Too many business suits in politics?

The People’s Assembly elections are drawing near, with presidential elections scheduled soon afterwards. One of these two events will certainly be followed by a cabinet reshuffle. It is therefore critical at this juncture to evaluate the new trend of appointing business elites to this high executive body. 

The phenomenon is unprecedented in Egyptian history. It goes no further back then the first cabinet presided over by Prime Minister Ahmed Nazif in 2004, which included two ministers from the business world (Industry and Trade Minister Rashid Mohamed Rashid and Housing Minister Ahmed el-Maghraby). Today’s cabinet counts over seven. Most of these ministers oversee the same sectors in which they used to invest, and all of them control ministries relating to investment and production.

Although this shift has in some ways benefitted the country, it has also had its share of drawbacks. One of the new cabinet’s strengths is its ability to confront that most complicated of governance issues–Egypt’s sprawling bureaucracy. It should also be lauded for marshalling vital technological resources and putting them to use in the service of the Egyptian people. Their initiatives in this regard have boosted investment, ameliorated interaction with foreigners and led to improvements in the Egyptian stock market, banks and communication companies.

Yet at the same time the new business cabinet has its downsides. To begin with, managing a company is fundamentally different than managing the affairs of a state. When business thinking is applied to every aspect of government, a gulf develops between the state and its citizens, who are soon enough seen as the state’s customers. Businessmen, to a large extent, are governed by the logic of profit. When this style of thinking spreads throughout government ministries, everything under the state’s control slowly becomes commoditized.

Although businessmen are typically known for their economic acumen, the Central Accounting Agency (CAA) has documented all sorts of irregularities and inefficiencies that can be traced back to mismanagement by the business cabinet. Numerous projects implemented under cabinet supervision were the product of faulty feasibility studies and inaccurate cost-benefit analyses.  

Perusing the CAA’s records, it is clear that such mishaps have been a common occurrence over the last ten years. Perhaps the most recent such instance of ministerial negligence was the near-sale of Amun Island for under US$15 million, less then a tenth of its real value (the deal was only stopped after the president himself intervened).

At the very least, it seems apparent that the business cabinet has not yet been able to achieve the goals for which it was formed. Clear evidence of this can be seen in a November 2009 World Bank report, which warns of the Egyptian private sector’s inability to spur economic growth. It notes that most of Egypt’s investments are concentrated in the hands of a limited number of businessmen, describing half of them as “government officials.” But the objective behind appointing so many businessmen to ministerial positions–giving the private sector a larger role in improving the economy–has yet to be realized.

In principle, businessmen, like any other social group, should not be barred from political positions. However, strict regulations are needed to prevent businessmen-turned-politicians from placing their private interests ahead of the public good. They cannot be allowed to exploit information, available to them by virtue of their positions, for their own benefit or that of their relatives and friends.

Such was the conclusion of a recent Transparency International report. It cautioned that the increasing overlap between government and business in Egypt was a worrisome phenomenon. The report recommends that measures be put in place to eliminate conflicts of interest and protect the country’s economy from falling captive to a handful of unaccountable businessmen.

A successful businessman does not necessarily make a successful minister. Managing a private business revolves around the individual, whereas managing the affairs of state requires providing for the needs of a large population composed of groups from diverse backgrounds. Assigning businessmen to ministerial positions is a trend that needs to be re-assessed, and protections must be put in place to minimize its detrimental effects.

Translated from the Arabic Edition.

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