Egypt flag Egypt: Investing in Egypt

Foreign direct investment (FDI) in Egypt

FDI in Figures

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 151st out of 177 on the 2023 Index of Economic Freedom.

 
Foreign Direct Investment 202020212022
FDI Inward Flow (million USD) 5,8525,12211,400
FDI Stock (million USD) 132,477137,543148,888
Number of Greenfield Investments* 5365161
Value of Greenfield Investments (million USD) 2,28414,969107,490

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.

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What to consider if you invest in Egypt

Strong Points

Advantages for FDI in Egypt:

  • Strategic geographic location
  • Low-cost and relatively qualified labour force
  • Growing population (more than 100 million inhabitants) that makes Egypt a strategic market in the region
  • High tourism potential
  • Important energy resources, notably natural gas
  • Public works policy, which offers many investment opportunities to foreign companies
  • A sufficiently diversified economy (energy, tourism, Suez Canal revenues, industrial base, etc.)
  • Government policy that aims at improving the business climate
Weak Points

Disadvantages for FDI in Egypt:

  • Political situation that remains tense and arouses uncertainty for foreign investors
  • Degraded regional security situation
  • Fragile banking sector
  • High poverty rate and persistent unemployment 
  • Infrastructure that remains insufficient
  • Omnipresent public sector and excessive bureaucracy 
  • Shortage of skilled labour
  • Cumbersome customs procedures and non-tariff trade barriers
Government Measures to Motivate or Restrict FDI

Since September 2004, the General Authority for Investment and Free Zones (GAFI) has established an economic program to attract foreign investors, together with an average reduction of 35% customs duties and tariff simplification. Furthermore, Egypt enjoys the support of the FMI to put into place economic reforms (new VAT rate, reduction of subsidies on fuel and electricity, etc.). It shows the government's willingness to improve the business climate, which remains complex. Thus, after the Revolution, Egypt put into place restrictions on capital transfer. Investors are claiming that the approval of transfers may take several weeks.  

Several "megaprojects" may attract foreign investors in the coming years. Siemens already developed the largest gas power generation plant in the world, Egypt also plans to develop a large logistic and industrial platform around the Suez Canal, a new administrative capital city and large agrarian and mining projects.

In most sectors, foreigners benefit from the same treatment as nationals. A joint venture is needed to operate in certain sectors, namely hydrocarbons and real estate. The Law on Imports and Exports was amended to allow enterprises to be 51% Egyptian-owned to import (before, the enterprises had to be 100% Egyptian owned).
The country implemented a number of regulatory reforms, namely a new investment law in 2017; a new companies law and a bankruptcy law in 2018; and a new customs law in 2020 (if the establishment is under the provisions of the new investment law, it will benefit from a 2% unified custom tax over all imported machinery, equipment, and devices required for the set-up of the company).
More information on governmental measures to attract FDI in Egypt is available on the website of the
General Authority for Investment, which developed a special desk for investors. 

Bilateral investment conventions signed by Egypt
Egypt has signed bilateral agreements with more than a hundred countries, including most of the European Union countries, the United States and several African countries, the Middle-East and Asia. On the Mediterranean Basin, Egypt has signed bilateral conventions with Algeria, Spain, France, Greece, Italy, Libya, Lebanon, Malta, Morocco, Portugal, Tunisia and Turkey. An agreement with the Mercosur bloc of Latin American nations is also into force.
These conventions can be referred to on UNCTAD's Investment Policy Hub.

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Latest Update: February 2024