Economy: still attractive, Egypt faces a turning point

After a positive recovery at the end of the pandemic, the impact of the Russo-Ukrainian war will have been one too many for the Egyptian economy. The country is a net importer of fuel and agricultural raw materials. It imports 62 % of its wheat needs, with four-fifths coming from Russia and Ukraine. What's more, this war is not helping tourism, a major source of revenue for the country, with half of the 8 million visitors in 2021 coming from Eastern Europe.

The last few months have seen Egypt plunged into a serious economic crisis marked by spiralling inflation, a plummeting Egyptian pound and successive rises in interest rates. In mid-October, Egypt had to secure a three billion dollar loan with the International Monetary Fund (IMF) to ease the pressure on the balance of payments.

The exchange restrictions introduced by the government have led to a scarcity of the dollar, with serious consequences for the logistics sector, in particular an increase in the cost of goods. bottleneck effect in ports At the end of the year, shipments worth billions of dollars were stuck in the country due to a lack of access to the dollar to secure payment. The authorities therefore had to resort to emergency measures such as cancelling the requirement for importers to secure letters of credit to bring goods into the country.

The context is therefore delicate for an economy that had until then been relatively successful in initiating the turnaround from confinement and overcoming its impact on tourism. Thanks to a programme of structural reforms begun in previous years, the diversification of the economy and the government's insistence on maintain business continuityEgypt was the only country in the Middle East and North Africa region to record positive growth in 2020.

" An abrupt halt to the economy would have been very dangerous for Egypt, Ahmed Shalaby, Chairman of the Tatweer Misr property group, was quoted in the press as saying. It was a very intelligent choice and encouraged the business community to continue. Developers and subcontractors continued to work on their respective projects in 2020 and we are now seeing progress in the construction of the new urban communities. ".

Construction and real estate are undeniably important for driving the Egyptian economy, and are among the fastest-growing sectors. In fact, since 2014, they have contributed 15% of annual GDP. All sectors combined, however, Egypt has plenty to offer. High levels of consumer spending and a young, well-educated and multicultural workforce have made the country a favourite destination for foreign investors. In 2020, despite the impact of Covid, Egypt was still their favourite destination. favourite destination in Africa5.9 billion, compared with $9 billion the previous year.

Two institutions are particularly important for the country's economic direction: the Free Trade and Investment Authority and the Ministry of Economic Development and Planning. The Ministry of Economic Development and Planning is responsible for the general strategy and its implementation by sector. It is responsible for implementing the Egypt Vision 2030 national roadmap, which aims to make Egypt a a competitive and diversified economy. The objectives include boosting economic growth and per capita income, as well as key projects such as the construction of the new administrative capital, the integration of the informal sector, the development of the green economy and cloud infrastructure, and the promotion of public-private partnerships.

Another key institution, the General Authority for Investment and Free Zones (GAFI), has dedicated a special subsidiary to foreign investors from 2018, in the form of a one-stop shop for formalities and technical assistance. Several sectors have been identified as representing significant potential for investors: agriculture, land reclamation, real estate and textiles. In 2017, the Investment Law highlighted investment opportunities in several mega-projects: the Suez Canal Zone, the Ain Sokhna Port, but also the New Administrative Capital and the new New Al Alamein City on the Mediterranean coast.