The Ministry of Planning and Economic Development, represented by Dr. Ahmed Kamali, Deputy Minister of Planning, participated in the OECD Forum for the Middle East and North Africa, which precedes the Ministerial Conference of the Governance and Competitiveness Initiative for Development.
Dr. Ahmed Kamali, Deputy Minister of Planning and Economic Development, stated that limiting the informal sector is at the top of the list of priorities in Egypt, explaining that there is a link between the informal sector and the level of development, as developing countries have large informal sectors and with the development of countries the proportion of the sector decreases. The informal gradually, noting that it is not necessary to wait for this gradual decline, but rather to accelerate that process and take the necessary measures to reduce the volume of informal employment.
Kamali explained that the informal employment sector in Egypt is an important source of employment, as 55% of the workforce employs it, but on the other hand, the informal sector has a low multiplier value as one-third of the local income comes from this sector, but the productivity of this sector is low in Egypt. This is in agreement with the results of La Porta and Schleifer (2014) research.
Kamali explained that the pandemic revealed the dangers of informal work, pointing to the Egyptian government's efforts to support workers in the informal sector, pointing out that about 1.6 million workers have benefited from the employment support initiative in its first phase, for which Egypt allocated about EGP 2.4 billion, noting that there are many Challenges related to social protection in the informal sector, explaining that according to the economic multiplicity in 2018, 53% of the projects belong to the informal sector, and then there is a decrease in the government's revenues through taxes, stressing that the transformation of these entities into formal companies will contribute to increasing their productivity, along with reducing poverty and increasing He entered the state.
Dr. Ahmed Kamali added that there is a negative relationship between the level of development and the informal sector, as it cannot be said that this sector will disappear overnight, but its size must be reduced, explaining that there are existing informal projects and others being established, stressing the need to focus on new entities preparing to enter In the market to reduce the size of the informal sector over time, noting that there are also multiple incentives that are offered to companies that transfer from the informal sector to the formal, explaining that any company that moves to the formal sector is exempt from taxes for a period of five years, as well as newly emerging companies through the formal sector enjoy these facilities. .
Kamali pointed out that the Central Bank of Egypt facilitated obtaining financing for these companies and reduced the interest to 5% instead of more than 10% for new loans, explaining that limiting the phenomenon of the informal sector and the tendency of emerging companies to it would be doubling the obstacles to those transactions of informal entities, stressing that The Egyptian government is working to develop all e-commerce operations (without payment / credit cards). Through the application of this system, companies will be negatively affected by what drives them to go to the formal sector, noting that there are also non-tax incentives for companies transferring to the formal sector, pointing to giving a deadline to pay infrastructure expenses With the government covering at times part of the costs of training workers in those companies, in addition to the government paying half the value of the land in addition to exemptions on property taxes, stressing that all these measures are taken to encourage companies to shift towards the formal sector.
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