
Foreign Direct Investment
Despite the Covid-19 pandemic, Egypt remained the largest recipient in Africa, albeit with a significant reduction (-35%) from USD 9 billion recorded in 2019 to USD 5.9 billion in 2020, according to UNCTAD's 2021 World Investment Report. In the same year, FDI stocks reached USD 132 billion. According to UNCTAD’s Investment Trends Monitor, global FDI flows showed stronger than expected rebound momentum in the first half of 2021, but the recovery was uneven. In Northern Africa, FDI flows only reached USD 5 billion during that period. As of June 2021, FDI stock amounted to USD 134.3 billion (Central Bank of Egypt). Efforts to boost FDI diversification include the agreement to reactivate the USD 16 billion Saudi-Egyptian investment fund, which lists tourism, healthcare, pharmaceuticals, infrastructure, digital technologies, financial services, education and food as priority sectors. The Sovereign Fund of Egypt (TSFE) is seeking to attract FDI into a range of economic and social development projects through public-private-partnerships. Among the areas covered are solar-powered desalination plants, digitalization of the education system, transport (electric trains), finance, as well as the restructuration of state assets in the petroleum and water sector (SWF). Nevertheless, FDI in the country is still largely directed to natural resources. This pattern has been reinforced by the discovery of the Zohr offshore gas field in the Eastern Mediterranean region. The UK is by far the largest investor in Egypt, followed by Belgium, the USA and the UAE. FDI is concentrated in the oil and gas industry (around three-quarters of total investments), followed by real estate, manufacturing, financial services and construction.
The dynamic growth of the Egyptian economy, its strategic geographical position, low labour costs, skilled workforce, unique tourist potential, substantial energy reserves, large domestic market and the success of the reforms undertaken by the authorities (including many privatisations) contributed to drive up FDIs. Egypt recently adopted an Investment Law that includes performance requirements for certain investment incentives, including labour-intensive projects and geographical location. The government has also set up special economic zones with business-friendly regulations: more liberal, more efficient administration, tax incentives, facilitation of registration and customs procedures, better infrastructure, etc. However, outside these areas, it is difficult to register a new company, and instability in the country is hindering business developments in Egypt. The country ranked 114th out 190 countries in the 2020 Doing Business report of the World Bank (latest report), gaining six spots compared to the previous year.
Foreign Direct Investment | 2018 | 2019 | 2020 |
FDI Inward Flow (million USD) | 8,141 | 9,010 | 5,852 |
FDI Stock (million USD) | 117,728 | 126,639 | 132,477 |
Number of Greenfield Investments* | 92 | 140 | 52 |
Value of Greenfield Investments (million USD) | 12,832 | 13,715 | 1,655 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Egypt | Middle East & North Africa | United States | Germany |
Index of Transaction Transparency* | 8.0 | 6.4 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 3.0 | 4.8 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 3.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
