Egypt Market Opportunities

Egypt Market Opportunities

MFA: Strategic opportunities for foreign exporters

Economic growth in recent years has been interrupted by the negative effects of the covid-19 pandemic. Funds from remittances experienced a dramatic drop: millions of working Egyptians were forced to return to Egypt with negative consequences for the Egyptian economy. Revenues from the Suez Canal fell and tourism, which accounts for up to 11.5% of GDP, came to a complete halt in the months of the pandemic.

Due to persistent restrictions on international transport, tourism is expected to experience at least short-term stagnation and the need for financial support from the government and banking institutions in the coming years.

Nevertheless, Egypt is among the developing countries that have managed to avoid a long-term decline in the economy thanks to preventive fiscal measures. The Egyptian government is betting on investments in new natural gas fields and the sale of licenses to foreign companies. Despite subdued global energy demand, the commissioning of two major natural gas liquefaction stations and a new trade link in the Eastern Mediterranean will help support the national economy.

During 2020, the Egyptian government adopted numerous effective measures to support investors, producers and the business sector in order to mitigate the effects of the covid-19 pandemic. It launched a two-phase program to support domestic exporters; in 2020 it released a total of 800 million USD, in 2021 up to 950 million USD. It supported domestic entrepreneurs by waiving penalties for delayed tax payments, extending the deadlines for gas payments and reducing the price of electricity for industrial enterprises.

All this contributed to ensuring the liquidity of entrepreneurs, enabling them to invest in their own production and to ensure wages for employees. The Central Bank of Egypt cut its key rate by 300 basis points to 9.25%. The reduction is intended to support the growth of the industrial sector, reduce the budget deficit and stimulate foreign investment in the stock market. The IMF supported Egypt in the fight against the covid-19 pandemic with funds worth USD 2.77 billion, which the government drew during the whole of 2020.

Post-covid-19 opportunities

Transport industry and infrastructure

Egypt’s strategic location at the crossroads between Africa, the Middle East and Europe offers opportunities in the maritime infrastructure sector. The country has a total of 48 ports in the Mediterranean and Red Seas, serving up to 90% of Egypt’s international trade. These represent opportunities not only for their modernization, but also for the construction of logistics centers, such as free trade zones.

Domestic air transport, especially during the covid-19 pandemic, significantly helped to reduce financial losses in the transport sector. With a network of 28 civilian airports and an ever-increasing number of passengers transported annually, the government perceives the need for their expansion and modernization.

Large investments are expected mainly in the field of IT, security systems or air traffic management. Although the government spends a lot of money on the modernization and new construction of railway lines, train sets and the Cairo metro, these contracts are largely already redistributed between large French, German and Russian companies.

Defense industry

Even in times of crisis, the defense industry is one of the few industries that enjoy a steady flow of funding in Egypt. Several Czech companies have already managed to penetrate the Egyptian market, where manufacturers from all over the world are active. These are mainly small hand weapons (pistols and assault rifles), ammunition of all kinds, products of a dual nature for mining needs (mining explosives, special chemicals, etc.). Egyptian interest in licensed production is also growing.

State military factories produce not only military material, but are also significantly involved in civilian production. The government aims to increase its own production of military equipment and gain a share of the African market. The current security situation in Libya and its long unprotected border with Egypt present a great challenge, but also an opportunity for intelligent systems and radar technologies for border protection. Strategic locations such as the Red Sea and the Suez Canal, as well as vast desert areas near the borders with Israel and the Gaza Strip, require increased protection and represent opportunities for Czech passive defense technologies.

Water management and waste industry

The UN predicts that Egypt will not have enough water to supply its ever-growing population by 2025 if the newly built Great Ethiopian Recovery Dam (GERD) is completely filled. The flow of the Nile River will drop below 500 m 3 per capita due to the filling of the GERD and poor management of water resources. Due to the fact that the Nile River is the main water source usable for agriculture, there is a direct consequence of problems with the irrigation of thousands of hectares of agricultural land and the associated lack of basic food.

According to allcountrylist, the Egyptian government is trying to minimize the effects of this crisis and modernize the management of water resources – to make the irrigation of the Nile basin more efficient and to ensure the responsible management of water resources by Egyptian farmers. Egypt already relies on wastewater recycling as well, and as a result of the crisis, it is expected to expand this throughout the river basin. The experience of already established Czech companies in the country contributes to the good name of Czech companies in this field.

Healthcare and pharmaceutical industry

During the covid-19 pandemic, it was confirmed that the current capacities of hospital facilities are insufficient at critical moments. Already in the first months of the pandemic, state health facilities were overcrowded, which caused social discontent; the government had to set aside other public spaces for treating the infected. Nevertheless, due to the government’s instructions, private hospitals or facilities intended for state security forces were not used.

Investments in the healthcare sector amount to only 1.5% of GDP, which is reflected in the very poor state of state hospitals, in which quality standards are not respected and staff do not have the necessary equipment. The government is already investing in the expansion but also in the modernization of healthcare facilities (capacity expansion, modernization of current technology, training and service) and the trend is expected to continue in the coming years. In April 2021, for example, the so-called Pharma City was inaugurated, extending over more than 180,000 m 2, consisting of laboratories, storage areas and production facilities for medicines and medical devices.

Egypt Market Opportunities