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Population: 80,300,000 (July 2007 estimate)
Land Area: 1,001,450km2
Official Language: Arabic
Currency: Egyptian Pound
Administrative units: 26 governorates
National day: 23 July
Legal system: based on English common law, Islamic law and Napoleonic codes
International airports: Cairo, Alexandria, Luxor, Port Saïd, Hurghada, Sharm El-Sheik
Egypt is one of the largest economies in the Arab world and the fifteenth most populous country on earth. It is a country rich in resources and boasts thriving tourism and agricultural sectors. Its natural resources include oil, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead and zinc. The country is located in Northern Africa, bordering the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula.
At the present, Egypt is going through a process of profound reforms, including an ambitious privatization drive, which is starting to have a measurable impact on the country’s economic performance. Its success is indicated by the attraction of increasing levels of foreign investment. In the latter part of 2006, the economy expanded at a rate of 7%, in part due to the global energy price boom but also as a result of the country’s broadening economic base and increased domestic and overseas investment.
The year 2007 is to be the year of reforms, according to the business-oriented Egyptian government headed by Dr Ahmed Nazif, a former Telecommunications Minister, appointed in July 2004. An economic reform program initially introduced in 1991 has thus been revived with determination. As a result, Egypt has simplified and reduced tariffs and taxes, improved the transparency of the national budget, revived stalled privatizations of public enterprises, and adopted policies to improve competitiveness. Consequently a moderate revival started in 2004 with a 4.1% GDP growth rate, followed by 4.9% in 2005. According to the IMF, the economy is estimated to grow at 5.6% in 2006 and 2007. Unemployment remains a challenge facing the country with the rate standing at 9.5% on the 2005 figures. Appreciation of the Egyptian pound helped reduce inflation which was 11.4% in 2005 and it is estimated to have fallen considerably in 2006 to 4.1%. More privatizations and significant investment in the country's infrastructure is anticipated in the current year through to 2008. Egypt's export sectors, particularly its natural gas industry – can look to very bright prospects ahead.
Significant reforms in the banking and financial sector are also being implemented; banking is currently experiencing strong restructuring with mergers of smaller banks and the provision of non-performing loans through the establishment of credit bureaus. Egypt set a target to create stronger financial entities by reducing the number of banks to 34 in 2007 from 57 in 2004. Egypt is now committed to privatizing public banks and disposing of its stakes in joint venture banks. The latter was accomplished in 2005 through the sale of the public stake in National Societe Generale Bank, Misr International Bank and Egyptian American Bank. The intentions were also reflected in the successful privatization of Bank of Alexandria, which was sold to the Italian group, San Paolo, in a deal worth $1.6 billion. Banking sector reform is significant for the business environment as it will result in a more efficient banking system to support corporate lending.
In addition to reforms to the financial sector, another set of reforms that should have positive effects in stimulating business and investment is the mortgage finance system. Despite passing a mortgage finance law, the mortgage finance system in the country has only recently started to become active. Structural obstacles to its expansion related to the housing sector such as the mismatch of supply and demand of housing units and the extremely high registration fees that lead to most of the housing units remaining unregistered. Other problems including lack of awareness about the mechanism of the mortgage system, the lengthy and complicated procedures and the high cost of financing hindered the activation of the system.
Although the ambitious program of reforms will continue, state intervention remains in substantial areas of the economy, especially in heavy industry. The important textile sector has a turnover of more than $3 billion, but experienced a mixed year in 2006 through increased competition in the international market from countries like China. These pressures led to a fall in exports to Egypt’s traditional markets in Europe. This fall in market share is a serious concern for the textile industry, but is motivating its drive to seek out new buyers.
Cotton is the mainstay of agricultural production in Egypt and will continue to play a major role. The sector is receiving significant investment, particularly in the area of irrigation technologies. Agriculture contributes nearly 14% to the GDP and employs nearly one-third of the active population. Warm weather and plentiful water ensure that Egypt enjoys rich and fertile land from whose soil is several crops a year are derived, the main crops being cereals cotton and sugarcane.
With regards to the country’s manufacturing industry, the food processing sector has developed considerably and now contributes 17% to the GDP. Despite this healthy diversity of revenue sources, it should be recognized that the Egyptian economy remains heavily dependent on three activities where external controlling factors that are ultimately outside domestic control are key: these are tourism, oil and gas exports and Suez Canal revenues. The oil and gas sector accounts for approximately 12% of the GDP. The vital contribution of the 173km Suez Canal to the national income of the country is enormous. Connecting the Red Sea to the Mediterranean, the canal sees around 17,500 vessels pass through it every year. Tankers represent 25% of the traffic. Important construction engineering works are in progress to increase the depth of the canal in order to facilitate the passage of the largest and most modern tankers.
Since the EU-Egypt Association Agreement, which came into force in June 2004, the Egyptian market has gradually opened up to exporters and investors. The top three export partners are: Italy, the USA and Spain. Its top three import partners are: USA, Germany and China. The country’s main exports are mineral fuels & oils, cotton, and iron & steel; while as its main imports are consumer electronic and capital goods, reactors and boilers, cereals, food products, and chemicals.
Egypt strongly encourages foreign investment and has a highly professional body in the General Authority for Investment (GAFI) dedicated to the provision of all the support and assistance that is required by international investors. Tax concessions are available specifically to companies who carry out activities that can be demonstrated to bring benefits to the country’s targeted development areas such as the Sinai or its rural zones. The tax exemption rates depend on the activities and the opportunities created for the local economy. Egypt has established free trade zones allowing it to boost the industrial development of the country. These free trade zones include Nasr City, which is near the airport of Cairo; Alexandria; Port Saïd, on the entrance of the Suez Canal; Suez, the first port in the Red Sea; Ismailia, located between Port Saïd and Cairo; and Damiette.
Within the framework of its membership of the Arab League, Egypt is in the process of discussion to create an Arab Common market with the aim of eliminating customs duties between member states.
At three million when Napoleon entered the country in 1798, Egypt now boasts a population of well over 78 million. It is the most populated country in the Arab world. The Cairo conurbation constitutes some 25% of the total population and is the centre of commercial activity, followed by Alexandria. This retail and consumer market is dominated by private small shops, small independent supermarkets and private suppliers, most of which will be family businesses. The development of large-scale distribution is a recent trend and still only caters for that minority of the population which enjoys a disposable income and exercise spending power.
Egypt has historically been a trading nation and possesses a mature transport system of road, rail, sea and air. Central without doubt are the river Nile and the Suez Canal which connects the Red Sea to the Mediterranean. In addition, Egypt’s location and size ensure that its ports are vital for international trade. Its main Mediterranean port is Alexandria through which a third of Egyptian international trade passes. Its other important ports are Port Saïd, Suez and Damietta. A mining port is found at El Dikkeila, near Alexandria. In addition, along with the Nile and all the various canals, Egypt has 3,100km of internal waterways. Supplementing the Suez Canal, a Suez-Méditerranée oil pipeline (SUMED), operational since 1977, constitutes an important alternative for the transport of petroleum between the Mediterranean and Red Seas. This is jointly owned by Egypt, Kuwait, Abu Dhabi, Saudi Arabia and Qatar.
Egypt’s road network of 45,000km is dense and relatively modern, but in need of extensive upgrade. A program for the construction of new highways financed by the private sector is under way. The 5,500km Egyptian railroad network is the oldest railway in the region. It is in need of important investments to achieve modernization.
Egypt Ministry of Information
Maspero, Cornich El Nile, Cairo, Egypt
Tel: + (20) 2 57 48 78 2 / 57 48 98 6 / 57 48 98 2
Fax: + (20) 2 57 48 98 1
Email:
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Ministry of Economy and Foreign Trade
8, Adly Street, Cairo, Egypt
Tel: + (20) 2 391 96 61 / 391 66 29
Fax: + (20) 2 390 30 29
Email:
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Ministry of Tourism
Abbasia Square, Borg Misr Travel, Cairo, Egypt
Tel: + (20) 2 282 84 39 / 284 17 07
Fax: + (20) 2 285 95 51
Email:
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Ministry of Petroleum
El Makhayam, El Daem Street, Nasr City, Cairo, Egypt
Tel: + (20) 2 263 20 00 / 263 10 10
Fax: + (20) 2 263 60 60
Email:
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Ministry of State for International Co-operation
Adly Street, Cairo, Egypt
Tel: + (20) 2 391 00 08 / 393 51 47
Fax: + (20) 2 390 81 59
Email:
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Central Bank of Egypt
31, Kasr El Nil Street, Cairo, Egypt
Tel: + (20) 2 393 15 14
Fax: + (20) 2 392 63 61 / 392 50 45
Email:
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Website: www.cbe.org.eg
National Bank of Egypt
1187 Corniche El Nil, Cairo, Egypt
P.O. Box 11611, Cairo, Egypt
Tel: + (20) 2 574 91 01
Fax: + (20) 2 574 68 58
Email:
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Website: www.nbe.com.eg
Quelle: Ghorfa, Arab-German Chamber of Commerce & Industry e.V.
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