Is Egypt open for business? Not really would be the answer if quick and easy access to online government information is anything to go by. Access to some government web portals is sometimes frustratingly slow and cumbersome, with information often out of date. The Mubarak era is over, yet you wouldn’t think so judging by some web pages which have yet to be updated to reflect the seismic changes which have taken place. Egypt, it’s time to get the online act together!
Thankfully, there are areas of Egyptian business which have kept well ahead of the online game. A quick check of the web pages offering business banking from HSBC, Barclays, Citibank and many of Egypt’s home-grown financial institutions proves this to be the case. It’s now easier than ever before to obtain the sorts of business banking services to help kick start any promising entrepreneurial venture.
Understandably, many foreign companies are adopting a wait-and-see position in terms of increasing their investment in the country because of the continuing uncertainty. However, it would be fair to say, none doubt the long-term investment potential of Egypt.
The point was well made in the report, Doing Business in Egypt: 2012 Country Commercial Guide for US Companies, produced by the US Commercial Service and the State Department.
The report underlines how Egypt has traditionally been an attractive market for US firms thanks to what it describes as the country’s unique mix of demographics and commercial links to the broader world, strategic location and a demonstrated ability to innovate and compete in global markets.
Egypt’s population of over 80 million makes it the largest Arab country, and its location at the gateway of trade and commerce for Southern Europe as well as Africa and the Middle East position it as a prime location for the transit of goods as well as a key destination for American companies seeking to do business in Egypt and the region.
The 2011 revolution and the move towards democracy, however, has affected the political, economic, commercial and security environment, says the report. GDP growth has slowed to 1%, a drop of 5% on the previous year, and foreign reserves also fell, from $36 billion in January 2011 to $15.4 billion in January 2012. Foreign direct investment flows fell from $6.7 billion in 2009/10 to $2.1 billion in 2010/11.
Yet despite all of this, Egypt remains the fourth largest export market for US products and services in the Middle East. Globally, Egypt is the 33rd largest export market for the US. The US continues to be Egypt’s largest trading partner and second largest investor.
The report adds, “In this fluid commercial environment, many foreign and Egyptian firms have adopted a “wait and see” position as Egypt continues through a lengthy political transition, and works to rebuild its economy and re-establish security. Some Egyptian firms are operating under a “business as usual” mentality.
“While there was a net outflow of portfolio investment, US firms did not rush to close out operations and leave the country. Long-standing US investors, many of whom have been very successful here in Egypt, have stayed the course but in some instances have slowed down planned investment. There has been, however, a marked drop in total foreign investment into Egypt, reflecting the view that in the current unpredictable environment, it is best to wait before proceeding with large scale projects.”
Check out the full report here.