The Report: Egypt 2022
Located at the geographic centre of the MENA region, Egypt has a well-documented history that has seen it accumulate knowledge and wealth over millennia. Egypt proved resilient during the Covid-19 pandemic: it was the only country in the MENA region to record positive GDP growth in 2020. Its economy has been widely driven by the execution of Egypt Vision 2030. This plan notably aims to increase annual GDP to 12% in 2030.
Country Profile
Egypt was seen as a global centre of knowledge, science, and development throughout antiquity. Today, it stands in an economically advantageous location, straddling the Mediterranean and the Red seas, and at the confluence of Europe, Africa and Asia. The Suez Canal, completed in 1869, is one of the world’s busiest shipping lanes. Moreover, Egypt’s population is large and rapidly expanding, at a rate around 2.5% a year. It is seen as one of the country’s greatest economic assets if it can be harnessed by effective public policy. Moreover, the country is also characterised by a bottom-heavy population pyramid. The large youth cohort helps to limit the overall burden on the health care system, as evidenced by the relatively successful navigation of the Covid-19 pandemic. This chapter contains a viewpoint with President Abdel Fattah El Sisi of Egypt.
Explore chapterEconomy
Egypt’s robust fundamentals – supported by a diversified economy, sustained levels of consumer spending and a large workforce – has created a dynamic business climate and helped further develop the economy. This has enabled the country to avoid some of the more severe repercussions of the Covid-19 pandemic faced by neighbouring nations. According to IMF forecasts, GDP is expected to expand from $402.8bn in 2022 to $584.9bn in 2026. While Egypt’s oil and gas sector has been a significant recipient of investment – attracting $74bn between FY 2014/15 and FY 2019/20 – the economy is diversified, with opportunities across multiple sectors. Industry was the largest contributor to the economy in FY 2020/2021, followed by retail, agriculture and real estate. This chapter contains a viewpoint with Mohamed Maait, the minister of finance.
Explore chapterFinancial Services
Years of careful financial regulation have helped to create a robust banking system. The sector has continued to boast low levels of non-performing loans, high capital adequacy ratios and sufficient provisioning. As a result, by 2022 it was clear that Egypt had avoided some of the worst economic consequences of the Covid-19 pandemic seen elsewhere. As of April 2022 around two-thirds of Egypt’s population remained outside the banking sector, underscoring opportunities in the sector. However, new challenges arose with Russia’s invasion of Ukraine in February 2022. Turbulence in capital markets led to a significant squeeze on foreign exchange liquidity, with the Central Bank of Egypt issuing restrictions on non-strategic imports in the first quarter of the year. Overall, the 2022-23 period is likely to continue to bring volatility to global financial markets. This chapter contains an interview with Hussein Abaza, CEO, Commercial International Bank.
Energy & Utilities
Egypt has turned its oil and gas industry around in the years since 2015: heavy investment in this industry now places Egypt in an advantageous position to capitalise on the resurgence of global travel and economic activity. The opening of new transport routes for hydrocarbons will help the country become a global energy centre connecting Europe, MENA and Asia. In addition to redeveloping its oil and gas operations, Egypt is also expanding its renewable energy and nuclear segments as a means of diversifying the energy mix and decarbonising the economy. Indeed, in January 2021 the Ministry of Petroleum and Mineral Resources announced plans to explore nine new oil and gas sites, with an investment of $1.4bn to drill 23 new wells. This should lead to greater energy security and allow the government to meet the needs of a large population.
Explore chapterIndustry & Retail
Egypt has made some progress in improving industrial development, but the government is working to focus on specialisation in certain segments – particularly textiles and pharmaceuticals. Indeed, scaling up investment in manufacturing is a policy priority, as the country’s value-added growth in this sector has been sluggish compared to other emerging economies. Namely, the country aims to accelerate industrialisation and shift from low-value-added to high-value-added, technology-intensive manufacturing segments. Nonetheless, despite Covid-19 pandemic-induced economic headwinds, the Egyptian retail sector has made significant progress in recent years, particularly in food retail and e-commerce. These segments saw rapid growth due to lockdowns and rising internet penetration rates. In FY 2019/20 and FY 2020/21 the private sector’s share of total investment in the retail and wholesale sectors amounted to 95% of the total, at $9.5bn and $7.4bn, respectively.
Explore chapterICT & Innovation
The development of Egypt’s ICT sector is supported by concerted efforts to diversify and develop a knowledge-based economy. Indeed, ICT’s contribution to GDP steadily rose from $5.1bn in FY 2017/18 to $8bn in FY 2020/21. Moreover, the pandemic saw a swift increase in demand for telecom services. In September 2021 the authorities announced a $360m plan to provide more than 60m people in 4500 villages with fibre-to-the-home internet. Moreover, the establishment of smart cities will also drive the adoption of next-generation technologies such as the cloud computing, artificial intelligence and 5G, with the internet’s contribution to GDP forecast to expand from $15.5bn in 2020 to $26bn in 2025 and $103.3bn in 2050. Finally, the government is working to develop digital payments and online shopping that will help sustain investment as companies adapt to meet new customer demands. This chapter contains an interview with Adel Hamid, CEO, Telecom Egypt.
Explore chapterConstruction & Real Estate
The government of Egypt has placed a strong emphasis on construction as a key engine of urban growth since the ambitious IMF-backed economic reform programme in 2016. Much of the sector’s underlying demand is a result of the growing population which, in turn, has created a need to develop new cities such as the New Administrative Capital. Overall, such mega-projects look set to drive construction activity from 2022 onwards. While the Covid-19 pandemic put pressure on real estate sales after a partial lockdown in early 2020, the sector has demonstrated resilience over the medium term. The 3.7% expansion of the real estate sector in FY 2020/21 outpaced that of the general economy and helped offset some of the losses seen in tourism and manufacturing. The market is likely to continue its shift towards high-income, mixed-use retail developments in areas such as East Cairo.
Explore chapterTransport & Logistics
While the 2020-22 period saw supply-chain disruptions, the high number of transport projects under development has helped to bolster Egypt’s transport and logistics prospects. Indeed, 30,000 km of new roads are set to be completed by the end of 2024, and in May 2021 the government signed a memorandum of understanding to begin the development of the Bus Rapid Transit project on the Cairo Ring Road. These efforts will also integrate Egypt more fully into global value chains, a long-standing priority given the country’s advantageous position between Europe, the Middle East and Africa. However, financing remains a hurdle. To solve this, the government has continued to liberalise market access to attract private capital and close the funding gap. This chapter contains an interview with Ramy Salah Eldeen, Managing Director, Alstom Egypt.
Explore chapterAgriculture
While Egypt’s agriculture sector is well established, the country continues to face challenges related to climate change, urbanisation, a rapidly expanding population, and food and water insecurity. For instance, some related industries were notably affected by Covid-19 pandemic restrictions and disruptions to the global supply chain. Egypt was among the most affected by the February 2022 invasion of Ukraine, as it is the world’s largest wheat importer, with 80% of its wheat originating from Russia and Ukraine. However, the government has introduced reforms aimed at improving irrigation techniques and cultivation efficiency to reduce water and food insecurity. For instance, nearly 60 desalination plants are now in operation processing 440,000 sq metres of water per day, and the country aimed to open 39 additional plants as of mid-2021. Moreover, private investment, mechanisation and digitalisation could modernise methods and inputs.
Explore chapterTourism
In 2020, when international arrivals and tourism operations were affected by the Covid-19 pandemic, there was a worry that the tourism industry would lose its post-2017 momentum. However, efforts have been made to maintain the upward trend. Indeed, public investment in the tourism sector and concerted marketing campaigns aimed at fuelling engagement laid the groundwork for a rebound. In May 2021 the Central bank of Egypt amended an initiative to make it easier for hoteliers to afford renovations, financing a maximum of 90% of the costs of replacement and renewal, up from the previous 75% coverage. Moreover, the government has sought to bolster the domestic tourism market, encouraging Egyptians to take their holidays in cultural destinations. Looking to the future, the Grand Egyptian Museum, home to around 100,000 artefacts, is opening its doors in 2022.
Explore chapterHealth & Education
The Covid-19 pandemic brought the limitations of the Egyptian health care sector under the spotlight, notably in regards to the medical staff-to-patient ratios and hospital bed numbers below the regional average. However, the health crisis has also helped to spur investment across the sector, especially in telehealth and medical technologies. Egypt is now advancing in its aim to deliver universal public health care to its entire population. In a similar line, education has been a primary policy priority for the current administration. The so-called Year of Education in 2019 has led to several large-scale changes, notably new school curricula with a greater focus on foreign languages and technology. While the pandemic negatively affected the student population by limiting access to in-person classes, it facilitated the adoption of education technology development in Egypt.
Explore chapterLegal Framework
Foreign investors looking to establish a business in Egypt – whether directly or through a joint venture – can enter the market by establishing a legal entity, the structure of which would depend on the needs and the scope of business involved. The government continues to work to attract investment, especially in several mega-projects in fields such as electricity, energy, industry, agriculture, health care and construction. Investment Law No. 72 of 2017 grants general incentives and guarantees for companies incorporated under its remit, as well as special incentives for projects that are prioritised by the government. These guarantees include equal opportunities for all investors – irrespective of their nationality. This chapter contains a viewpoint with Girgis Abd El Shahid, Managing Partner, Shahid Law Firm.
Explore chapterThe Guide
The Guide contains listings of accommodation options in Cairo for both business and leisure travellers. Helpful information is laid out on visa regulations and business etiquette, as well as on public and private transport options for navigating during your stay.
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