A lot has changed since I last visited Egypt in early January and since the protests in Midan Tahrir in mid-January. According to Marketplace, one thing that hasn’t changed is the incredible amount of bureaucracy which still exists in the country.
So here’s the crux, according to Ragui Assaad, a fellow at the Economic Research Forum in Cairo: Too many business-minded Egyptians look at the hassle, the heartache, and sheer waste of time involved and decide not to register their business.
RAGUI ASSAAD: Many people simply cannot afford to do these things and so avoid them altogether and remain under the radar.
Assaad says you can call it the “black market” or you can call it the “informal” economy.
ASSAAD: This is the issue of informality. Informality is not that people don’t want to pay taxes. Informality is that people cannot afford the very high transaction costs that it takes to deal with the bureaucracy in any way.
As I recommended in an earlier post, a funny, heart-wrenching read which details how the common Egyptian cab driver deals with many challenges–including government bureaucracy–is the book Taxi by Khaled Al Khamissi. In addition to increasing the level of freedom Egyptians have available to them, reducing these high transaction costs is one of the keys to improving the quality of life in Cairo and the rest of Egypt.