More Mercedes Cars Cruise Cairo Streets as Rich Prosper

Between the Nile and the Cairo zoo, workers are constructing the First Residence, an exclusive apartment complex offering units at more than $3 million each, a helipad, and separate villas equipped with swimming pools.

On Cairo's streets even the most expensive Mercedes Benz cars - such as the $440,000 model S600 - have become a common sight. And at the upscale World Trade Center mall, a growing number of ritzy shops sell fine French china and imported designer clothing.

The growth of extraordinary wealth in Egypt is becoming increasingly apparent. More businesses are catering to the rich, largely beneficiaries of the economic reform program begun in 1991 that pried open a reluctant Egyptian marketplace for more local and foreign investment.

As the rich have grown richer, the poor have become poorer. Economic reform has meant rising prices and fewer job opportunities for Egypt's population of 60.6 million, striving to survive on $750 a year per capita.

"The gap [between rich and poor] is certainly getting wider," says Galal Amin, an economics professor at the American University of Cairo. "In the '90s this disparity has become very obvious."

Between fiscal year 1981-82 and 1990-91, the number of people living below the poverty line increased from 30 to 57 percent, according to a report on poverty and income distribution by Karima Korayem, a professor at Cairo's al-Azhar University. The economist estimated the poverty line to be about $60 a year in 1981-82 and $226 in 1990-91.

The income share of the most wealthy 10 percent of the population increased from 24.5 percent of national earnings in 1981-82 to 28 percent in 1990-91, according to Korayem's study.

Economists say this widening gap between rich and poor has grown even more since Egypt signed the economic reform program with the International Monetary Fund, World Bank, and other aid donors in 1991, forcing the country to move more quickly toward a free market. Reforms included liberalizing trade barriers, cutting subsidies, and selling state-owned companies.

"The structural-adjustment policies which were applied in 1991 were much harsher than those applied in the '70s," Korayem says. Egypt began free-market reforms in 1973, when Egyptian President Anwar Sadat initiated his "open door policy" toward foreign trade and investment.

Economists also say a decline in world oil prices in the 1980s further hurt the economy. Fewer Egyptians were working in the oil-rich Gulf states and sending their wages home in the form of hard currency.

But wealthy entrepreneurs are taking advantage of the growing capitalist atmosphere. On Egypt's north shore and the desert road from Cairo north to Alexandria, developments of million-dollar villas are sprouting. Shops sell designer clothing by Christian Dior and Donna Karan, Lalique crystal, and Cristofle silver.

Meanwhile, more middle- and lower-class Egyptians are taking overcrowded buses, riding in old jalopies, or driving donkey carts. Unemployment stands at 20 percent. Cuts in the subsidies for oil, sugar, and meat, higher gas and electricity prices, and reductions in the government's education and health budgets make it harder to make ends meet.

"Life is harder," says Kamla Obd Mohamed, a mother of three who works as a maid for $200 a month and lives in a poor Cairo suburb, Bulaq al-Dakrour. "Things that cost E10 (US$3) are now E20 or E30. I want to buy pants for my son, but I can't. Meat is more expensive, and rice."

Government officials deny that the gap between the rich and the poor is growing. They say that the hardest part of economic reform is past; Egypt's economy, with a budget deficit under 2 percent and inflation at less than 9 percent, is healthier, Egyptians will start to enjoy some benefits of reform, including more jobs, they say.

Nabil Osman, chairman of the State Information Service, says, "The most painful stage of economic reform is behind us."