This post is inspired by the latest tragic event in the Mediterranean Sea where a boat filled with almost 600 undocumented immigrants capsized and it was reported that most of them had died drowning. The boat took off from the Egyptian coast and was filled with multiple nationalities including, Egyptian, Sudanese, Ethiopian, Syrians and maybe others. Of course this is not a new story, actually it became too common to see in headlines that most people grow numb to this humanitarian disaster and started asking if these people can secure a lump sum of money to pay smugglers, why they don’t invest it in their own community and save themselves and their families the troubles.
Are you still calling them “illegal immigrants”?
First, let’s correct the widely used term “illegal immigrants”. This term is wrong and gives legitimacy to centuries of colonialism where imaginary borders were drawn to control the flow of natural resources and it follows the strategy of divide and concurs. The correct term is “Undocumented immigrants”, which has many reasons nowadays mostly economic or fleeing war. Again the main reason for such phenomena goes back to colonial history and the unequal distribution of wealth around the world. So if you think your country did it right and others were just lazy or didn’t have the capacity to advance, you are terribly wrong and need to do some reading. I suggest you start by Re-Envisioning Global Development: A Horizontal Perspective for Sandra Halperin, it’s a light read and goes into detail of how we arrived in today’s tragic events.
Now to answer the main question we have to do some math. According to news outlets, it cost almost 70,000 LE “Egyptian Pounds” for a person to secure a spot on the boat to cross the Mediterranean Sea. That roughly $7,900 and if we imagine for a second that ten of these immigrants joined forces and invested in a venture project, this means that they would collectively have $79,000.
What can you do with $80,000? Many would jump to the conclusion that you can establish a business with such amount of capital, but this is wrong because it is assuming that there are no barriers to market entry.
From the Egyptian perspective, what are the barriers to domestic market entry?
- Corruption: In Egypt, if you decide to start a business you are forced to pay facilitation fees in almost every interaction with a government entity to get the required permits ad fulfill regulations. But wait there is more, fulfilling such regulation and permits doesn’t mean that you are safe. If you succeed if opening your business at any given day you might be faced by whatever government authority showing up at you business demand a fine or treating you with closing your business for whatever reason and of course you have to pay more facilitation fees.
- High capital investment needed for any market entry vs low returns: Do to economic instability the government seek to create many new taxes and tariffs to create revenue streams which have led to dramatically lowering the Return of Investment “ROI” for capital. Before Sisi’s term a common ROI was 20%, now it’s less than 10% leaving capital shy to invest and safer at banks with a flat ROI of 12%.
- The militarization of Imports and Exports: The Egyptian army now controls almost 70% of the Egyptian economy. The army intervenes to solve “supply problems” and end up pushing private business from markets with the rationale of national security. In this case, if your business depends on any raw materials that have to be imported you are on your own. Not just because you are in competition with the Army which has “Slave labor” and usually price goods and services almost at cost price to gain political advantage, but you have to secure foreign currency which is almost impossible to achieve legally now in Egypt. “Most of the foreign currency flow has stopped due to instability”.
- Taxation without representation: I know this is an American term, but it defiantly applies for the current situation in Egypt. The process of determining your tax as a business can be least described as random and of course, corruption here plays a major role. Like most countries, the reach gets lower tax brackets and sometimes pay a facilitation fee and conclude many under the table deals to reduce their taxes sometimes to 0%. While the rest might find themselves with millions of Egyptian pounds in taxes due to an error or as a signal for a bribe and they have to expose their resources to settle. Some of these cases extend for decades and of course the poor person has to pay the lawyers’ fees etc..
- Not all undocumented immigrates are economic immigrates: Another false assumption is that all persons who take the decision to take such risk are looking for a job opportunity. This can be proved by looking at immigration patterns. Longtime ago undocumented immigrates were mostly males, who would risk to cross to the other side and work in inhumane conditions just to secure a lump sum of money to send back to his family. Now, we all see in the news entire families taking the risk and when tragedy strikes we are faced with shocking images of little angles bodies lying on the sand. This is an indication of the miserable conditions of oppression and dictatorship that our lands had come
- Getting 10 people to agree to invest in the same project: This point is just about how hard is it for humans to organize and collaborate. You can’t get people to agree on which movie to watch in their living room, good luck getting them to invest in a project together.
Forgive me for the length post, but I’ve only scratched the surface. This topic can be the title of a master’s thesis or even a Ph.D. I have tried to address some of the visible issues associated with undocumented immigrants rational. Some fact checking is needed, but I guarantee it won’t be too off from reality. Also, I intended to write in English so I can target a wider audience.