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Why Egypt?

Summary

Area: 1,001,450 km2

Population: 99.3 million (United Nations, 2018)

Urban population: 38.1%

Population density: 99.3 people per km2

Population growth rate (change): 1.87%

Capital city: Cairo

Official language: Arabic

Currency: Egyptian Pound (LE)

Nominal GDP: US $237.1 billion (FY 2017)

Real annual GDP growth: 5.3% (FY 2017)

GDP per capita: US $2,500.8 (FY 2017)

Annual inflation rate: average 20% in FY 2018, 13.5% in July year/year

Unemployment rate: 10.6%

General government gross debt: 92% of GDP (FY 2018)

Fiscal balance: 9.8% of GDP (FY 2018)

Current account balance: US $6.9 billion/2.8% of GDP (preliminary figures FY 2018)

Exports of goods to UK: £674 million

Exports of services to UK: £316 million

Imports of goods from UK: £1,323 million

Imports of services from UK: £670 million

[Source – mostly FCO Economics Unit, Apr 2018]


Geography

The Arab Republic of Egypt is a large country, over a million km2 situated in the northeast corner of the continent of Africa. It has a strategic geographical location in the heart of the Middle East and North Africa (MENA) region with sea ports scattered over the Mediterranean, Red Sea and Suez Canal, making it a hub for international trade between Europe, the Middle East, Africa and the Far East. The Suez Canal links the Red Sea to the Mediterranean – a connection vital not just to Egypt but to the world.

Most of Egypt lies in the continent of Africa, although a small portion – the Sinai Peninsula – is in Asia. The country borders Libya to the west, the Mediterranean Sea to the north, the Gaza Strip and Israel to the northeast, the Red Sea to the southeast and Sudan to the south.

Although snow can fall on Mount Sinai, Egypt is the driest and sunniest country in the world and with the exception of the Nile Valley and Delta, over 95% of its land surface is desert, with sand dunes reaching 30m in height, particularly in the eastern fringes of the Sahara Desert to the west of the Nile Valley. Temperatures inland can reach 40-50°C, but are cooler along the Mediterranean coast in the north.

Most of the cities, including Egypt’s capital city Cairo and second city Alexandria, are located along the fertile Nile Valley and Nile Delta, the area which has supported the majority of the population for millennia.

Egypt Map I Stock -891562682

 

Country overview

Egypt is a lower-middle income country with a population of almost 100 million. Its fast-growing, young population, its diverse and expanding economy, and its strategic location linking the Middle East, Europe, Africa and Asia make it an ideal global business hub. At nearly 30 million, Egypt’s labour pool is the largest in the region, consisting of a well-trained, highly-educated and competitive workforce in a variety of sectors.

As an added incentive, beneficial trade agreements, including the Greater Arab Free Trade Area (GAFTA) and Common Market for Eastern and Southern Africa (COMESA), provide the country with favoured access to regional growth markets. Egypt’s free trade agreement with the EU means that UK companies trading with Egypt are exempt from tariffs on industrial products. See: http://www.theebcc.com/media/1126/eu-egypt-trade-agreement.pdf.

Many already benefit; the value of UK trade with Egypt is around £3 billion. In addition the numerous free zones around the country support Egypt-based manufacturing hubs for SMEs and multinationals.

There are abundant opportunities for UK business to get involved in sectors such as energy, renewables, construction and infrastructure, retail, transport and many others.

Egypt is entering a period of political and economic stability; a reform-minded government has embarked on an ambitious programme to stimulate the Egyptian economy by launching several major projects involving both the public and private sector, such as the Suez Canal Economic Zone, the Capital Cairo, the Golden Triangle Mining Project, the North Coast Al-Alamein development and the Damietta Grain Hub.

[Source – Egyptian-British Chamber of Commerce]

Strengths of the Egyptian market

Strengths of the Egyptian market include:

  • young growing population (over 61% of the population is under the age of 30) and large consumer market

  • large trainable low-wages workforce

  • reasonably developed infrastructure

  • competitive tax rate of 22.5%

  • various multilateral and bilateral trade agreements

  • strategic location, with the Suez Canal the main transport route between Asia and Europe

Contact a Department for International Trade (DIT) export adviser at: https://www.contactus.trade.gov.uk/enquiry/topic for a free consultation if you are interested in exporting to Egypt.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies, see: https://www.gov.uk/government/organisations/uk-export-finance. You can also check the current UKEF cover position for Egypt at: https://www.gov.uk/guidance/country-cover-policy-and-indicators#egypt.

[Source – DIT/ UKEF/gov.uk]

 

Political situation

The current president is Abdel Fattah El Sisi, who was elected to his first four-year term in June 2014. After a number of turbulent years following the 2011 revolution, Egypt’s economic situation has gradually stabilised.

[Source – British Embassy Cairo (July 2018)]

Business and human rights

Egypt continues to be a country of concern with regards to human rights.  For more information, please refer to the FCO’s annual human rights report on Egypt and quarterly updates. See: https://www.gov.uk/government/collections/human-rights-and-democracy-reports.

[Source – gov.uk]

 

Economic overview

Egypt is highly import-dependent and is likely to remain so for the foreseeable future. Over the last 15 years it has been undergoing a transformation into a market-orientated economy. Significant investments in ports, airports, highways and railways are planned which will lead to more efficient movement of goods.

Since 2014, the economy has been on a path to recovery. It was the largest destination for all foreign direct investment into Africa. Its stock market (EGX) was the best performing in the world in terms of returns.

In 2017 it had an annual Gross Domestic Product (GDP) per capita of US $2,500, putting it in the top three economies in Africa. GDP growth increased to 5.3% in FY 2018, the highest in ten years, and is projected by the IMF to rise to 6% over the next four years. According to a recent PwC report, Egypt could be a G20 power by 2030.

It is estimated that between US $200 and US $300 billion worth of projects are needed to solve the country’s electricity and housing shortages. This will also generate jobs for an expanding population through broader economic diversification.

Egypt embarked on a major reform programme in November last year, unlocking a US $12 billion loan from the IMF. The key elements include exchange control liberalisation and subsidy reform. Following flotation, inflation had risen to over 30%, but pressures now appear to be easing. Egypt’s current account deficit has begun to decrease and its foreign currency reserves are up.

Parliament has passed an industrial licensing act, an investment act and a bankruptcy act in recent months, with the intention of improving the attractiveness of Egypt for business.

Egypt remains an attractive market that offers significant business opportunities. Its economy is among the most diversified in the MENA region and its geographic location is hard to beat.

Trade agreements

Egypt is a member of the following organisations:

  • World Trade Organization (WTO)

  • Common Market for Eastern and Southern Africa (COMESA)

  • Egypt-EFTA Agreement

  • EURO-Med Partnership

  • Greater Arab Free Trade Area (GAFTA)

Egypt currently has an Association Agreement (AA) with the EU which covers a broad range of issues, including trade. The UK is seeking to “ensure continuity of effect” of the EU’s existing AA after the UK leaves the EU.

In line with the Africa Trade Strategy, complementary work will be undertaken across the region to:

  • identify market access barriers

  • find ways to tackle them, and

  • agree a cross-government approach to improving the business environment

This work includes tracking the trade policy work currently led by the EU delegations in-country, and engagement with business, government, and civil society.

A full list of Egypt’s bilateral and regional agreements is available from the Egyptian Ministry of Trade and Industry (MTI), at: http://www.mti.gov.eg/english/Pages/default.aspx.

[Source – DIT/gov.uk]

 

Major economic projects

Suez Canal Economic Zone

The Suez Canal Economic Zone (SCZone) is a world-class free zone and trade hub along the banks of the newly-expanded Suez Canal. Strategically located on the main trade route between Europe and Asia, more than 8% of global trade passes through every year. See: https://www.sczone.eg/English/Pages/default.aspx for further information.

The Capital Cairo

The Capital Cairo is Egypt’s new administrative city situated along the corridor between Cairo and the Red Sea, providing linkages to significant shipping routes. The master plan is to create a global city with smart infrastructure for Egypt’s future, which will provide a multitude of economic opportunities and offer a distinct quality of life. See: http://thecapitalcairo.com/ for further information.

[Source – Egyptian-British Chamber of Commerce]

 

UK and Egypt trade

There are approximately 1,450 British businesses active in Egypt across a range of sectors (oil and gas, defence and security, infrastructure, energy, pharmaceuticals, ICT, tourism, and a wide range of well-known retail brands).

Top UK exports of goods to Egypt include:

  • metalliferous ores and metal scrap

  • fruit and vegetables

  • general industrial machinery and equipment

  • medicinal and pharmaceutical products

  • power generating machinery and equipment

Many UK companies are already doing business in Egypt, including BP, Shell, Subsea 7, Wood, LOC Group, ODE North Africa, Vodafone, Barclays, HSBC, GSK, Astra Zeneca, Pearson, Kortext Digital, Wolfram, Wiley, Imagine Education, Encyclopaedia Britannica, Marks and Spencer, Mothercare and Unilever amongst many others.

[Source – DIT/gov.uk]

World rankings

Contact a DIT export adviser at: https://www.contactus.trade.gov.uk/enquiry/topic for a free consultation if you are interested in exporting to Egypt.

Contact UK Export Finance (UKEF) about trade finance and insurance cover for UK companies. You can also check the current UKEF cover position for Egypt. See: https://www.gov.uk/guidance/country-cover-policy-and-indicators#egypt.

[Source – DIT/UKEF/gov.uk]


 

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