Foreign Direct Investment

 According to UNCTAD's World Investment Report 2024, Egypt saw FDI inflows decrease to USD 9.8 billion in 2023, from the record level of 11.4 billion reached the previous year. At the end of the same period, the total stock of inward FDI stood at USD 158.6 billion. Egypt stands out as a key investment destination in North Africa, attracting automotive MNEs like BMW and Robert Bosch (Germany) and Nissan (Japan), as well as pharmaceutical companies such as GlaxoSmithKline (United Kingdom) and electronics producers like Samsung Electronics (Republic of Korea). Moreover, the Suez Canal Economic Zone secured agreements for green ammonia and green hydrogen projects in Egypt, valued at USD 10.8 billion, as the country introduced an investment tax credit and other fiscal incentives aimed at promoting green hydrogen (data UNCTAD). Figures from the Central Bank show that in the fiscal year 2023/24, FDI inflows came chiefly from the UAE (68.7%), the U.S. (5.3%), the UK (5.2%), and Italy (3.7%). According to the Minister of Investment and Foreign Trade, announced that Egypt's FDI hit an impressive USD 46.1 billion in 2024, marking a substantial increase from USD 9.8 billion in 2023. This remarkable growth was primarily driven by the USD 35 billion Ras El Hekma deal, which significantly boosted the country's investment prospects: in February 2024, the Egyptian government finalized a monumental USD 35 billion investment agreement with Abu Dhabi's sovereign wealth fund, ADQ, to develop the stretch of Mediterranean coastline in northern Egypt.

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 driving 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. In January 2024, President El-Sisi enacted the Green Hydrogen Law (Law No. 2 of 2024), offering incentives for green hydrogen projects, including desalination and manufacturing for hydrogen facilities. Projects must be completed within five years of agreement signing and start operations within five years to qualify. Expansions can also benefit if completed within seven years of the original project. To be eligible, projects must secure 70% of financing from external sources (FDI), use at least 20% local inputs, and contribute to local development. Incentives include a cash investment deduction of 33-55% on income tax, VAT exemptions on exports, equipment, and raw materials, along with property tax reductions and a golden license for approved projects. Nevertheless, investors encounter challenges such as extensive bureaucracy, a lack of transparency, inconsistent enforcement of laws and regulations, obstacles in accessing foreign currency for profit repatriation or importing goods, a scarcity of skilled labour, intricate customs procedures, corruption, and concerns related to intellectual property. The country ranks 86th among the 133 economies on the Global Innovation Index 2024 and 146th out of 184 on the latest Index of Economic Freedom.