Egypt ranks first in the Agility index for fastest infrastructure growth in 2017
The Agility Index, which measures the level of infrastructure in emerging markets, has announced that Egypt is the fastest growing market in 2017 and ranked 14th out of 50 surveyed countries.
In this paper, we will discuss how the index works and its standards and how Egypt has developed within this framework. We will also explain the relationship between spending on infrastructure on one hand and improving the citizens’ living standards on the other.
First: What is Agility?
Agility Logistics is the largest management and industrial development company in the Middle East and North Africa, it was founded in 1979 and is headquartered in Kuwait city. The institution works in 100 countries and has 500 offices with 22 thousand employees. It has 4 branches in Egypt (Cairo, Giza, Alexandria and Port Said) and has achieved returns of $4.1 billion with a net profit of $193 million.
Second: Index criteria
Market size, growth rate, business climate, transport/road network, customs and trans-border transport (amounting for 50% of the percentage weight of the country's ranking in the index)
Size and quality of roads, transport and communications network
Surveying 500 of the top experts and managers in the field of logistics and trade
The report is reviewed and presented to several international institutions such as: the IMF, the World Bank, the World Economic Forum, the United Nations and its economic, industrial and commercial agencies.
Third: The most prominent issues to raise concern in the report
The experts expressed their confusion and alarm at President Trump's policies and possibility of a US withdrawal from the NAFTA agreement (a free trade agreement between the United States, Mexico and Canada, which came into force in 1994)
Other issues of concern to the logistics sector in 2018 are
A) China's massive debt problem and its potential risks
B) The bold reforms programme in Saudi Arabia
C) The political crisis and corruption scandals in Brazil
Fourth: What are the 10 most improved countries in the index?
Egypt ranked first in the list of the most improved among all 50 countries, with an overall move of 6 ranks from 20th to 14th.
1- Egypt
2- Qatar
3- Bangladesh
4- Pakistan
5- Thailand
6- Ethiopia
7- Iran
8- Vietnam
9- China
10- Peru
Fifth: Which countries deteriorated in this year's index?
Venezuela topped the list of the most deteriorated countries. The decline is directly linked to the severe economic crisis and the huge inflation due to poor management of the economy during the period of high oil prices and no precautionary scenario in the case of falling prices. Accordingly, in 2014, when the oil prices moved to $30 per barrel from about $130 per barrel, the violent shake lead the market to deteriorate.
Nigeria came in second as a result of the deterioration of the economic crisis and mismanagement of the file of monetary and financial reform, as well as, the widening and deepening of the black market crisis in Lagos. Where in not for the latest increase in oil prices, the Nigerian economic crisis would have been heading towards a more severe deterioration.
Notable other poor performers
Saudi Arabia’s indicators reflected a decline in the index for logistics and infrastructure in 2017 due to the crisis of delayed works or projects within construction and real estate. This was largely due to the oil crisis and its temporary negative impact on economic reform.
It was also striking to see South Africa, Egypt's largest counterpart on the African continent, suffering from a significant decline in its infrastructure and investments into roads and transportation, which is mainly due to the political unrest there since 2012 that has overshadowed the economy.
Comment on Egypt’s developments
At the beginning of the economic reforms in the middle of 2014, Egypt was ranked at the 32nd place (In the Agility index of 2015).
Furthermore, Egypt was among the list of the worst 10 countries to deteriorate, alongside Libya, Jordan, Cambodia and Lebanon.
In 2016, some of the national projects began to reflect upon the country and it entered the list of most developed countries, whilst also elevating 22nd in the overall standings.
In the 2017 report, Egypt continued to improve and our overall ranking moved to 20th position.
Finally, in the 2018 report, Egypt tops the list of improving countries in terms of development in infrastructure. That moved our ranking to 14th position, which is the best ranking Egypt has ever achieved since the launch of the index.
It should be noted that the index includes large and strong economies such as China, India, UAE, Saudi Arabia and Russia.
6. Furthermore Egypt has outperformed strong economies such as Thailand, the Philippines, Vietnam, Morocco, South Africa, Argentina, Jordan, and Tunisia. As well as, major oil countries such as Nigeria, Kuwait, Bahrain, Iran and Algeria.
Final result
Egypt has taken bold steps in floating its currency and reducing government support to attract investment, boost exports and raise tourism revenues. In doing this, it has also attained the trust and support of international institutions such as the IMF.
There is a reason for optimism about the Egyptian economy. A large number of investors are shifting their production lines to Cairo whilst others are expanding their existing lines to benefit from the low costs of production and recent reforms.
Some aim to exploit Egypt’s newly established business set-up as a production and distribution platform to serve Africa and the Middle East
The Central Bank of Egypt has done a good job in curbing inflation and the government’s efforts in developing improved and new legislations have further added to the success of the development process.
Foreign reserves are on the rise (currently covering 8 months ahead of requirements and a good plan for debt interests and dues coverage in scope), restrictions on imports have eased, infrastructural projects are nearing completion or completed, which will enhance the country's energy and the capacity of its road network.
In this report there is a clear indication of the importance of spending on infrastructure and its correlation to attracting domestic and foreign investments that lead to a higher cash flow in the Egyptian economy. Agility Logistics states that it has noticed some of its customers turning to Egypt and some of them are expanding there after the reforms to exploit it as a platform for expansion into Africa and the region. This added value can generate positive growth in 2018, provided that the Egyptian government completes the process of economic reforms in accordance with the IMF programme. This will, concurrently, maintain the credibility and confidence in the Egyptian market that should yield a healthier economy and better living conditions for the citizens.
