Before the political crisis, the rapid influx of new investments over the past few years made Egypt the largest recipient of FDIs in the Middle East and 3rd in the Arab world, after Saudi Arabia and United Arab Emirates. The dynamic growth of the Egyptian economy (around 7% before the crisis), its strategic geographical position, low labor costs and skilled workforce, a unique tourist potential, substantial energy reserves, large domestic market and the success of reforms undertaken by the authorities (including many privatizations) were all factors that may explain this sharp rise of FDI. The regional context should also be taken into account, as Egypt benefited from abundant liquidity coming from the Gulf countries, as a direct result of the increase in revenues generated by oil exports.
Having dried out due to the global economic crisis and later in 2011 the sociopolitical revolution, FDI inflows recovered in 2012. According to official estimates, FDI flux have risen by 33% in the course of the fiscal year 2012-2013. According to the World Investment Report 2013 published by the UNCTAD, Egypt is the 7th largest recipient of FDI in Africa. FDI comes mainly from the European Union, the United States and the Arab countries. Investments focus primarily on tourism, construction, telecommunications, financial services, energy, and healthcare.
|Egypt||Middle East & North Africa||United States||Germany|
|Index of Transaction Transparency*||8.0||6.0||7.0||5.0|
|Index of Manager’s Responsibility**||3.0||5.0||9.0||5.0|
|Index of Shareholders’ Power***||4.0||9.0||5.0|
|Index of Investor Protection****||5.3||5.0||8.3||5.0|
Source: Doing Business - Last Available Data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2011||2012||2013|
|FDI Inward Flow (million USD)||-483||6,881||5,553|
|FDI Stock (million USD)||72,612||79,493||85,046|
|Performance Index*, Ranking on 181 Economies||82||-||-|
|Potential Index**, Ranking on 177 Economies||46||-||-|
|Number of Greenfield Investments***||52||60||44|
|FDI Inwards (in % of GFCF****)||-1.3||16.9||12.8|
|FDI Stock (in % of GDP)||31.4||31.2||31.3|
Source: UNCTAD - Last Available Data.
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
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Last Updates: October 2014