Egypt is the largest country in the region, with more than 60% of its population under the age of 30. It was the needs and aspirations of those young men and women that ignited the January 25 and June 30 events. Their need for jobs, freedom of expression, political participation, transparency, social justice and a brighter outlook solidified their resolve to bring about change for a new Egypt. However, the Egyptian economy has also witnessed economic repercussions following the revolution. We are facing a high level of annual inflation, reaching 9.74% in August 2013; decreasing net international reserves of roughly $18.9bn; and increasing levels of unemployment, which reached 12.7% in 2012.
Yet net foreign direct investments in the first nine months of the 2012/13 fiscal year were at $1.4bn. Furthermore, projections and assessments for the future have highlighted the economy’s ability to overcome these repercussions, benefitting in part from an open political system and institutional strengthening that is reflected in an aggregate GDP growth of 2.3% during the first three quarters of 2012/13 and which is expected to reach 3.5% by the end of the year. Based on a gradual return to normal business operations and an abundance of raw material, in addition to the cost factor advantages of a young and talented labour force, and proximity to major international markets, we believe the outlook for Egypt looks increasingly promising.
Our primary goal now is to achieve a more stable investment climate by addressing the problems facing investors. It is worth mentioning that we are looking for greater dialogue and cooperation with the private sector in order to understand their concerns and find solutions, thus bolstering confidence as soon as possible. Observers also expect the economy to see even higher growth rates as security and stability are restored in Egypt and production is given high priority.
In an effort to improve the economy, the Ministry of Investment has put into action an ambitious plan whereby it is targeting labour-intensive and non-energy-intensive sectors, which include agro-processing and agriculture, textiles, spinning and weaving, tourism, renewable energy, health and education.
The ministry’s plan aims to encourage growth by improving the legislative environment and simplifying procedures for inland investments; encouraging private and public partnerships; and supporting small and medium-sized enterprises (SME) by linking them to large projects within an integration framework.
An example of this is GAFI’s new Bedaya Centre for Entrepreneurship and SME Development, which has been established with a target size of LE1bn ($142.3m) and seeks to encourage young entrepreneurs, which is very important given that boosting SMEs is key to development for any economy, and in Egypt that is particularly true for its youth.
Finally, the modification of the Investment Law No. 8 of 1997 will help allow for a more clear-cut reconciliation mechanism between investors and the government in all legal disputes. This reform allows for what is considered one of the most important means towards new investment, and it was introduced with the purpose of starting a new era of trust between the government and investors. GAFI endorses five mechanisms for dispute resolution, each one of which is focused on resolving business conflicts and ensuring the transparency that investors are seeking.
As it is well known that there are many government organisations involved in the process of investor land allocation and acquisition, there is a new proposal to make the Ministry of Investment the single point of contact in an effort to facilitate future transactions, whether these are outright purchases or longer-term leaseholds. We are confident that noticeable changes will occur in these areas within a few months. Furthermore, the Ministry of Investment will arrange official visits, promotional missions and road shows, with both indoor and outdoor events, to emerging markets and BRICS countries to strength investment ties. We will also be promoting public-private partnerships, which we believe will be the new driving force of the economy.
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