Egypt's challenge: The economy

 Egyptian motorists line up to buy fuel at a gas station in Cairo on March 11, 2013 Motorists in Egypt sometimes have to queue for hours to buy fuel

Since the 2011 revolution the Egyptian economy has gone from bad to worse. Unemployment is up, so is the budget deficit, job creation is virtually non-existent and the Egyptian pound has lost much of its value. And matters are made even worse by the general lack of security in the country. As part of her series of reports looking at the challenges facing Egypt today Shaimaa Khalil focuses on the Egyptian economy.

If you look at a map of Egypt, the Nile Delta is a splash of green between Cairo and its second city Alexandria.

Of course there's a lot of agriculture there but the Delta is also the industrial heartland of the country.

Start Quote

"If they remove the subsidies, you won't just see a revolution, you'll see total destruction... I'm not blaming the revolution, I'm blaming those in power ”

End Quote Mohamed Alexandria mini bus driver

El Mahalla El Kubra, or Mahalla, as it's more widely known, is Egypt's textile capital.

Until recently cotton textiles accounted for around a third of Egypt's industrial production. But there's been a massive decline and two years after the revolution many factories in Mahalla are barely functioning.

Most of these factories are government owned but in the past two years the government has been running out of money. Foreign investment has all but dried up because of the unstable political and security situation in the country.

As a result the factories have not had the capital investment they need. Huge machines are lying idle for want of parts and maintenance. The workers too aren't getting paid on time. The result has been numerous strikes, further stalling production.

The Samanoud textiles factory is one of the biggest in Mahalla. In the factory, workers stand in front of rows of noisy looms weaving the cotton cloth.

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Shaimaa Khalil
  • Listen to Shaimaa Khalil's documentary Egypt's Challenge on the BBC World Service Tuesday 7 May at 08:05, 14:32 and 19:05 GMT

Most of them have worked in the factory for more than two decades - but have now become disillusioned.

"We are suffocating!" Mostafa Abdullah, a worker in the Samanoud factory told me.

"We're worse off now… We don't get paid on time. We've got people to support; we've got school fees to pay," he said.

You hear this kind of story across Egypt, not just in big factories but also in the smaller, unofficial enterprises.

"Business is bad," Hany Mohamed said. He sells beans from a cart in a narrow street in downtown Alexandria.

"Things are more difficult now, raw materials are expensive and I don't make much profit"

Hany also explained that a big part of why business is bad is the lack of security.

Mostafa Abdullah Factory worker Mostafa Abdullah says that he doesn't get paid on time

"There are no police in the streets," he said. "Even though the police used to give me a hard time and take my cart off the street, I still want them back because now I'm left to the mercy of thugs."

'Time bomb'

On the other side of Alexandria, three long lanes of taxis and minibuses are parked on the road.

It's not a traffic jam - the drivers are queuing up outside a petrol station waiting for diesel, or Solar as it's known in Egypt.

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The problem with the fuel subsidy is that now it has become a time bomb”

End Quote Professor Samer Attalah American University of Cairo

There have been fuel shortages recently with reports saying that the country has run out of the hard currency it needs to import fuel.

These long queues can now be found outside almost every petrol station. Even as I travelled on the desert road between Cairo and Alexandria long lanes of trucks were at a standstill queuing for fuel, at times turning the desert highway into a giant car park.

"I always ask my students to see where diesel comes into their daily economic lives," Professor Samer Attalah, an economist at the American University of Cairo said.

"It goes into every economic activity - transportation, bread making, it's a very dangerous issue."

Professor Attalah points out that the two key words here are fuel and subsidies - a quarter of the government's budget goes on subsidizing fuel.

"The problem with the fuel subsidy is that now it has become a time bomb.

"There has to be a mechanism for the government to provide fuel to these poor people without making these large queues or without creating this large deficit. And it's very, very tricky," Professor Attalah said.

Mohamed, a mini bus driver in Alexandria Mohamed, a mini bus driver in Alexandria, relies on fuel subsidies to make a living

For Mohamed, a mini bus driver in Alexandria, fuel subsidies are not about government strategy, they're about making a living and keeping Egypt moving.

"If they remove the subsidies, you won't just see a revolution, you'll see total destruction," he told me as we waited together outside a petrol station.

"I'm not blaming the revolution, I'm blaming those in power," he said.

For most Egyptians the 2011 revolution was about political freedom, but it was also about justice, both social and economic, and the right of every Egyptian to make a living and to provide for their families.

Travelling around the country, I met few people who felt the government had delivered for them economically and many more who argued that it had simply made things worse.

Listen to The Documentary: Egypt's Challenge on Tuesday 7 May on the BBC World Service.

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