Egypt: a magnet for foreign investment
The country has made itself a beacon for overseas investors, compelled by favourable incentives and a large and dynamic domestic market.
Egypt has undertaken considerable efforts to turn itself into an investment hub, and with some success; the country is Africa’s largest recipient of foreign direct investment (FDI) flows, which in 2019 grew by 11% to $9bn. The total stock of FDI stands at $126.6bn, according to the United Nations Conference on Trade and Development’s (Unctad’s) Global Investment Trends Monitor 2019 report.
Unctad said economic reforms undertaken by the Egyptian government have improved macroeconomic stability and boosted investor confidence. Although much foreign direct investment was still driven by the oil and gas industry, which absorbs about two-thirds of total foreign investment, capital is also seeping into a diverse range of sectors, including communications, financial services, consumer goods and real estate.
The government has framed its investment policies to stimulate investment and enhance production, in addition to supporting economic activity with technical support programmes, training and capacity building.
Investors have been attracted to Egypt’s intoxicating mix of rapid GDP growth, a strategic geographical position, a skilled labour force and, crucially, a large domestic market. The country’s Investment Law includes performance requirements for certain investment incentives. The government has also established special economic zones with tax incentives and more rapid facilitation of registration and customs procedures.
In December 2019 President Abdel Fattah Al‑Sisi placed prime minister Mostafa Madbouly directly in charge of the government’s investment portfolio, with direct oversight of the investment and administrative reform portfolios. The investment portfolio is now run through the General Authority for Investment and Free Zones, while administrative reform will come under the Central Agency for Organization and Administration. The aim is to speed up the work and prevent overlap.
Egypt has witnessed a busy projects market in recent years, attracting sizeable foreign funding for some major infrastructure schemes. For example, Egypt’s first nuclear power project is proceeding with $25bn in Russian finance. Investors from the Gulf Cooperation Council states, as well as Asia and Europe, are also investing in projects across sectors ranging from real estate to rail.
Despite the pandemic, the government has been busy this year in pushing major new strategic economic projects. At the end of May, Egypt’s Minister of Petroleum and Mineral Resources, Tarek El-Molla, announced a $19bn plan for the country’s petrochemicals sector. This would consist of 11 projects that would be implemented between 2020 and 2035, that will be supported financially by the US International Development Finance Corporation and the US Export-Import Bank.
Plans also call for investment in new affordable homes: the Ministry of Housing estimates 500,000 will be required annually to match demand. Transport is also likely to prove a major recipient of investment. The national transport ministry and the Egyptian Railway Authority have announced plans this year to launch a rapid transit bus system for Cairo’s ring road, along with road expansion work and new stations built with links to metro Line 3 stations in Cairo and Giza.
The investment plans are rooted in Egypt Vision 2030, the country’s roadmap for a long-term sustainable development strategy. The concept is based on 10 pillars:
Pillar I: Economic Development
By 2030, the Egyptian economy will be a disciplined market economy that is characterised by stable macroeconomic conditions. The Egyptian economy will be an active player in the global economy, capable of adapting to global variables, maximise the added value and provide job opportunities, as well as making the real GDP per capita reach the ranks of upper middle-income countries.
Pillar II: Energy
By 2030, the energy sector will be able to meet all the requirements of sustainable national development of energy resources, leading to an effective contribution in promoting economic growth, national competitiveness and social justice as well as preserving the environment and showing leadership in the fields of renewable energy and rational sustainable management of resources.
Pillar III: Knowledge, Innovation and Scientific Research
By 2030, Egyptian society will be creative, innovative and productive in the fields of science, technology and knowledge, characterised by the existence of an integrated policy that includes the development value of innovation and knowledge.
Pillar IV: Transparency and Efficiency of Government Institutions
By 2030, the administrative apparatus will be efficient and effective. Besides, it will be characterised by transparency, fairness, and flexibility, it will be subject to accountability and it will work to increase citizens’ satisfaction, and will interact with and respond to them.
Pillar V: Social Justice
By 2030, it is targeted to build a fair society characterised by equality of rights, as well as economic, social and political opportunities with the highest degree of societal integration.
Pillar VI: Health
By 2030, all Egyptians shall enjoy the right to a safe and healthy life, through the implementation of an integrated health policy.
Pillar VII: Education and Training
By 2030, high quality education and training shall be made available to everyone.
Pillar VIII: Culture
By 2030, it is intended to set up positive cultural values in Egyptian society that respect diversity, differences and non-discrimination.
Pillar IX: Environment
By 2030, the environment pillar will be an essential one in all development and economic sectors, to ensure security, efficient usage, optimal exploitation and investment of natural resources.
Pillar X: Urban Development
By 2030, Egypt, through its land, civilization and distinguished location will be able to accommodate its population as well as resources under a more balanced scheme that meets the aspirations of Egyptians and improves the quality of their lives.