Egypt has recently tried to increase the openness of its economy. The Egyptian government has ratified an investment law that encourages FDI (Foreign Direct Investment) by granting foreign investors similar protections as Egyptian citizens and indeed offers other incentives. Such efforts are aligned with Egypt’s intention to become the largest recipient of FDI flows in the North Africa region.
Background: Egypt's economic freedom rating has fluctuated over the years – although it increased from 2015 to 2021. According to the Heritage Foundation, by mid-2021 its economic freedom score was 55.7, which represents an increase from 54.0 in 2020. However, Egypt is still only rated 11th among the 14 countries in the Middle East and North Africa region. Nevertheless, it has recently improved in 9 of the 12 categories of economic freedom.
Although not regarded as a country in which doing business is easy and straightforward, Egypt has improved its ranking in the World Bank Ease of Doing Business rankings. This indicates that whilst still challenging, the business environment and capacity to enter the Egyptian market are improving.
Background: According to World Bank, Egypt was ranked 114th out of 190 economies in terms of ease of doing business in 2020. The country is among 42 countries to have implemented positive regulatory reforms in three or more of the 10 topics included in the 2020 report – including relating to tax payments, shareholder protection and required business certifications.
Egypt's economy has been shifting away from the oil and gas industry. It is focusing on pivoting more towards a service-oriented industry open to new entrants. Other main sectors including industry and agriculture are also increasing in relative importance.
Background: Egypt was a net oil exporter before the 2011 revolution. However, excessive reliance on oil and natural gas had negative political and economic consequences. Various reforms to relax regulations and allow privatization has helped to drive Egypt'’s economy towards a range of service and industrial activities. Now, the service sector accounted for around 55% of GDP, compared to 33% from industry and 12% from agriculture.
The public sector is the primary provider of investments in science and innovation. The governance of the research system is heavily centralized, limiting its efficiency and prospects for collaboration with the private sector. The relatively low level of R&D investment has harmed Egypt’s prospects.
Background: Egypt's research and innovation ecosystem are comparatively underdeveloped. Egypt's expenditure on R&D is low, accounting for 0.21% of total GDP. Egyptian private enterprises allocate relatively little of their income to R&D investment.
Egypt's Vision 2030 has been gaining traction and is impacting positively the economy. Inclusive and sustainable economic growth is expected to improve the Egyptian population’s quality of life and living standards in upcoming years and offer opportunities for new companies to enter the market.
Background: Egypt’s Vision 2030 includes a long-term strategic plan to achieve sustainable development. The government is undertaking a comprehensive agenda of economic reform with the aim to maintain economic stability, enhance economic productivity, lower inflation and increase employment. Egypt’s Vision 2030 embodies three main elements of sustainable development - economic, social and environmental – as well as aiming to strengthen Egyptian leadership regionally and internationally.
A rising number of young Egyptians are becoming active in various types of start-ups, including in tech-based sectors. The Egyptian government has indicated a strong interest in further developing the start-up culture in the country.
Background: The number of venture capital (VC) firms, accelerators and incubators in Egypt has been increasing, indicating significant interest in entrepreneurship in the country. According to the Global Entrepreneurship Monitor (GEM), over 80% of Egyptians consider successful entrepreneurs to have high social status (higher than the global average). However, many small and new companies have struggled to acquire financing.
The Suez Canal is used by a significant amount of the world’s cargo and goods. There has been major infrastructure investment in recent years, aimed at boosting the daily capacity for two-way traffic in the canal.
Background: In 2013, the Egyptian government initiated a new investment programme focusing on infrastructure development. This included the further development of the Suez Canal. The investment had a total value of over €6.9 billion. Despite COVID-19's impact, the Suez Canal Authority recorded its second highest annual tonnage figures in 2020.
As a result of Egypt’s rapid population growth and housing shortages, the country’s construction and real-estate sectors have been increasing in importance. There is considerable room for new investments and companies to enter the market.
Background: Egypt's population is mainly located on around 6% of the country's territory. The government has identified construction in new areas as a driver for a more decentralized urban strategy. Egypt's construction and real estate sectors, which account for 8 million jobs, are regarded as a key driver of economic growth and a fundamental component of national development.
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