Investment in Egypt? Why is it the right time?

Egypt has witnessed an economic boost in the last couple of years due to the economic and structural reforms program that the country implemented in 2016. As a result, the investment climate has grown to be very attractive for local and foreign investors through many favorable incentives.

Overview of the Egypt investment landscape

Egypt has always been famous as the ideal market for investments; its vast population and the untapped dynamic market facilitate introducing and testing new ideas.

Facts and Figures about Egypt

- The current population surpasses 101 million, with almost 16.6% young population aging between (21 - 29).
- Egypt's Suez Canal hosts 10% of the world trade passing through it annually.
- Inflation rates have decreased dramatically, and the GDP is expected to grow by 3% for 2021.
- Interest rates have dropped from 13% to 8.25%.
- Egypt's geographical location has always been a great asset. Since it perfectly lies in the heart of Africa and acts as a gateway to multiple European countries.
- In 2019, Egypt’s startups raised collectively $95 million in 142 investment deals, setting a new record.
- New Cities especially the new administrative capital is providing investors with attractive investment in Egypt opportunities primarily real estate opportunities.

Trending industries and Egypt investment opportunities

Egypt's sustainable development strategy, "Egypt's Vision 2030," pillars provide significant opportunities for investments in different industries that help improve citizens' lives. Construction, real estate, education, health and most importantly, digitalization are some of the fast-growing and developing industries in Egypt investment in the last 5 years.

The digitalization of government services has been on the top of the government priorities, revamping how citizens deal with governmental entities and boosting the ICT sector.  Investments in the sector increased by 35% to EGP 48.1 billion, the ICT contribution to Egypt’s GDP grew by 4.4% in 2020, despite the Covid crisis.

Digital transformation also plays a pivotal role in attracting new investments to support Egypt's financial inclusion vision. The government facilitates the law for banks, companies, and startups to invest in new projects that support financial inclusion.

Earlier this year, Egypt's first cash fund, "Seyola", closed its subscription with an issue size exceeding EGP 1.075 billion, before its scheduled date, due to the large turnout witnessed during the subscription period.

Real estate is one of Egypt's booming industries right now and is expected to be Egypt's largest contributor to GDP; it currently accounts for 16% of the GDP. According to a recent study, the industry is expected to grow at an average of 9.6% per year until 2024.

Egypt is currently building 25 new smart cities and multiple new housing projects that are attracting a lot of foreign direct investments (FDIs) like Emarti companies Al Futtaim and Emaar. The governments focus also on building a more robust infrastructure and improving the existing ones is providing a significant boost for the investments.

The Energy sector is also proliferating and attracting more investments; in 2020, Egypt exported electrical energy worth $6.407 billion, according to CAPMAS. The renewable energy industry has witnessed significant developments; Aswan's new solar park is among the largest globally with a $2.1 billion investment.

The Government is determined to increase the percentage of electricity produced from green energy resources to 60% by 2035. Egypt is the first MENA country to sell sovereign green bonds in 2020 attracting $3.7 billion.

Economic reforms attract foreign investments.

The government exerts efforts to turn Egypt into Africa's most prominent investment hub, welcoming all investors wishing to expand their investment in the dynamic Egyptian market. The new investment laws facilitating trade and investment have encouraged a more positive flow of foreign direct investment.

In 2019 Egypt received the highest foreign direct investment (FDI) in the Middle East and Africa with $13.7 billion.

Egypt's diversified economy made it resilient to economic crises. Despite the Covid 19 pandemic's impact on the economy, Egypt has shown quick and positive recovery signs. According to the Standard Chartered Bank, Egypt will be the first country in the MENA region to restore its pre-pandemic GDP in 2021.

Foreign investment in Egyptian has recorded a historical increase by the end of February 2021, reaching $28.5 billion. Egypt has become very attractive for international foreign investments; just recently, the Saudi El Sharbatly group announced its intention to invest $2.5 Billion in the Egyptian market in the next 5 years. Amazon has also expressed its intention to use Egypt’s strategic position to turn it into an industrial hub and manufacture more of its products in Egypt.

The market opportunities in Egypt are endless and to facilitate market entry barriers and company registration for foreign investors, Egypt has set up an online portal, “Invest in Egypt”, to expedite the process and lead the investors in a seamless process.

References
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