Company export guide for Egypt
Troubled times make way for growing trade
With a turbulent recent past Egypt became the template for the Arab Spring in 2011 and despite ongoing political turmoil is emerging as a potentially lucrative destination for British exporters. Its divisions and uncertainties aside, Egypt is a growing and attractive market for many UK companies with particular opportunities in ICT, oil and gas, engineering and education and training.
The various conflicts have cost the country dearly – more than £500 billion since 1991, according to the Strategic Foresight Group. A quarter of the population remain illiterate and poorly educated. Poverty remains rife with more than 15 million Egyptians – around a fifth of the population – surviving on less than $1 a day.
Straddling North Africa and the Middle East, Egypt is a strategic trade hub linking Europe, Asia, Africa and the Far East via the Suez Canal. Bisected by the River Nile, much of the country is unoccupied with vast areas of desert and nearly 30 million people concentrated in and around the sprawling city of Cairo. Significant areas of desert have been reclaimed principally for agricultural use.
For decades the Egyptian economy was highly centralised but that changed dramatically during the 1990s following arrangements with the IMF and huge external debt relief. Over the past decade Egypt has undergone wholesale reforms as it transforms into a market economy.
Growing poverty and pervasive corruption sparked the popular uprising beginning in January 2011. All this was fuelled by the failure of business reforms of 2004 to deliver higher living standards for the country’s 82 million plus people or enough jobs for its increasingly young population, half of whom are under 25. There are around 700,000 youngsters entering the labour market for the first time each year.
Since the revolution the country’s foreign exchange reserves have more than halved to £10 billion with many exporting their assets abroad.
Annual growth in the economy was at around five per cent by mid 2012. It has averaged this kind of figure for the past quarter of a century. However, more sluggish growth over the past four years has left youth unemployment standing at 25 per cent and 12.6 per cent of the adult workforce jobless.
The revolution highlighted the rampant corruption under the Mubarak regime. Various government officials and ex-ministers have been convicted of corruption charges. Nevertheless, despite widespread calls for greater transparency, the clean-up is slow although new anti-corruption laws are being drafted.
This is just one of the many challenges faced by the country’s new president Mohammed Morsi of the Muslim Brotherhood sworn in for a four-year term in June 2012. Using the brotherhood’s business expertise, Morsi has launched the Renaissance Project, an ambitious programme of economic development. This includes international finance, foreign investment and working towards an open and transparent economy.
Agriculture, which accounts for a third of the country’s workforce and 14 per cent of GDP has faced problems, particularly fuel shortages. Industry accounts for 40 per cent of the economy and the service industry nearly 49 per cent. Tourism is a crucial income-earner.
Egypt imports around £30 billion worth of goods a year, principally machinery and equipment, foodstuffs, chemicals, fuels and wood products. At present the UK is low on the list of Egypt’s chief suppliers.