Doing Business in Egypt
The E of ‘CIVETS’ – the world’s fast emerging markets – Egypt has strong export potential, political uncertainty aside
The CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa) promise to be among the fastest emerging markets over the next decade. Foreign investment in these nations is growing and – as most of their own production is in raw materials – there is a growing market for secondary goods. If the UK government is to succeed in its plan for an export-led recovery then the UK must focus on these markets.
Egypt is the world’s 30th largest country by land mass and 15th by population. The North African giant boasts superb trading links with Europe and Asia by sea as well as Africa on land; arguably, it is the most economically developed of the CIVET nations. On the surface it would appear that Egypt should already be one of the world’s major economies.
However, Egypt has historically been held back by a distinct lack of arable land and heavy over reliance on the Nile basin. This has meant that Egypt’s ever growing population has been too localised, which has led to relative poverty. Political oppression and uncertainty has also meant that, although much foreign investment has been received, development projects have failed to bring wealth to the Egyptian people.
Nevertheless, Egypt’s economy is moving in the right direction. GDP has grown sharply every year since 2004 (from $80bn to $240bn) as foreign investment in communications and physical infrastructure projects makes inroads. There have also been a number of government-led economic reforms since the early 2000s that have allowed the economy to grow.
Egypt is a major exporter of crude petroleum products and gasses. Other exports include gold, minerals and copper plates.
In return Egypt is a heavy importer of refined petroleum products, ferrous waste and scrap, cars and many other consumer goods. This propensity to import more finished products makes Egypt an attractive target for British exporters. As the nation’s wealth and business presence increases, so should the country’s requirement for manufactured goods and professional services – the best of British exports.
One major concern for British businesses considering Egypt as a target market is the recent uprisings and the uncertain political future. This makes Egypt the riskiest of the CIVETS nations at present. The new government, led by the Muslim Brotherhood, has not yet made clear its intentions for business. Neither has it made clear whether it will be sensitive towards westernisation (though this is unlikely).
Therefore, although all of the economic and geographical ducks are in a row – making Egypt a potentially attractive investment opportunity – the political uncertainty leans toward caution. It is very difficult to consider investment in a country that could turn hostile at any moment. Nevertheless, the right business with the right product could find exciting opportunity in the land of the Pyramid. If the world embraces the new Egypt, and the country embrace the world, then business opportunity could develop considerably.
Torrie Callander is a corporate dealer at independent foreign exchange provider, Global Reach Partners