Egypt began its journey towards democracy in January 2011, with the “Arab Spring” uprising. Perhaps unsurprisingly, the journey has not been a smooth one, and difficulties continue as evidenced by events following the ouster of President Morsi in early July 2013. A new interim government with significant public support is now in place with a brief to oversee the all necessary steps towards the election of a new Parliament and a new President. Recent events coupled with continuing economic uncertainty, security concerns and another interim government are not conducive to the attraction of FDI. It may take time before stability is restored. Nevertheless, the 2013 edition of Ernst & Young’s annual attractiveness of investments in Africa report placed Egypt as the second most attractive country in the continent for investment.
Furthermore, the fundamental advantages of Egypt as a trading and investment partner for the UK have not changed, and history has shown that the Egyptian economy is able to turn round quickly. The economy is highly diversified (the third largest in the Middle East) with significant mineral resources, is strategically located in the centre of the MENA region, and is heavily import dependent. Its population of 85M is the largest in the Arab world, and an expanding middle class and attractive demographics (half the population is under 25) provide confidence in its future productive capability and potential consumer demand. Egypt is the hub for the world’s maritime traffic through the Suez Canal, and is a signatory to many regional and international free trade agreements. British goods and services are held in high regard. British business still sees Egypt as a natural hub for regional trade, positioned at the crossroads of Europe, Middle East and Africa.
Whilst it may take time for Egypt to return to the 7%+ growth rates in evidence before the global downturn and the 2011 uprising, it has the potential to do so. Its needs are great, creating demand for imported goods, services and expertise. Trade is less affected by recent events and political and economic uncertainties; there are significant opportunities across many sectors of the economy today. Companies already doing business in Egypt will be well placed when high levels of economic growth return.