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flag Egypt Egypt: Investing

In this page: FDI in Figures | Why You Should Choose to Invest in Egypt | Procedures Relative to Foreign Investment | Investment Opportunities

 

FDI in Figures

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.

 

Country Comparison For the Protection of Investors

  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 201120122013
FDI Inward Flow (million USD) -4836,8815,553
FDI Stock (million USD) 72,61279,49385,046
Performance Index*, Ranking on 181 Economies 82--
Potential Index**, Ranking on 177 Economies 46--
Number of Greenfield Investments*** 526044
FDI Inwards (in % of GFCF****) -1.316.912.8
FDI Stock (in % of GDP) 31.431.231.3

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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Why You Should Choose to Invest in Egypt

Strong Points
The country is in a geographically strategic location. Moreover, it offers a cheap and relatively qualified labor force. Its growing population constitutes a non-negligible market in the region. Its energy resources are attractive and in addition, the country has in recent years, launched a public works policy (construction of the third metro line, expansion of the port of Sokhna and improvement and renovation of the rail network), which offers many investment opportunities to foreign companies. Finally, the government policy for large scale liberalization and improving the appeal to foreign investors are encouraging signs for foreign investment.
Weak Points
Despite privatizations, the inefficient and loss-making public sector remains ubiquitous in some sectors. In addition, the rapid population growth continues to curtail the improvement of the standard of living for Egyptians. In fact, the country registers a delay in its infrastructures in which current investments are not able to make up for.
Other obstacles to investment include excessive bureaucracy, a shortage of skilled labor, and limited access to credit, slow and cumbersome customs procedures, and non-tariff trade barriers.
Government Measures to Motivate or Restrict FDI
Since September 2004, the General Authority for Investment and Free Zones (GAFI) has established an economic program to attract foreign investors, together with an average reduction of 35% customs duty and tariff simplification. Though all the economic sectors are open to domestic and foreign investors, there are some that are especially targeted by the Law, which expressly provides the possibility to execute projects under the BOT (Build, Operate, Transfer) form, in the agricultural, industry, mining, tourism and hospitality, air travel, off-shore shipping transport, goods transport services, oil prospection and drilling, infrastructures more specifically for drinking water conveyance, roads, housing and used water recycling sectors. Other sectors are added to this list depending on needs (leasing, venture capital, creation of computer programs and software, etc.). Privatization programs are also open to foreign investors. Some sectors are considered strategic and hence subject to specific legislations: Aerospatiale, defense, newspaper publishing.
Following the revolution, Egypt put into place capital transfer restrictions that prevent foreign companies from sending more than $100,000 out of Egypt without a valid commercial purpose, original documentation, and approval by the Central Bank of Egypt. Investors report that it can take several weeks for legitimate transfers to be executed.
Bilateral Investment Conventions Signed By Egypt
Egypt signed bilateral agreements with more than a hundred countries, including most of the European Union countries, the United States and several African countries, the Middle-East and Asia.  On the Mediterranean Basin, Egypt has signed bilateral conventions with Algeria, Spain, France, Greece, Italy, Libya, Lebanon, Malta, Morocco, Portugal, Tunisia and Turkey.In 2010 Egypt signed an agreement with the Mercosur bloc of Latin American nations.

These conventions can be referred to on the UNCTAD website.

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Procedures Relative to Foreign Investment

Freedom of Establishment
In theory, it is guaranteed (except for setting up in Sinai or the military domain). In practice, foreign companies can face some discrimination compared to their competitors from the Egyptian public sector. Their main difficulty is to obtain local bank credit which is still highly state-controlled.
Acquisition of Holdings
The acquisition of the majority interest in a domestic company is allowed in Egypt. In fact, holding more than 49% of the capital of a local bank is authorized since law 97/1996.
Obligation to Declare
The investor has to provide the following information: the name of the contracting parties, the company's legal form, the name of the company, the type of activity, the length of existence of the company and its capital, the Egyptian and non-Egyptian contribution percentage, the means of subscription and each partner's liabilities.  For more information, you can consult the GAFI investment guide.
Competent Organization For the Declaration
GAFI
Requests For Specific Authorizations
The founders of joint stock and limited liability companies must furnish a bank certificate showing that 10% of the issued capital has been paid up.

Learn more about Foreign Investment in Egypt on Globaltrade.net, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
General Authority for Investment and Free Zones in Egypt(GAFI)
Tenders, Projects and Public Procurement
Globaltenders, Tenders & Projects from Egypt
Tenders Info, Tenders in Egypt
DgMarket, Tenders Worldwide
Other Useful Resources
Egyptian government information website
Economic Developments and Prospects in Egypt - African Economic Outlook
 
 

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Learn more about Investing in Egypt on Globaltrade.net, the Directory for International Trade Service Providers.

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Last Updates: October 2014