Investment in Egypt and Egypt Economic Vision 2030
The Egypt Vision 2030 strategy is more of a statement of broad economic intent than a precise roadmap. However, against the backdrop of the global Covid-19 pandemic and with government policy focused on short-term mitigation efforts, the document provides as a useful reminder of the nation’s long-term economic ambitions. Launched in 2016, the strategy aims to create a “competitive, balanced and diversified economy” that supports “innovation and knowledge, social justice, economic development, and the environment”. A number of concrete macroeconomic goals are outlined in the document, including raising the nation’s annual GDP growth rate to 12%, its GDP per capita to $10,000 and its share of global GDP to 1%. At the same time, the strategy established the objective of reducing unemployment to 5%, bringing the inflation rate to between 3% and 5%, and lowering public debt as a share of GDP to 75%. While these figures provide useful targets for government planners, Vision 2030’s principal utility from an investment perspective is as a guide to potential growth sectors.
The strategy identifies nearly 80 programmes and projects to be implemented in the bid to drive economic growth through to 2030. These include the development of river transportation, entrepreneurship programmes, logistics centres and environmental projects. In addition, the plan envisions the construction of a New Administrative Capital outside of Cairo.
The General Authority for Investment and Free Zones (GAFI) has identified a wide range of sectors that Egypt’s competitive advantage make suitable for further development. According to GAFI, an expanding population and increasing levels of disposable income will drive retail sector expansion. The same factors underpin the growth of the health care and education sectors. In addition, Egypt’s rich geology is expected to support an enlarged mining industry. Energy diversification programmes and a favourable climate for solar power make renewable energy a key growth sector, while agriculture and land reclamation is expected be accelerated by the government’s drive towards food self-sufficiency. The country’s already well-developed tourism industry is set to receive a boost through an increased number of visitor sites, upgrades to security infrastructure and improvements in travel industry standards. Continued reform to the financial and insurance sectors, meanwhile, is expected to attract greater capital to the country and support growth in other industries, such as real estate, oil and gas, petrochemicals, transport and textiles.
Egypt’s ambitious strategic targets meets numerous challenges. As the Covid-19 pandemic demonstrates, external factors can derail government planning and significantly affect macroeconomic performance. Prior to the outbreak of the virus, Egypt had made considerable progress in pursuing its goals. In 2019 the economy grew by 5.6%, up from 4.3% in 2016, according to the IMF. Increased income per capita is another area in which the country has performed relatively well, with $4689 per adult in 2019, according to Credit Suisse estimates, which is greater than its 2020 interim target.
In other areas, Egypt has made gains but fallen short of its intermediate goals. In 2020, for example, the country ranked 114th out of 190 countries in the World Bank’s “Doing Business” report, up from 131st in 2016. However, this is short of its objective of rising to 100th place by 2020 and highlights that it has considerable ground to make up to reach 30th by 2030. Furthermore, while unemployment fell from 12.6% in late 2016 to 8.1% in the third quarter of FY 2018/19, its lowest level since 2011, the employment rate over this period did not climb in parallel, as might be expected. The overall employment rate fell from 40.4% to 38.5% over the same period. Ensuring further progress towards the achievement of the Egypt Vision 2030 targets will require the continuation of Egypt’s process of economic reform and agile policy-making in response to Covid-19.
Egypt has accordingly adopted various policies and enacted laws to improve the country’s position with foreign investors. Investment in Egypt was earlier governed by the Investment Guarantees and Incentives (Law number 8 of 1997 as amended) which was repealed by Investment Law number 72 of 2017 (Investment Law 2017 or new Law as amended.) The Law was officially published on 31 May 2017 and came into effect on 1 June 2017, amendments to the Law were issued by Royal Decree Number 2731/2019 and 2732/2019 with the purpose to promote investment climate in Egypt and add new incentives for investment projects
Egypt Is a party to numerous bilateral investment agreements and multilateral conventions in the world including Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965), Multilateral Investment Guarantee Agency (1965) and Unified Agreement for the Investment of Arab Capital in the Arab States (1980), Egypt is a signatory to the United Nations Conference on Trade and Development (UNCTAD of 1964).
When a person invests within the Arab Republic of Egypt by either setting up, expanding or developing an investment project and using the fund for the development of such a project while contributing to the sustainable development of the State will be termed as an investor making an investment in Egypt. Such an investment project can include activity in many sectors including industry, agriculture, tourism, communications or technology sectors. The new Law aims to promote foreign investment in Egypt by simplifying the process while improving the national economic growth rate. Employment opportunities, promotion of exports and sustainable development are some of the benefits that are aimed to be promoted through this Law, and great emphasis has been laid out on the social responsibilities of foreign investors in the territory. The competent authorities aim to enhance foreign investment in Egypt.
The Egyptian state also paid attention to the infrastructure and an advanced road network linking all regions of the Egyptian state to each other, which led to ease movement within the Egyptian territory, especially the transportation of goods, equipment, tools and other necessary and complementary elements for investment, which led to improving the conditions for investment and trade within Egypt and offer an available investment opportunities in remote areas, which are rich in natural resources and promising opportunities, especially with regard to natural resources and the appropriate climate, as well as the strategic value of the geographical location and the availability of human element and manpower in various sectors, As well as granting exemptions and advantages for importing and exporting from and into the Egyptian state, simplifying the necessary procedures and supporting Local manufacturing and attention to quality in order to create competitiveness for the Egyptian product with international products, all of this contributed to pushing forward the economy and development of the Egyptian society, which is starting to show its impact on the Egyptian economy and the state’s domestic product.
The political leadership in Egypt did not make a mistake when it devoted all its resources to improving the field of investment in the Egyptian market and advancing development. Rather, it was correct in what it did, as it facilitated and simplified all procedures and documents required to start an activity or project within the Egyptian state or establish a company or facility that enjoys exemptions and guarantees established for investment in Egypt.
Egypt provides the investors with the availability of several possible forms of investment in the Egyptian market and several laws that can be enjoyed according to the nature of the investment and the economic activity, its purpose and the goal of its establishment, so one person can enjoy the umbrella of the individual establishment as one of the forms of investment, and in the case of partners he can enjoy any legal form of partnership Such as joint-stock companies or individual companies, according to the nature of each activity and the requirements for it, and whether these partners are Egyptians or foreigners, and whether they are natural or companies.
The Egyptian legislator has set the interest of the Egyptian economy in mind and has given a lot of flexibility and dynamism to the field of investment, considering this as a general trend within the state that helps the political leadership to reach it through mechanisms and controls that provide the desired flexibility, but within a framework of transparent oversight that does not lead to disruption of work or the negative influence on it, and the Egyptian legislator is still continuing to modernize and develop the legal and legal system for it to provide a better environment for investment in the Arab Republic of Egypt and to preserve its gains during the past period and the improving of the investment in the Egyptian state and the remarkable improvement in all the figures and results of the economy and investment in the Arab Republic of Egypt
It remains only the existence of a comprehensive law firm that can help the investor and provides him with appropriate solutions throughout the period of the project, from the time the investment decision is made in Egypt until the completion of that investment and the achievement of its objectives. The mission of this law firm is to provide promising investment opportunities within a legal framework and establish an appropriate legal entity according to the nature of the activity and its purpose, in order to obtain the exemptions and guarantees established by the applicable laws, to provide legal protection to the investor throughout and after the project period, to secure the legally and to provide the most severe legal protection and the most favourable conditions for the project, and the role of this law firm does not end until after the project ends or its liquidating according to the law.