Egypt is the third-most-populous country in Africa and the 15th worldwide, according to World Bank figures. As of 2017 the number of residents was estimated to have reached 92m. Arabic is the official language and the only one widely understood across the entire country. Over the last 15 years, Egypt has been undergoing a transformation into a market-oriented economy. The country currently maintains a lower-middle-income status. While there is substantial potential to push the country towards middle-income status, GDP growth rates were stalled – first by the global economic crisis and then by political instability. Nevertheless, the economy grew at a rate of nearly 4% in FY 2014/15 and FY 2015/16. Egypt is a presidential republic. The current president is Abdel Fattah El Sisi, who was elected to his first four-year term in May 2014, following the removal of the previous administration of Mohamed Morsi.
This chapter contains interviews with President Abdel Fattah El Sisi; and Akinwumi Adesina, President, African Development Bank.Explore chapter
Egypt’s GDP per capita of $3615 in 2015, according to the World Bank, is considerably lower than the world average of $10,058, and establishes the country as lower-middle income. The nation’s transition from an energy exporter to a net importer of gas has resulted in a stubborn current account deficit. Nevertheless, Egypt entered 2016 on the back of some encouraging economic data. According to the Ministry of Planning, real GDP for FY 2014/15 grew by 4.2% at market prices, the most rapid rate of expansion since the 2011 revolution. Improving Egypt’s investment credentials will remain a key concern for the government over the coming year, as it seeks to shift the burden of development from the state to the private sector. The promulgation of the new Investment Law will bring much-needed clarity to important investment factors such as free zones, tax exemptions and the purchase of state-owned land. In the short term, however, the government is likely to continue to face considerable economic challenges.
This chapter contains interviews with Mohamed Khodeir, Chairman, General Authority for Investment; Anis Aclimandos, President, American Chamber of Commerce in Egypt; and Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development.Explore chapter
Egypt’s banking sector has shown itself capable of weathering difficult economic circumstances in recent years. However, profitability has been challenged by a range of forces, including significant changes made in 2016 to the regulatory framework surrounding lending activity and a shortage of foreign currency that negatively affected the daily operations of banks and wider investor sentiment. The sector is also undergoing something of a shake-up in terms of ownership, following an announcement in 2016 by the Central Bank of Egypt that the country intends to sell stakes in two state-owned lenders. Egypt’s banking sector is likely to continue to face some significant changes in 2017-18. The country’s lenders are still well placed to weather volatility, and are generally in good health, but the coming months will test their ability to adapt to changing circumstances.
This chapter contains an interview with Khalid Elgibali, Division President, Mastercard MENA.Explore chapter
The year 2016 was a difficult one for exchanges across the MENA region, due in large part to persistently low oil prices and political unrest. Egypt’s main index reflected the regional malaise for the first half of 2016, with a currency crisis and seemingly intractable fiscal deficit impacting investor confidence. By the second half of the year, however, the index was climbing once again as negotiations regarding an IMF lending programme were nearing a successful conclusion. While significant challenges remain, not least the direction of Egypt’s economy over the coming years, the Egyptian Exchange (EGX) and its regulator continue to develop one of the region’s most important exchanges. While the ability of the EGX to attract both new listings and investors is tied to the wider question of Egypt’s macroeconomic performance and the vicissitudes of global politics, the exchange is well positioned to grow should circumstances allow.
This chapter contains interviews with Sherif Samy, Chairman, Egyptian Financial Supervisory Authority; Hussein Choucri, Chairman and Managing Director, HC Securities & Investment; and Omar El Maghawry, CEO, FEP Capital.Explore chapter
The Egyptian insurance industry, one of the oldest in the region, has shown a welcome degree of resilience in recent years. Despite its long history, however, the market remains at a relatively nascent stage of growth compared to those in more advanced economies, characterised by a low penetration rate and modest insurance density. While this means that growth opportunities abound, questions remain as to how they will be achieved. Despite these obstacles, there is significant potential for development in Egypt’s insurance industry. Oil importing economies in the MENA region, such as Egypt, are likely to see premiums grow in excess of GDP growth where governments are able to maintain their determined development plans.
This chapter contains an interview with Corneille Karekezi, Group CEO, Africa Re.Explore chapter
Egypt is one of Africa’s main oil and gas producers, but it is also the continent’s largest consumer of energy. Both oil and gas are found throughout the country in multiple onshore and offshore regions, including the Mediterranean Sea, which is emerging as a major new gas basin. Nevertheless, sourcing enough supply to meet demand is the sector’s central challenge, even as these discoveries are expected to contribute significantly to meeting demand within the next few years. With discoveries in 2016 and the expectation of future upstream findings, Egypt is well on its way to addressing the supply side of its energy provision problem. Managing demand increases through subsidy cuts is a longer-term proposition, and Egypt is working to become a net energy exporter again.
This chapter contains an interview Tarek El Molla, Minister of Petroleum and Mineral Resources.Explore chapter
Industry & Retail
With a market of 92m consumers and growing, Egypt is a natural fit for manufacturing industries. The sector spans a diverse range of activities, largely led by the private sector, that range from building materials and downstream processing, to long-running textile factories, as well as competitive food and fast-moving consumer goods segments. Yet the government hopes to further expand, and its goals for the sector are ambitious. Manufacturing accounted for approximately 16.6% of the country’s GDP in 2015, with medium-term plans to create 3m jobs and increase its share to 25% by 2020, in part through the development of new industrial zones. Egypt’s industrial sector features substantial attractions for long-term investment, including a large consumer base, low labour costs and a potential gateway to the growing African middle class. Short-term obstacles remain, however, starting with the Egyptian pound’s struggle to stabilise against major international currencies and continued instability in gas supply; yet the goal of long-term growth remains the key priority. Egypt’s retail market is competitive and highly fragmented. The maturing formal retail sector features a range of shopping malls, supermarkets, hypermarkets and smaller franchised competitors, as well as the more informal options that have traditionally served Egypt’s shopping needs, such as souqs, street vendors, independent high-street shops and neighbourhood corner stores.
This chapter contains interviews with Mohamed Zaki El Sewedy, Chairman, Federation of Egyptian Industries; and Hassan Nouh, Managing Director, Ezz Steel.Explore chapter
Transport infrastructure is one of the current priority areas for development by the Egyptian government, which is looking to roll out an era of mega-projects. Roads are congested, with 92m people competing for space with trucks and trailers, as almost all commercial goods in the country are moved via roads. The process of refurbishing ports and rail lines is under way, but are in need of further investment, and private sector partners are involved. Though concerns remain about whether the government is currently deploying its resources in the best available spots, Egypt’s ability to attract aid and concessional financing helps the government to prioritise more projects than it otherwise could on its own, and the effectiveness of this approach will be assessed over the next several years, helping to further clarify the long-term vision.
This chapter contains interviews with Mohab Mameesh, Chairman and Managing Director, Suez Canal Authority; and Ahmed Darwish, Chairman, General Authority for the Suez Canal Economic Zone.Explore chapter
Telecoms & IT
As of the end of 2016, Egypt’s telecommunications sector was strongly positioned for future growth. With more than 95m mobile subscribers, the nation’s three mobile telecoms providers – namely Vodafone Egypt, Etisalat Misr and Orange Egypt – are investing heavily in network expansion, quality of service improvements and new technologies. This has accelerated in recent months, following the National Telecom Regulatory Authority issuance of four 4G LTE licences in mid-2016. While the licensing of 4G LTE service providers in Egypt bodes well for consumers, the operators face a tightening competitive environment. Furthermore, all three mobile operators report relatively narrow margins and various infrastructure-related challenges, while mobile data – and smartphone usage – is still seeing slow uptake. The steady advance of ICT over the past decade has left Egypt’s tech industry in a strong position, despite the nation’s ongoing economic and political challenges. The country has seen a significant rise in internet penetration in recent years, as a result of growing usage among middle-class Egyptians and the business community, rapidly expanding international bandwidth, as well as the accompanying lower tariffs. While Egypt’s strong fundamentals, state-led support programmes and large tech-savvy workforce bode well for the future of the domestic ICT industry, numerous challenges lie ahead.
This chapter contains an interview with Ashraf Sabry, CEO, Fawry.Explore chapter
Recent macroeconomic trends – particularly the depreciation of the Egyptian pound and the foreign currency shortage – reflected both positively and negatively on Egypt’s real estate market throughout 2016, resulting in mixed results and predictions across the sector. The situation was felt across all sectors, but it had a particular impact on the real estate market. On the one hand, investment in property continues to be a relatively stable prospect in uncertain times. On the other hand, the depreciation of the Egyptian pound resulted in increased construction costs for imported materials and corresponding delays, diminished the amount of disposable income for the population and made profit generation a challenge for the retail segment. Yet despite some economic setbacks and continued legislative hurdles, there is reason for optimism in the country’s real estate sector. While growth rates may have slowed for the moment, and foreign currency shortages have delayed some projects, demand remains strong and housing needs across the income spectrum must be met.
This chapter contains interviews with Ayman Ismail, Chairman, New Administrative Capital; and Ahmed El Hitamy, CEO, Madinet Nasr Housing and Development.Explore chapter
As cranes tower over the skies of an ever-expanding Cairo and billboards advertising new housing developments, universities and malls proliferate throughout the city, it is clear that after several years of uncertainty Egypt is in the midst of a construction boom. Large government priority projects, such as the New Administrative Capital, the expansion of the Cairo metro and water treatment projects in Upper Egypt, continue to promote growth in the sector. The Ministry of Finance cites construction as one of the most important sectors in terms of its contribution to economic growth in the coming years. With strong demand for energy and infrastructure projects, as well as real estate, the sector is likely to see steady expansion. However, it has not been immune to the short-term economic instability in the aftermath of the currency float, posing challenges amid potential.
This chapter contains an interview with Osama Bishai, CEO, Orascom Construction.Explore chapter
The tourism industry in Egypt is continuing its drive to regain its international reputation as a world-class destination and to further develop non-traditional tourism niches, as the government remains determined for the sector to retain its position as a key driver of the economy and critical source of foreign currency, even after five challenging years. Indeed, with a variety of government-led initiatives, as well as regional and international support, operators are still hopeful the sector can regain momentum. However, given lingering security and currency issues, it is difficult to predict exactly what the coming years will hold for Egypt’s tourism sector. The industry would benefit from an extended period of peace and stability to enable tourist inflows to rebound. Yet with the government’s commitment to revive the industry through investing in both conventional and niche tourism, and its efforts to promote the country as an attractive destination, there is plenty of scope for long-term growth.Explore chapter
Agriculture & Agro-industry
Despite steadily increasing urbanisation in recent years, the agriculture sector remains a cornerstone of Egypt’s economy, both in terms of overall value-added output and employment. Egypt produces a wide range of crops and other agricultural products, including cereals such as wheat and corn rice, fruits and vegetables, sugar, cotton, dairy products, livestock and fish, among others. Solid support for agricultural activity on the part of the government and new opportunities for domestic and foreign investors alike point to an expansion of the sector in the coming years. However, Egypt’s agriculture sector still faces a range of challenges. High and rising rates of inflation are an issue, with the annual food and beverage inflation rate at 13.8% as of October 2016, up significantly from 11% a year earlier. The current government has set out a series of focused agriculture-focused programmes in a bid to address these issues.
This chapter contains an interview with Ahmed El Rashidi, Managing Director, El Rashidi El Mizan.Explore chapter
Health & Education
Continued efforts to address the health care needs of its large and growing population have resulted in varied opportunities for the development of Egypt’s health care space, particularly in the form of private sector investment. While the country has continued to see some positive steps, especially in the arena of primary care access and infant and maternal care, progress has been stalled on some other priorities, including the long-promised universal health insurance initiative. While there is still some heavy lifting to be done, Egypt is likely to make progress on goals for quality and equitable health care access, if the government can meet its commitments to increase public spending on health initiatives, attract additional foreign investment for facility upgrades and research, and increase equity of access through the passage of the universal health coverage law. Overhauling the education system has remained on the Egyptian government’s long priority list following the 2011 revolution, and for good reason. In 2015 approximately 33% of the 92m-strong population were under the age of 15, according to the World Bank. The Strategic Plan for Pre-University Education Reform 2014-30 published by the Ministry of Education states that every child has an equal right to receive a quality education in accordance with international standards, thus allowing every child to contribute effectively to the social and economic development of the country and to compete regionally and globally.Explore chapter
In conjunction with Deloitte, OBG explores the taxation system, examining Egypt’s investor-friendly environment.Explore chapter
OBG introduces the reader to the different aspects of the legal system in Egypt, in partnership with Helmy, Hamza & Partners.
OBG talks to Mohamad Talaat, Managing Partner, Helmy, Hamza & Partners, on beneficial laws and current developments.Explore chapter
This section includes information on hotels, government ministries and other listings, alongside useful tips for visitors on topics like currency, visas, language, communications, dress, business hours and electricity.Explore chapter
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