS), which employs the concept of best practice as a measuring stick for Egypt’s performance, the OECD recently held a three-day workshop in hopes of getting feedback from participants.

Workshop attendees were candid in their remarks, if for no other reason than to help the OECD in its task of assessing how business is conducted in Egypt. "We must try to stop producing useless people," said Gamal Abu Taleb, chairman of a local consultancy. "Vocational schools are appalling." 

The national labor force–or "human capital"–is only one of 12 factors in the BCDS, which also takes into account access-to-finance and legal issues, such as corruption and government policies on taxes, trade and investment.

Along with trying to help millions of employed and unemployed improve their skills, the strategy is also aimed at boosting overall national product. "Economic growth is not just about firms, but also the human capital that underpins the economy," said OECD economist Ania Thiemann.

Since the main concern of most businesses is that their workforces are equipped with useful skills, the thinking goes, professional education and business should therefore be brought into alignment.

This, however, is seldom the case, according to workshop attendees. They called for more engagement by the private sector, both in terms of investment in training and by explaining their future needs to educators.

"We don’t have this sort of sectoral vision of where we want to be in 20 years," said Ahmed Kamaly, assistant professor of Economics at the American University in Cairo.

Abu Taleb also complains of the lack of an overall plan for educating the workforce, either by companies or by the government. Despite being involved in strategy discussions since 2007, he says, the government has failed to produce any substantial framework for action. "We can’t expect the students to define the country’s strategy," he said.

While the government has taken steps to invest in professional education, critics say this education is not being applied in the right places. One problem, according to one workshop attendee, is that much of the money for training has been poured into large companies instead of small- to medium-sized enterprises.

Some have argued that, since big companies hire more people than anyone else, more people will benefit by training their staffs. But critics note that large, profitable companies can generally afford to pay for training themselves–as opposed to smaller companies with limited resources.

Policy changes, however, are not always easy within the bounds of an established bureaucracy. The OECD puts it this way: "The centralized management of the budget creates an unequal distribution of resources… The currently adopted approach of one-size-fits-all is outdated and threatens to weaken the rural areas when compared to the urban."

The detailed BCDS strategy–comprised of 242 indicators–is intended to address the most important issues for business, so that, not only are workforces more skilled and better educated, but more and better job opportunities are also created.

The OECD–which is primarily concerned with issues of free markets and democracy–also has a regional investment program, which aims to stimulate the private investment that drives job growth.

The OECD’s stated goal in working with the Egyptian government is to help the latter improve the local business climate and contribute to the financial security of the growing population.

"We have to do things in a practical way," said Abu Taleb, "within our means and in a sustainable way."

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