Foreign Direct Investment
According to UNCTAD's World Investment Report 2023, Egypt saw FDI inflows more than double to USD 11.4 billion in 2022, with increased cross-border M&A sales. The country remained the second-largest recipient of FDI in Africa after South Africa. In the same year, FDI stocks reached USD 148.8 billion. 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 60% of total investments), followed by financial services, manufacturing, real estate and construction. 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). In the fiscal year 2022/2023, Egypt's services sector attracted the highest FDI at USD 5.94 billion, constituting 59.16% of the total FDI for the year, as per the Central Bank of Egypt's External Position report. The financial segment led within the services sector, securing USD 2.13 billion, followed by communication and information technology at USD 836 million. Manufacturing ranked second overall, receiving USD 3.34 billion in FDI, while real estate claimed the third spot with USD 552.3 million. Egypt experienced a rise in net FDI inflows to USD 10 billion in FY2022/2023 (ending in June), compared to USD 8.9 billion the previous year. During 2023, Acme Group revealed plans for a USD 13 billion facility in Egypt aimed at generating an annual output of 2.2 billion tons of green hydrogen. Additionally, ReNew Power has declared its intention to establish a USD 8 billion green hydrogen plant within the Suez Canal Economic Zone.
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. 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. Egypt recently announced incentives for FDI in crucial sectors and regions, offering support of up to 55% of the income tax incurred on generated revenue. These incentives are applicable when a minimum of 50% of the funding for an investment project or its expansion comes from foreign currency sources.
The country ranks 86th among the 132 economies on the Global Innovation Index 2023 and 146th out of 184 on the 2023 Index of Economic Freedom.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Inward Flow (million USD) | 5,852 | 5,122 | 11,400 |
FDI Stock (million USD) | 132,477 | 137,543 | 148,888 |
Number of Greenfield Investments* | 53 | 65 | 161 |
Value of Greenfield Investments (million USD) | 2,284 | 14,969 | 107,490 |
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.