Will Sisi and the Egyptian army ruin Egypts economy

the egyptian military has played an important role in the country's politics and economy since the administration of president gamal abdul nasir in the 1950s and 60s but since the 2013 coup the scale of army involvement in the economy has reached new heights the egyptian army has numerous incentives as an economic player this includes full or partial tax breaks privileged access to big government contracts and free labor of conscripted soldiers but how does this work and who benefits from it in 2013 only months after the coup egypt's interim president adley mansour issued amendments that allowed the government to abandon tenders and assign projects to any companies of its choosing in urgent cases the decision was followed by 2014 amendment that prohibited third party appeals against contracts concluded by the government with any parties these amendments have allowed the military to take on real estate and construction markets with little competition the full extent of the egyptian military's role in the economy is shrouded in mystery its budget is unknown and its industries are untaxed egypt's military spokesperson tamar el-rufai said in 2019 that the army has overseen two thousand three hundred projects employing five million egyptians but president abdel fattah al-sisi has continuously denied the extent of the military's wealth and the army has been able to emerge as big player in industries because as an institution it enjoys an array of advantages from lower to no taxes to subsidised labour and privileged access to resources najib sowetis one of egypt's most recognizable businessmen who also backed cc in the coup complained in 2019 interview that these advantages deterred investment in the private sector was not the first businessman close to the government to speak out against the military's growing influence over the country's economy in 2019 an egyptian businessman who worked as military contractor for 15 years posted series of videos on social media accusing president sisi and the military apparatus of corruption the profit from the military's economic activities is not shared with the public according to the carnegie middle east centre no income coming into the military goes back to civilian agencies it all goes into army funds and share of the profit is distributed to senior officers the egyptian armed forces manages approximately one quarter of total government spending in housing and public infrastructure this share according to the carnegie middle east centre is about 370 billion egyptian pounds which is equivalent to about 23 billion dollars since coming to power president sisi has undertaken mega infrastructure projects for which the government has borrowed heavily to fund in 2015 the egyptian president announced that the country will be building new capital in vast stretch of desert east of cairo the new administrative capital is planned to be as large as singapore in an effort to help solve egypt's congestion problem but the 58 billion project has struggled to raise funds after some investors pulled out the egyptian army owns 51 percent of the shares in administrative capital for urban development the company in charge of building the new capital which is set to open in 2021 so what the military are doing is they're following orders and if he tells them to go build new city in the sand somewhere they go build new city in the sand the problem here is that what's happening is they're sinking enormous amounts of capital in projects that are not actually productive in ways that lot of the time damage relationships with the private sector an example of one of egypt's mega projects was the expansion of the sewers canal the fastest shipping route between europe and asia the sewers canal extension was completed in 2015 and cost the country 8 billion dollars and was mostly financed by the issuance of local bonds in 2014 the head of the sewers canal agency mohab mamash claimed that the expected revenues are forecasted to reach 100 billion dollars year huge number when compared to the size of egypt's economy but five years on the yearly revenue of the sewers canal extension project has not exceeded 5.9 billion dollars in march 2019 egypt's finance ministry announced that it would repay 600 million dollars in loan installments after the project failed to generate enough revenue but there's more for mega projects like the expansion of the sewers canal and the new administrative capital the egyptian army relies on the country's huge number of conscripted soldiers as free labor to minimize its costs critics of the expansion of military industries in egypt say these jobs should be allocated to civil workforce to create much-needed job opportunities in 2017 the imf warned that the participation of entities affiliated with egypt's ministry of defense in the economy may hinder private sector development and job creation egypt's cement industry is good example of this in august 2018 the military-owned arish cement company launched the biggest cement plant in the country the additional production capacity brought on by new military plants have added further problems to the cement market that is already suffering from low demand some cement companies were forced to drop their prices or close down including public companies like the national cement company that agreed to liquidate its assets in october 2018 after continual financial loss and debts but another challenge with military business is that unlike other companies they don't pay taxes so although the egyptian army now controls 20 of the cement market the government will not earn any tax benefits from its profits now as sisi moves into his eighth year of leadership after the coup against egypt's first democratically elected government will he continue to empower his military allies to the exclusion of the egyptian public and what will the consequences be of this involvement in the long run