Egypt’s economy has demonstrated strong economic growth, even during the financial crisis. In the fiscal year 2008/2009 that ended in June, the economy grew at 4.7%, whereas other countries had negative growth rates[2].Also, over the past two years, the country’s GDP growth rate has been better than the average of the MENA region, and around two percentage points above the global average[3].
Egypt is also among the 10 most active reformers for the fourth time. It moved up to 106 from 116 among 183 economies worldwide in the overall ease of doing business ranking. According to the report “Doing Business 2010: Reforming through Difficult Times”, Egypt made progress in various areas, improving its investment climate[4].
Egypt’s diversified economy is one of its unique characteristics, when compared to the MENA region. In 2008/2009, manufacturing made up 15.8% of GDP, while extraction accounted for 13.9% and agriculture, irrigation and fishing for 14.0%. The following graph gives more details of the composition of GDP by sector, as of July-March 2008/2009[5]
Source: Central Bank of Egypt, 2008/09.
Egypt enjoys a large, competitively priced labor force that enables businesses to be more cost effective.
Egypt is a net regional exporter of labor services, and possesses the largest pool of low-cost labor in the region, with a labor market in excess of 22 million workers[6].
Egypt also possesses a large domestic market due to its large population size and its increasing per capital income.
Dozens of global consumer brands have entered the Egyptian market and retail sales have expanded, as the Egyptian consumer market gains more significance. Egypt’s relatively young population (56.5% between the age of 15 and 60) has positively impacted investment trends in Egypt[7].
Egypt has the advantage of easily accessing major international markets across the globe, due to its various bilateral and multilateral agreements with other countries and regions. These include:
· The EU-Egypt Association Agreement
· The Qualifying Industrial Zone (QIZ) agreement
· The Greater Arab Free Trade Agreement
· The COMESA
· The Agadir Agreement Also easy access to key global markets in Europe, the Arab world, Africa, and the Indian Subcontinent is enabled by the country’s location on important international logistics routes, giving exporters operating in Egypt a competitive edge over their rivals[8].
Facts about Egypt’s Economy and Investment Climate
· Egypt’s population growth rate (2008/2009) is 1.9%, reflecting an increasing domestic market[9].
· FDI inflows have reached US$ 8.1 billion FY 2009, one of the leading FDI inflows in the world amid the financial crisis[10].
· Corporate tax rate stands at 20% of net annual profit, down from 42%[11].
· Egyptian workers earn only 47% of the salary of their Tunisian counterparts in the textile industry, 36% of Moroccan salaries, and 32% of the wages earned by Turkish workers[12].
· Steel prices have decreased through the first 3 quarters of 2009 from L.E. 3981 in January to L.E. 2920 in September 2009 (Source: Information and Decision Support Center, November 2009).
Egypt’s Vital Economic Sectors
Among the nation's fastest–growing sectors are tourism, communication and information technology, banking, agriculture, industry, construction, manufacturing and transportation.
· Tourism Sector
Residential tourism in Egypt is one of the sectors that have high potential. In fact, the Egyptian-British chamber of commerce has adopted residential tourism as its major area of interest due to its importance. This type of tourism is ideal in Egypt, as it is characterized by a high level of spending by tourists. There are a number of British success stories in Egypt in this field[13].
· ICT Sector
The ICT sector in Egypt has shown strong growth over the past years. According to Noozz, reports revealed that Egypt's overall economy expanded by 4.7 percent in the fiscal year through June [2009], fuelled by the expansion of its ICT industry, which grew by 14.6 percent.
There are many information technology and telecom investment opportunities in Egypt. The most important opportunities lie in the core backbone, public data and Internet services, wireless local loop networks, and mobile networks[14].
Egypt has also strengthened its position as one of the world's fastest growing outsourcing destinations over the past year through a number of international MoUs, and investments in the country's ICT infrastructure and education[15].
· Banking Sector
Egypt’s banking and financial sector has been proven to be strong, despite the financial crisis. The following aspects have contributed to strengthening the sector:
- Egypt’s 2004-reforms have eliminated weak banks and improved the banking system’s asset quality and capital adequacy.
- Egypt has abundant liquidity that is generated by the increase of projects in different growing sectors, and by the economy’s solid growth[16].
· Agriculture Sector
The agriculture sector is considered one of the major sectors in Egypt’s economy. Its importance comes from its role in ensuring food security, as well as being the main feedstock for many industries[17].
Prepared by: The British Egyptian Business Association (BEBA)
[1] Financial Times, December, 2009
[2] Zawya, November 5, 2009
[3] General Authority for Investment, 2009
[4] The World Bank Group, September 2009
[5] General Authority for Investment 2008/2009
[6] General Authority for Investment, 2009
[7] General Authority for Investment, 2009
[8] General Authority for Investment, 2009
[9] Information and Decision Support Center, November 2009
[10] General Authority for Investment, 2009
[11] Ministry of Investment, 2009
[12] Ministry of Investment, 2009
[13] Ministry of Foreign Affairs, July 11, 2009
[14] Ministry of Communications and Information Technology, December 2009
[15] Ministry of Finance, August 26, 2009
[16] Global Investment House, February 2009
[17] Global Investment House, February 2009
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