Invest In
Invest in EGYPT
J an u ar y 2011
January 2011 A Glimpse at the Egyptian Economy 1
Invest In
Egypt
Population
79.6 million (Jan 2011)
GDP Growth
5.1% (FY 2009/10) / 5.5% (Q1 FY 2010/11)
GDP in Current Prices
EGP 1202.6 billion (FY 2009/10)
Net International Reserves (NIR)
USD 36 million (December 2010)
Foreign Direct Investment
USD 6.8 billion (FY 2009/10) / USD 1.6 billion (Q1 FY 2010/11)
Unemployment
8.96% (Q3 of 2010)
In ation
10.3% (December 2010)
Exports
USD 23.9 billion (FY 2009/10)
USD 6.1 billion (Q1 FY 2010/2011)
Imports
USD 49 billion (FY 2009/10)
USD 12.7 billion (Q1 FY 2010/2011)
Exchange Rate (11/1/2011)
U$ = EGP 5.8178
EUR = EGP 7.5474
GBP = EGP 9.0641
January 2011 1
Invest In
4 International Recognition
6 Good Reasons to Invest in Egypt
8 Economic Growth and Stability Figures
Contents GDP Growth Rate
Inflation
Unemployment
Interest Rate
10 Investment
Investment laws
Foreign Direct Investment
Public Private Partnerships
Newly Established Companies
Expansions by Companies
17 Strategic and Emerging Industries (Clusters)
Least Affected Clusters
Petroleum and Gas
Industry
Infrastructure (Electricity)
21 Fast Forward your Business to Success
Investment
Non-bank Financial Sector
26 Publications, Trade Fairs and Conferences
January 2011 3
Ministry of Investment
Egypt’s existing issuer ratings, which are also Ba1 with a stable out-
look. Moody’s states that the government of Egypt’s Ba1 issuer ratings
are supported by the country’s robust external position, relatively well
diversified economy, favourable public debt structure, and the current
government’s track record of economic reform.
International • Egypt has been amongst the Top 10 Reformers in the annual “Doing
Recognition Business” report 2011, which is jointly produced by the World Bank
and IFC, for the fifth time in the last six years; and jumped signifi-
cantly in its rankings by 71 positions to become the 94th out of 183
countries. This proves that Egypt is one of the most open and dynamic
economies among emerging markets with real gdP growth averaging
6.2% between FY 2005/06 and FY 2009/10.
• Egypt was ranked the first in North Africa and the second best desti-
nation, after South Africa, for foreign direct investment (Fdi) in the
African continent for the FY 2009/10 in terms of investment climate
A ccording to Moody’s, the credit rating agency, Egypt’s sovereign attractiveness, according to “African Countries of the Future 2009-
credit rating outlook has changed from negative to stable. This im- 2010” report by Fdi intelligence. The study considered numerous
provement positively affected the sovereign credit rating of local and criteria when measuring such a rank, including infrastructure develop-
foreign currencies in Egypt (Ba1), the credit rating of bank deposits in ment, local strategies for encouraging Fdi, the economic potential of
foreign currency (Ba2) and the credit rating of bonds in foreign currency the country, human resources, living standards and market openness.
(Baa2). • Egypt was ranked first in North Africa and second in the African conti-
in April 2010, Moody’s investors Service assigned ratings of Ba1 to the nent, after Angola, in terms of net FDI inflows according to the “World
dollar-denominated senior unsecured bonds recently issued by the gov- investment report 2010” by the UncTAd.
ernment of Egypt. These ratings are in line with the government of
4 January 2011
Invest In
January 2011 5
Ministry of Investment
• Egypt has the vast availability and strong capability of qualified,
trained and motivated human resources, with a solid reputation as a
net regional exporter of labor services. This vast pool of labor boasts
multinational talents with multilingual capabilities. Also developments
Good Reasons in design, technology and innovation have fostered more business
activities in Egypt.
to Invest in • The Egyptian government has instilled stability through regulatory-
Egypt frameworks, having adjusted the amendments necessary to serve the
business and investment climate.
• The well established quality of life in Egypt makes it a Centre of Attrac-
tion for many investors.
• The Egypt Government is a pro-business government; which lends its
support to competitive business activities.
Egypt heads one of the largest sustainable economic growth areas in
• The Comprehensive Public Private Partnerships Strategy aims to en-
the Middle East and north Africa. it is a centre of diverse and dynamic
hance the Quality of Services available in the country.
economic activities.
• We provide competitive corporate and personal tax rates, both stand-
• Egypt’s strategic geographic location makes it the ideal launching pad-
ing at 20%.
for gaining entry into markets all over the world.
• Egypt boasts a stable institutional political system and benefits from a
• Egypt boasts an extensive, world-class infrastructure network, which-
stable currency and high security measures.
includes various means of newly established or renovated transporta-
tion methods. • Such a reformist investment climate makes Egypt a Center of Attrac-
tion for top investors.
• Egypt offers a high quality of excellent suppliers and service providers.
6 January 2011
Invest In
The Upper Egypt-red Sea road
January 2011 7
Ministry of Investment
The FY 2009/10 provides further evidence of a pick-up in growth and
external demand. during the FY 2009/10, gdP in current prices stood
at EgP 1202.6 billion, with a growth rate averaging 5.1% and already in
Economic the first quarter of FY 2010/11 GDP in current prices reached EGP 231.2
billion, with a growth rate 5.5%.
Growth &
Stability Inflation
Figures
A ccording to CAPMAS data, the annual headline CPI inflation de-
creased in December 2010, reaching 10.3%; down from 13.1 %
during december 2009.
Unemployment Rate
GDP
T hE unemployment rate has decreased to 8.96% at the end of the
Q3 of 2010, compared to 9.20 % in the corresponding period of the
previous year.
E gYPT is one of the few countries that have managed to post re-
spectable GDP growth in 2009 & 2010. Although the global financial
crisis continues to interrupt the domestic growth momentum; making Interest Rate
it far beyond the average steep growth of the last three years, which
T
averaged around 6%. Economic performance was better than expected, hE central bank of Egypt (cBE) started an accommodative mon-
although headline inflation remains elevated. Growth fell to only 4.7 etary policy since the beginning of 2009. After several cuts during
percent in FY 2008/09 on the strength of consumption spending, and the year, the overnight deposit and lending rates have stood at 8.25%
production in the construction, communications, and trade sectors. and 9.75% respectively since September 2009 to date.
8 January 2011
Invest In
Economic Growth Inflation in Consumer Prices
(Percent Change) ¹
Percent Percent
14.2
7.2
14.0
8 7.1 30
13.6
6.9
12.9
13.1
12.8
12.8
12.2
11.8
11.6
11.7
11.5
11.4
11.0
6 5.5 25
10.2
10.2
10.3
10.3
5.1
10.2
9.8
4.6 4.7
9.9
9.8
9.7
4.1 20
8.4
4 3.4 3.2 3.2
15
2
10
0 5
2000/01
2001/02
2002/03
2003/04
2004/05
2005/06
2006/07
2007/08
2008/09
Q1 2010/11
2009/10
0
Aug 09
Aug 10
May 09
Nov 09
May 10
Nov 10
Jan 09
Feb 09
Apr 09
Jun 09
Jul 09
Apr 10
Jun 10
Jul 10
Sep 09
Oct 09
Jan 10
Feb 10
Mar 09
Sep 10
Dec 09
Mar 10
Oct 10
Dec 10
1- Year-on-Year
Source: Ministry of Economic development Source: cAPMAS
Unemployment Rate Interest Rates
Percent Deposit Rate Lending Rate
13 11.77 Percent
12 11.10 14 12.5 12.0
11
10 10.90 9.37 9.36 9.12 12 10.75 10.5
9.30 8.90 9.00 8.96 10.0 10.0 9.75 9.75
8.40
9 9.40 10
8.99 8.90 9.10 9.20 8.90
8 8.84 9.5 10.0
8.60 8 9.0
7 8.0 8.75 8.5 8.25 8.25
6 6
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
4
Jun 2005 Jun 2006 Jun 2007 Jun 2008 Jun 2009 Jul 2009 Aug 2009 Sep 2005 till
Jan 2011
Source: cAPMAS Source: central Bank of Egypt
January 2011 9
Ministry of Investment
Investments
Investment Laws:
– No export requirements.
M AnY amendments have been completed, in order to facilitate the- – Access to dispute resolution committees administrated by the general
start-up procedures of any business and encourage investments Authority For investment (gAFi).
- in general - focusing on investment incentives and guarantees such as – Unfettered access to land in Upper Egypt.
the investment law no. 8 of 1997, and the companies law no. 159 of – A standard income tax rate of 20% (except for oil and gas companies;
1981 which govern inland investment. which account for 40.5%).
Among the incentives and guarantees of the laws and their amend-
– 10-year tax exemption for land cultivation and its subsequent activities
ments, Egypt guarantees:
related to livestock, poultry and fish.
– Protection against expropriation and compulsory pricing. – Export duties ranging from 5-25% of the value of the wholesale trans-
– Full right to repatriate profits and dividends. action, while import duties range from 2-32%.
10 January 2011
Invest In
During FY 2009/10 several efforts were made to enforce more and quickly using reconciliation, mediation or any other means agreed
reforms and procedures necessary to facilitate an easier “doing upon by parties to the dispute.
business” environment. These include: • Several actions have been taken to simplify and streamline the invest-
• The Minister of Investment’s decree No. 16 for 2010 on amending ment procedures, especially for SMEs and provide finance necessary
some provisions of the executive regulations of the companies Law to establish such projects. The reporting period witnessed the launch
no. 159 for 1981. The amendment abolished the service cost, which of electronic establishment of companies. These procedures comple-
used to be paid by limited liability companies to the general Authority ment previous steps to improve work within gAFi, which started with
for investment. The target beyond this was to encourage SMEs to as- the one stop shop to improve the investment climate in Egypt and
sume the form of limited liability companies. attract more investments to increase growth, create more jobs and
raise citizens’ standard of living.
• Law No. 133 for 2010 was issued on licensing oil refinery projects to
operate according to the free zone system. By virtue of this law, such
projects shall enjoy all benefits and guarantees granted to projects
established in free zones including exemption from all custom duties.
• Issuing the Social Insurances and Pensions Law No. 135 for 2010 on
22 June 2010.
• Issuing the Minister of Investment’s decree No. 16 for 2010 on amend-
ing the executive regulations of the companies Law no. 159 for 1981.
The amendment abolished the services cost, which used to be paid by
limited liability companies to gAFi. The amendment aims to protect
rights of shareholders, especially minority shareholders so that licens-
ing founders and board members to clinch compensatory contracts
shall be for each contract separately.
• Issuing the Minister of Investment’s decree No. 170 for 2009 on estab-
lishing a new gAFi-based center for settling investment disputes fairly
January 2011 11
Ministry of Investment
Foreign Direct Investment
n ET Foreign direct investment (Fdi) was the main proof that the
reform measures undertaken by the government of Egypt were on
the right track. Fdi showed unprecedented growth in the last six years.
The global financial crisis has affected FDI flows across the globe. Egypt
managed to attract Fdi worth of USd 6.8 billion in FY 2009/10. Egypt
attracted 1.6 billion worth of FDI in the first quarter of FY 2010/11. It
is worthy to mention that net Fdi peaked in FY 2007/08 at USd 13.2
billion.
Sectoral Distribution of FDI
c oMPoSiTion of Fdi in the last six years draw a clear picture of the
attractiveness of the Egyptian economy. on average, 42.5% of Fdi
was channeled to establish new companies in addition to capital expan-
sions.
on the other hand, only 1.87% of Fdi during the same period went to
the real estate sector.
12 January 2011
Invest In
Foreign Direct Investment Foreign Direct Investment by Sector
USD billion Real Estate Sale of Assets to Non-Residents
14 13.2 Inflows in the Petroleum Sector New Establishments & Expansions
Percent
12 11.1 0.4 0.4 0.4 3.0 1.7 4.5 1.9
100
10
8.1 30.0 27.3
8 6.8 80 31.2 41.7
6.1 53.1
6 65.6 14.8 66.0
3.9 60 25.1 17.7
4 14.0
2.1 1.6 2.6
2 40
10.1 54.8 48.1 3.7
0 20 47.3 39.8 42.5
23.9 28.5
Q1 2010/11
2009/10
2008/09
2003/04
2004/05
2005/06
2006/07
2007/08
0
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 6 Year
Average
Source: central Bank of Egypt Source: central Bank of Egypt
Sectoral Distribution of Net FDI Inflows (USD million)
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 6 Year Average
new establishments & expansions 925.6 3,347.8 5,227.2 6,368.4 2,314.9 2,690.4 3,479.1
Sale of assets to non-residents 390.8 905.7 2,772.2 2,337.0 303.5 173.1 1,147.1
real estate 16.5 25.7 39.0 394.9 138.4 305.3 153.3
Inflows in the petroleum sector 2,540.2 1,832.2 3,014.8 4,136.2 5356.6 3,589.4 3,411.6
Net FDI inflows 3,873.1 6,111.4 11,053.2 13,236.5 8,113.4 6,758.2 8,191.0
Source: central Bank of Egypt
January 2011 13
Ministry of Investment
Public Private Partnership “PPP”:
B Y strengthening the private sector’s participation in the economic
reform process, the Ministry of investment initiated a comprehen-
sive PPP promotion strategy in 2006, which included the creation of
the legislative and institutional framework to facilitate major PPP infra-
structure projects. during the period extending from 1990 to 2008, the
private sector was involved with PPPs in four infrastructure domains:
telecommunications, transportation, water and sewage. The private sec-
tor implemented a total of 23 projects with a total investment cost of
USd 16.556 billion. The telecommunications sector accounted for the
greatest share of investment, standing at USd 12.459 billion. This, how-
ever, represents just the launch of a successful experiment which the
government intends to replicate and vastly expand in the future.
Recently the contribution of the private sector has diversified into other
construction operations such as building schools, highway, as well as
water and wastewater operations, and maintenance projects.
As a result, the Ministry of investment has achieved major milestones
in this domain including creation and operation of The Upper Egypt-red
Sea road.
This project is based on establishing a first class 412 km free highway;
connecting the Sohag, Qena, and Assiut governorates in Upper Egypt
HE President Mohamed Hosni Mubarak; HE Dr. Ahmed Nazif, The Prime Minister; HE Dr.
with the Safaga harbor by the red sea. This is a major step that will Mahmoud Mohieldin, the former Minister of Investment; HE Eng. Alaa Fahmy, The Minister
of Transportation, during the inauguration of Upper Egypt-red Sea road.
14 January 2011
Invest In
enhance Egypt’s trade connection with the African continent through
the red Sea.
In February 2010, the first phase of the road’s construction, costing EGP
1,600 million and involving the construction of a dual-lane highway con-
necting the cities of Assiut, Sohag and Qena to Safaga, was completed.
The new road will reduce travel time between Assiut to Safaga, and
ensure faster and cheaper movement of freight by trucks, speed-up
the productive and construction projects put on the backburner in Up-
per Egypt. it will also help ease congestion on the roads currently con-
necting Upper Egypt and the red Sea. once the road is complete, other
projects along the highway will be promoted by the Ministry of invest-
ment, attracting regional and foreign investments. This would boost the
number of companies in the Upper Egypt governorates, including Assiut,
and help create an extremely attractive investment climate. increasing
private sector participation in key projects, such as this initiative, reflects
the strong commitment of the Egyptian government to improve the
quality of services and facilities being provided to its citizens.
January 2011 15
Ministry of Investment
Newly Established Companies: Expansions By Companies:
d UE to the facilities offered the Egyptian government, legislative
amendments and the development of rules and procedures regulat-
ing the market, have directly resulted in the increase in the number of
E xPAnSionS by companies in FY 2009/10 included 1,578 companies
with an issued capital of EgP 66,742.84 million, compared with 1570
new companies with an issued capital of EgP 58,707.61 million in FY
established companies since July 2004 to date. As a result, these newly 2008/09.
established companies have provided around 159,497 new employment
It is worth noting that expansions by companies during the first half
opportunities or vacancies during FY 2009/10.
of FY 2010/11 included 821 companies with an issued capital of EgP
one should note that between FY 2004/05 and FY 2009/10 the number 20,673.84 million.
of newly established companies stood at 37,725; which constitutes
The following chart shows companies’ expansions since FY 2004/05 till
around 50% of all establishments created since 1970. it is worth noting
the first half of FY 2010/11:
that the newly established companies reached 3,245 companies during
the first half of FY 2010/11.
Expansions by Companies FY 20004/2005 – semi annual
The following figure shows the number of newly established companies FY 2010/11
since FY 2004/05 till the first half of FY 2010/11:
Companies
1,570 1,578
Newly Established Companies FY 2004/2005 – semi annual 1,600 1,465
1,285
FY 2010/11 1,400
1,200 977
Companies 1,000 824 821
7,957
8,000 7,269 800
6,289 6,048 6,291
6,000 600
3,871 400
4,000 3,245
200
2,000
0
0
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 semi annual
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 semi annual
2010/11
2010/11
Source: gAFi Source: gAFi
16 January 2011
Invest In
A LThoUgh the global financial crisis continues to exert downward
pressures and is, to some extent, negatively affecting many emerg-
ing industries in different markets, Egypt continues to maintain a posi-
Strategic & tive outlook in sectors such as ciT, and the Petroleum and gas sector.
on the other hand, some sectors were not drastically affected by the re-
Emerging percussions of the global economic downfall due to the robust demand
Industries of a huge domestic market with high potentials. According to the follow-
ing up report of the Ministry of Economic development of FY 2009/10
(Clusters) the construction sector reached 13.2% growth, the ciT sector reached
13%, for the first time since the global crisis has affected the Tourism
sector to peak up to such growth rate recording 12%, followed by the
transportation sector with 6.8% growth, followed by the trade sectors
with 6.1%, followed by the industrial sector with 5.3%, while the Agri-
culture sector reached 3.5% during FY 2009/10.
Least Affected Clusters:
Communication & Information Technology:
The Egyptian information and communication Technology sector is one
of the most vibrant industries the nation has to offer. Egypt is home to
many local and regional offices of major multinationals. Multinationals
including Microsoft, Tele performance, oracle, France Telecom and intel,
among dozens of others, source iT development and customer support
from Egypt.
January 2011 17
Ministry of Investment
• Total investments in the CIT sector amounted for 8.8% and 10.3% Petroleum and Gas sector:
out of total implemented investments during 2009/10 and Q1 of FY
T
2010/11 respectively. hE energy sector as a whole has enormous potential for Egypt and
the government is encouraging foreign investment in this field. Nat-
• Internet users increased by 29.6% during Q1 of FY 2010/2011 com-
ural gas is becoming an ever more important revenue generator as it
pared to the same period of the previous year.
becomes the world’s fastest growing primary energy source. This sector
is expected to show marked growth in the next few years in Egypt as
Selected Indicators for the Communication and Information decreasing technology costs allow for the ease of exploration and ex-
Technology Sector
traction, while oil supplies are further depleted.
items october 2010 • 63 new explorations during FY 2009/10 which increases the estimated
reserves. While in Q1 of FY 2010/11, 11 new explorations have al-
Number of subscribers in fixed line service (million) 9.58 ready been achieved.
Total capacity of telephone exchanges (million line) 14.49 Productions of Natural Gas, Crude Petroleum & Petrochemicals
during FY 2007/08 - Q1 of FY 2010/11
number of subscribers in cellular phones (million) 65.49 Natural Gas Crude Petroleum Petrochemicals
million tons
90
Telephone public service cabins (thousands) 1226.32 80
70
60
42.9 46.0 46.7
international communication circuits (thousands circuit) 2125 50 37.2
40 32.9 35.6 35.0 35.2 34.2
30
20 9.2 9.0 11.7
internet users (million user) 23.06 10
0
2007/08 2008/09 2009/10 Q1 2010/11
Source: Ministry of communication & information Technology Source: Ministry of Petroleum
18 January 2011
Invest In
• The production of the Natural Gas recorded an increase of 1.8% and
a decrease of 3.4% while the crude Petroleum recorded a decrease
of 1.3% and increase of 2.3% during the FY 2009/10 and Q1 of FY
2010/11 respectively compared to the same period in the previous
year.
• The domestic consumption of Petroleum products surged by 6% and
by 7% during FY 2009/10 and Q1 of FY 2010/11 respectively com-
pared to the same period of the previous year.
• USD 9.3 billion and USD 2.2 billion new investments in the field of
the research and development have been achieved by the Petrol and
natural gas sector during FY 2009/10 and Q1 of FY 2010/11.
Industrial sector:
T hE industrial sector represents an important advanced rank within
the national economy. in addition to its strong interrelation with
several productive and services sectors, combined with its role in boost-
ing foreign trade and improving the balance of payment.
• The Industrial sector amounted for 6.3% growth rate during Q1 of FY
2010/11; compared to 4.9% during the same period of the previous
year. it is worth noting that the industrial sector reached 5.3% growth
rate during FY 2009/10.
• Total investments worth EGP 25.5 billion and EGP 8.8 billion were
poured into the industrial sector during FY 2009/10 and Q1 of FY
2010/11 respectively.
January 2011 19
Ministry of Investment
Infrastructure “Electricity sector” currently, there are 46 projects in Public Utilities and infrastructure
worth USd 16 billion that are considered to be excellent investment op-
governments and multinational organizations are stepping in and step- portunities in the infrastructure sector.
ping up public finance allocations for infrastructure projects in an effort
• Total investments in the electricity sector reached EGP 13.4 billion
to help their economies cushion the blow of the current global financial
during FY 2009/10 and EgP 2.5 billion in Q1 of FY 2010/11 respec-
down turn. The Egyptian government is no exception and has ambitious
tively.
plans to transform the country’s infrastructure to a booming sector by
raising infrastructure spending, adding as much as EgP 30 billion in • One should note that the rate of growth of the electricity sector
March to its stimulus package. reached 6.2% in FY 2009/10 and around 8% during Q1 of FY 2010/11
respectively.
• 6.9% increase in consumption of electricity during Q1 of FY 2010/11.
Electricity Consumption Structure during Q1 of FY 2010/11
Industry
Agriculture 4% 32%
Alternative Energy 1%
Public Utilities 9% 9% Others
Government 5%
40% Household
Source: Ministry of Electricity and Energy
20 January 2011
Invest In
1. The launch of the trial run of the Electronic company Building/regis-
tration System in gAFi in September 2009.
This system has been designed through a cooperation protocol between
gAFi and the Ministry of State for Administrative development. As per
Fast Forward the project, launched by specialized i.T companies, newly established
companies can be registered online without having to visit gAFi head-
your Business quarters.
to Success The project consists of three phases:
Phase One: At the end of this phase, using filing and following up ap-
plications, investors will be able to file company setup applications
and documents online.
Phase Two: includes paying the capital duty electronically.
Phase Three: Enables investors to sign electronically without having
M AnY steps have been taken since 2004 with the aim of improving to visit gAFi.
the efficiency of the financial sector, increasing investments to ul-
2. Time to establish a company has been reduced to 72 hours from its
timately boost economic growth and development as well as enhancing
previous time lag of over two months.
competitiveness and financial innovation.
3. Enforcing the one Stop Shop, which gathers all sectors and entities
dealing with investors into GAFI’s new office building.
These steps were implemented through the following procedures:
4. Issuing the “Arab Investor’s Card,” which was effective in December
2006, in coordination with the Ministry of interior to facilitate dealing
Investment: with governmental bodies.
I. Reforms and Facilities 5. Establishing a land allocation unit in gAFi’s one Stop Shop.
The Egyptian government has adopted many facilities, the latest being:
January 2011 21
Ministry of Investment
6. implementing decentralization in governorates by establishing gAFi- III. Wages and Salaries
branches countrywide.
Supporting the comparative advantage, the wage levels in Egypt are
7. reducing the time necessary to register property from 72 to 38 days. among the most competitive globally. in the textile sector, which has
8. Automation of Egyptian ports and introduction of electronic services seen major relocations globally searching for lower labor costs, Egyptian
in all import and export procedures. A one-stop shop has been cre- workers earn only 47% of Tunisian counterparts salaries, 36% of that of
ated to obtain documents necessary for import and export. Moreover, Moroccans and 32% of the wages earned by textile workers in Turkey.
the average custom tariff has been reduced several times to 6.9 per-
cent and the tariff items have been reduced from 27 to six items only. Non-bank Financial Sector Reform
The government’s policies since July 2004 have been aimed at im-
These steps and all the government’s efforts to improve the investment
proving and reforming the financial sector; regulating markets and up-
climate in Egypt aim to solve investors’ problems with the objective of
dating their regulatory and legislative structures; supporting supervisory
attracting more investments that will, in turn, promote growth rates,
frameworks; strengthening capital structures of financial institutions and
increase job opportunities and improve the standard of living.
protecting investors’ rights. it is worthy of note that these policies have
been adopted by the government before the outbreak of the current
II.Tax System
financial crisis; enabling the financial sector to address its repercussions
Among the ongoing efforts to make Egypt the most attractive invest- and reducing its negative impact on the sector.
ment destination in the MEnA region, the government has cut both the
corporate tax rates from 42% to 20% of the annual profit(except for The development of non-bank financial services sector (NBFS) has
the oil and gas explorations and production companies profits, which been based on three main pillars; the first is strengthening and increas-
are made subject to 40.5% tax rate); and the personal tax rates from ing the number of institutions in the market. The second is concerned
32% to 20% of total net income earned in Egypt of residents and non with regulatory bodies. The third is related to updating legislation gov-
residents of Egyptian nationality. erning these activities.
The non-bank financial services reform consists of two main phases;
the first one was extended from 2005 to 2008, targeting to increase ef-
22 January 2011
Invest In
ficiency of non-bank financial institutions and ensure they are properly menting specialized programs to update workers’ skills in the field of
structured and subject to strict supervisory rules in order to support the non-bank financial services supervision and other programs for capital
efficiency and ensure the stability and liquidity of the financial sector. market and financial services investors and raising the community’s fi-
The first phase was focused on restructuring the insurance sector; deep- nancial awareness so that the weak investment culture at some citizens
ening the capital market and increasing the efficiency of the mortgage are not improperly exploited in spreading some negative phenomena
finance market. such as illegal investment of money. The financial culture is being dis-
seminated thorough different mass media in coordination between the
Within the implementation of the program, the fiscal year 2008/09 Ministry of investment, the Ministry of Education, the Ministry of higher
witnessed the issuance of Law no. 10/2009 on regulating non-bank fi- Education and media and press agencies.
nancial markets and instruments in order to unify non-bank financial
services regulatory bodies into the Egyptian Financial Supervisory Au- Efforts of the Ministry of Investment to upgrade non-bank financial
thority (EFSA) replacing the Egyptian insurance Supervisory Authority, services institutions include the introduction of legislative amendments
the capital Market Authority and the Mortgage Finance Authority. The allowing for the establishment of workers’ federations such as mortgage
new entity, concerned with the financial leasing activity, commenced its finance and financial leasing.
missions on 1st of July 2009.
Concerning the Insurance sector
The second phase (2009-2012) targets to enable the financial sector
to perform its role as a financial intermediary in order to mobilize sav- 1. The number of insurance companies has increased from 21 compa-
ings, increase investment levels, enhance the role of financial brokerage nies in FY 2004/05 to 29 companies to date.
institutions and encourage financial innovation within strict supervision
2. insurance premiums have increased from EgP 4.3 billion in FY 2004/05
standards. This phase of the program would aim to provide finance to
to EgP 8.7 billion in FY 2009/10 realizing a growth rate of 102.3%.
different economic sectors, especially long and medium term finance to
SMEs, create a new type of companies that provide financial services 3. Total assets of insurance companies have increased by 123.4% in FY
to small and micro enterprises and paying attention to micro insurance. 2009/10 compared to 2004/05. While the shareholders’ rights grew
reaching EGP 24.2 billion by the end of FY 2009/10; realizing 90.6 %
The second phase is focused on increasing financial culture, imple- growth compared to FY 2004/05.
January 2011 23
Ministry of Investment
Concerning the Capital Market: Value of Trade & Monthly Average of Trading Values
(2003/04 – semi annual 2010/11)
1. Turnover in the Egyptian exchange reached EgP 446 billion during FY
2009/10; while the monthly average value of trade has reached EGP EGP million
Value of Trade Monthly Average Value of Trade
37.2 billion by the end FY 2009/10. 600,000 547,064
500,000 446,022
2. The volume of trading in the Egyptian exchange reached 33.8 billion
400,000
securities by the end FY 2009/10.
261,639 280,025
300,000 241,443 221,833
3. During the first half of FY 2010/11 the turnover in the Egyptian ex-
200,000 133,100
change has already reached a very promising EgP 133 billion.
100,000 27,349 72,831
21,711 45,589 23,335 37,169
2,279 6,069 20,120
0
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 semi annual
2010/11
Trading volume and Monthly Average of Trading Values
(2003/04 – semi annual 2010/11)
Total Trading Volume Monthly Average Trading Volume
million securities
300,000
250,000 238,333
200,000
150,000 143,000
100,000
45,589 33,763
50,000 2,273 5,834 19,607 25,872
1,684 9,423
140 189 486 785 2,156 2,814
0
2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 semi annual
2010/11
Source: The Egyptian Stock Exchange
24 January 2011
Invest In
Mortgage finance developments (2004-2010): 3. 3. The number of investors and housing units subsidized by guaran-
tee and Subsidy Fund (GSF) - benefiting both youth and low income
1. The number of mortgage finance lenders has increased to 13 compa- groups - reached 5,200 units worth EgP 51.7 million by the end of
nies* plus the Egyptian Mortgage Refinance Company and 19 banks June 2010.
by the end FY 2009/10. While the total value of mortgage loans ex-
4. new program for subsidizing low income groups has been activat-
tended by banks and mortgage finance companies is worth of around
ed during FY 2009/10. it provides EgP 1,650 million for subsidizing
EgP 4 billion by the end of FY 2009/10.
65,000 housing unit during the next three years.
2. The interest rates on the mortgage finance offered has reached
12.48% of by the end of FY 2009/10.
Mortgage Loans originated by Banks* and Mortgage Finance
Companies (2004/05 – 2009/10)
Banks Mortgage Finance Companies
EGP million
3,971
4,000
3,000 2,910 1,882
1,915 1,314
2,000
821
106 445 822
2,089
1,000 1,596
16 214 355 1,094
90 231 467
0
2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Source: Egyptian Financial Supervisory Authority (EFSA)
* The companies already operating (Taameer- Masrya– Tamweel - Amlak- Sakan- Finance house- Tayseer) +
the Egyptian Mortgage Refinance Company and a new company was introduced to the mortgage finance
market under the name of «Al Masryeen Mortgage Finance Company“.
January 2011 25
Ministry of Investment
Publications,
Trade Fairs &
Conferences
S EvErAL publications were published by the Egyptian Ministry of in-
vestment and its affiliate son the economic, business and investment
climate in Egypt, combined with the economic and social policy reform
on the other hand, Egypt continues to be a hub for all regional and
international trade fairs and conferences held in different sectors over
several decades.
measures that the government of Egypt has been implementing since
2004. During 2009/10 many conferences were held among them:
The Annual report published by the Ministry of investment along with 1. The Annual Euromoney conference was held in September 2009. in
the quarterly, monthly and several non-periodic publications provide his speech to the conference, the Minister of investment at the time,
valuable information on the Egyptian economy for all investors, tar- dr. Mahmoud Mohieldin stated that the Egyptian government had suc-
geting more balanced growth that will benefit not only the Egyptian ceeded in containing the negative impacts of the global financial crisis.
population, but also investors from the MENA region; as well as other he highlighted the sectoral diversity of the Egyptian economy. he un-
continents that consider Egypt a key strategic, economic player globally. derscored the government’s interest in achieving a balanced growth
26 January 2011
Invest In
among all se tors, which is reflected positively on citizens’ standards resentatives of finance institutions, investor associations, Egyptian,
of living. Arab and foreign investors and members of popular and local councils.
Such conferences reviewed the investment opportunities and poten-
2. Several Euromoney conferences were held addressing various sectors
tial in respective governorates and the development requirements in
of the Egyptian economy.
each governorate. These events discussed the investment and inves-
- The Euromoney insurance conference was held in March 2010 to tors’ problems in these governorates and means to resolve them in
address the pivots included in the action program to develop the coordination between investors and relevant officials. Four rounds of
insurance sector within the second phase of the Financial Sector investment conferences in governorates were held, leading to a total
reform Program (2009-2012). of 20 conferences during the period from 28 May to June 2010.
- The Fourth Egypt housing and real Estate Finance Euromoney confer- 4. The Ministry of investment supported plans to develop the bonds
ence was held in June 2010 under the auspices of his Excellency dr. market, by organizing the global Emerging currency Bond (gEMLoc)
Ahmed nazif, the Prime Minister. The conference reviewed the mort- Program conference, which provided a great opportunity to promote
gage finance development plan in the coming period, which is based cooperation between emerging economies and gEMLoc members.
on legislative development, raising market efficiency and increasing it also gave Egyptian and global mutual funds the chance to become
awareness in the field of financial culture. Issues presented included acquainted with the bonds markets in emerging markets across the
the financial market’s promotion plan to be involved in the coming world. The program aims to develop the bonds market in emerging
period with three pivots in mind: legislative development, improving countries and encourage dialogue between these countries in order
market efficiency and improving awareness of financial culture. to develop the bonds market further, thus creating opportunities for
3. Periodical conferences are organized regularly by the Ministry of in- funding.
vestment countrywide to spotlight the investment opportunities avail- 5. in September 2010, dr. Mahmoud Mohieldin left his position as the
able in the Egyptian governorates, as well as the development plans Minister of investment of Egypt upon his appointment as Managing
and required megaprojects. Conducting regular conferences in Egypt’s director of the World Bank group. currently overseeing the invest-
five economic regions: Greater Cairo, West and Middle Delta, East ment portfolio is his Excellency Minister rachid Mohamed rachid –
delta, canal and Sinai and Upper Egypt. These conferences were at- the Minister of Trade and industry.
tended by respective governors, officials of relevant ministries, rep-
January 2011 27
Ministry of Investment
tatives of Egyptian and foreign business
organizations. The system of economic re-
forms adopted by the government for over
6 years was a major reason behind ranking
the Egyptian investment climate among the
best foreign investment-attracting coun-
tries. Minister rachid called on international
financing institutions to focus on injecting
more investments into small and medium
industries, which represent a major chal-
lenge in achieving sustainable development
in economies of the southern Mediterranean
countries and stressed that Egypt is keen to
promote cooperation with Europe, Egypt’s
first political and economic partner.
in this regard, it’s worth mentioning here
that Egypt will be hosting the biggest and
most important global official gathering of
economic decision-makers and financial ex-
6. in keeping with the Mandate of the Ministry of investment, his Ex- perts worldwide, which is the joint 2012 “IMF/World Bank” Annual Meet-
cellency Minister rachid Mohamed rachid, the Minister of Trade and ings.
industry and acting Minister of investment, inaugurated the 2nd Euro- This great achievement of Egypt’s success to host these annual meet-
Mediterranean conference & Exhibition on donor Funding, Banking ings reflects World Bank and IMF member states’ appreciation of the re-
and novel Funding instruments – MEdA Finance 2010 - witnessed gional role played by Egypt in the African continent and the Middle East.
by several Arab and European financing institutions and represen- This statement has been confirmed by the majority of member states,
28 January 2011
Invest In
More than 16,000 participants representing
the member states and World Bank and iMF
top personnel will be attending, in addition
to key intellectuals, economists, global fi-
nancial institution and media personalities.
This event will be a great opportunity for the
Egyptian government to attract more foreign
direct investments by presenting their eco-
nomic and financial outlook along with the
investment opportunity available in different
sectors.
which voted for Egypt and got acquainted with Egypt’s capabilities in
terms of human resources, hotel accommodation capacity, conference
halls and press, and technical capabilities to host the conference.
January 2011 29
Invest In
Published by : The Ministry of investment
of
The Arab republic of Egypt
www.investment.gov.eg
Address: 3 Salah Salem road, nasr city, cairo, Egypt.
Tel. : +202 240 55 651
Fax : +202 240 55 635
E-mail : info@investment.gov.eg
distributed in the Arab republic of Egypt and abroad to individuals and institutions monitoring the performance of the Egyptian economy
and the Ministry of Investment and its affiliates.
The information in this publication may be freely re-used and reproduced provided appropriate credit is given to the source.
Affiliates to the Ministry of Investment:
General Authority for Investment (GAFI) www.gafinet.org
Egyptian Financial Supervisory Authority (EFSA) www.efsa.gov.eg
Suez Economic Zone (SEZone) www.sezone-egypt.com
The Egyptian Exchange (Egx) www.egyptse.com
Egyptian institute of directors (Eiod) www.eiod.org
January 2011 31
www.investment.gov.eg
info@investment.gov.eg