At first glance, Egypt may be a daunting prospect for an exporter, due to its fiscal deficit and political and social instability. The country has the largest growing population in the Arab world, limited arable land and an over-dependence on the Nile, all of which contributes to a stressed society and too few resources. The government, despite having undergone massive upheaval, has attempted to meet the demands of its population through economic reform. Unfortunately the benefits of this have largely failed to filter down to the wider population.
However, the Egyptian economy has been on the road to recovery since 2014 when it was the largest destination for all Foreign Direct Investment, and it is as highly import dependant market.
The country has made many significant investments to its infrastructure to ease the logistics of importing and exporting goods. Ports, airports, highways and railways are all in the pipeline for extension. Libya, Sudan and Israel border Egypt by land, and Cyprus, Jordan, Saudi Arabia, Turkey and Greece are neighbours by sea.
Many large UK companies are already doing business in Egypt, such as BP, Shell, BG Group, Vodafone, Barclays, HSBC, GSK, AstraZeneca, Unilever and many more.
In terms of business culture, English is widely spoken throughout Egypt and will most often be used for written correspondences also. However, some public sector organisations will prefer Arabic to be used.
Strengths of the Egyptian market:
- The population of Egypt is around the 90 million mark; most have a lower middle income and 18 per cent of the population are under 25. This is good news as it means there is a young workforce.
- The Suez Canal has recently been extended to create a world maritime traffic hub
- It boasts the third largest economy in Africa, so could potentially be a good base to break into the continent
- Egypt is well placed for strategic growth – it borders several countries in Africa and Europe
- There are a number of free trade agreements and arrangements in place that you can research and tap into
Challenges of the Egyptian market:
- Egypt is still battling a serious fiscal deficit
- It is still amid some political and social turbulence
- Poverty has creeped up to 26.4 per cent
- Unemployment levels currently stand at about 13 per cent; this figure is still rising
- The tourism trade, something Egypt has long been known for with its links to the ancient world, is in decline
- Investments in Egypt are also declining
- It ranks fairly low on the World Bank’s list of countries that are easy to do business with due to excessive bureaucracy
- It also ranks fairly low for transparency, and there are high levels of corruption
- There are some restrictions in place on foreign property ownership
- There is a lack of legal and contractual certainty
The Egyptian government is placing a huge priority on the education and training sector. Schools and colleges take up around 11.9 per cent of government spending and this is set to rise; there is also strong growth in the private education sector.
The British education system is highly regarded in Egypt which opens up many opportunities to UK companies offering vocational training, employability skills, schooling, teacher training, school equipment and ICT services, English language skills or qualifications and certification.
Oil and gas
The oil and gas sector accounts for 15 per cent of Egypt’s national GDP and 31 per cent of Foreign Direct Investment.
Around 50 international petroleum companies are currently working on oil extraction projects in Egypt, with around 143 rigs in operation. Opportunities for UK companies include exploration and field development, operations and maintenance, and training and sustainable development.
Egypt has a growing affluent middle class and low levels of penetration from modern retail shops. The government itself is keen to position itself as a main partner in the development of this sector and hopes to attract foreign investment to drive competition and modern innovations.
Opportunities are available for UK firms offering consumer goods, food, clothing, over the counter pharmaceuticals, online retailing and franchising.
Egypt has a growing demand for electricity and there are many opportunities for any company looking to develop alternative power resources. Egypt hopes to produce around 12-20 per cent of its electricity from renewable sources by 2020.
There are opportunities for UK companies that can install wind farms and construct solar power stations and nuclear plants.
Construction and infrastructure
Egypt is investing heavily in infrastructure to improve the logistics of imports and exports being moved across borders. This represents a significant opportunity to UK businesses – the Suez Canal Zone project alone is worth an estimated £20 billion over 15 years.
UK companies can participate in ports and logistics development, transport infrastructure, power generation, water desalination and waste water treatment plants.