5. 5
• Natural Resources: oil & gas (70% self sufficiency), renewable energy,
minerals
• Location: Strategically located between high purchasing markets of Europe and
Gulf. Transport corridor between Mediterranean sea and Indian Pacific ocean.
• Fourth largest economy in Arab world after KSA, UAE and Algeria
• Huge market: 90 mn people
• Work force: Educated, skilled, moderate cost, majority of population is young
• Party to many bilateral and regional trade agreements
• Suez Canal: 8% of global maritime trade, turnover $5,5 bn
• Tourism: Long term global destination for cultural and leisure tourism.
• Oversees Remittances $18 bn in 2013
6. Egypt has the most diversified economy in the Middle East
6
7. GDP
• $255 bn
• $3,000 per capita
• 2.1% growth Rate
(FY2012/13)
7
8. • Unemployment 13.3%
• Annual Headline Inflation 11.4%
• Public Budget Deficit 14% of GDP FY2012/13, 12% expected FY2013/14
• NIR - May 2014 $17,3 million (covers 3 months imports)
• BOP Surplus $2.2 bn (July/March 2013/14)
• Trade balance $-25 bn deficit in FY2009/10
$-33 bn deficit in FY2012/13
8
9. • Total FDI reached $5.2 bn in
2012/13 from $8.1 bn in
2008/09.
• FDI has fallen dramatically
after 2011 revolution. After
2012 we see FDI picking up
again.
9
10. Netherlands is the 2nd largest EU investor and the 7th internationally (Accumulative data
since 1970).
10
Main EU investors in Egypt
11. » The Netherlands is the fourth largest EU exporter to Egypt after Italy, Germany and
France with exports of €1,276 million (2013)
» The Netherlands is the seventh largest EU importer from Egypt after Italy, Germany,
France, Spain, UK and Greece with imports of €331 million (2013)
11
12. » Morgan Stanley confirms
confidence in Egyptian Stock
Exchange (EGX), keeps it in
Emerging Markets Index due to
positive market developments.
» Benchmark index EGX 30
increased 85% since 30th June
2013. EGX 30 value was 4,752
in 30/6/2013, recorded 8,746 in
12/6/2014.
» Market Capitalisation is
currently $66 bn down from
$139 bn in 2007
12
13. » GDP growth was 7.2% before the global financial crises; expected
to recover to 5.5% in 2017/18 (Source: EIU).
» IMF forecasts economic growth 4.3% in 2015; GoE estimates is
3.2% for 2014/15.
» Goldman Sachs includes Egypt in top 11 countries from which
global growth will come in 15 years.
» World Bank expects Egypt to rank 15th globally by GDP in 2050
ahead of Canada and Italy.
» Investment opportunities exist across a wide range of sectors
(agriculture, transport, water, oil & gas, education & training,
energy, engineering, ICT, retail, financial services, life sciences and
security equipment). 13
14. » Energy crisis (blackouts, inefficient usage, slowdown natural gas
production)
» Fiscal balance (budget deficit, reliance on aid and grants)
» Subsidy schemes (1/5 of budget, not directed to needy, social sensitivity)
» Solvency crisis (Lack of hard currency, black market, delayed payment of
obligations, etc.)
» Business and investment climate (complicated government procedures,
changes in legislations, contract enforcement, tax conflicts, protecting
investors etc.)
» Stability / security (dropped credit ratings, demonstrations and strikes,
increased crime rates, etc.)
GoE is aware of these challenges and has started to rebuild the country by:
o Economic reforms started by reducing energy subsidies.
o Major efforts to improve security.
o Legislative reform to encourage investment
o Use of International Advisory services (multilateral and private)
14
15. » Most populous country in the Middle
East and North Africa
» Population: 90 million (May 2014)
expected to reach 150 million by
2035
» Growth rate: 2.8%
» 50% population is under 25 yrs
» 45% of population live on less than
$2/day
15
17. » USA: 2 missions to Egypt (infrastructure and safety), 1 ministerial visit (Foreign Affairs).
Relieving $1 bn of Egypt’s debt for new educational and economic projects. Providing
$1.7 bn in loans for infrastructure projects (water and transportation sectors) and SME
support. Annual $1.3 bn military aid. In addition to training and investing in people
initiatives.
» UK: 3 missions to Egypt (SCC, Waste Management, energy) and 3 events (tourism,
nursing, banking), 1 Ministerial visit to the UK (education) and 3 events about Egypt in the
UK (investment, ports and multi-sectorial)
» France: French Development Agency to provide €1.2 bn for financing the third phase of
Cairo's third metro line Sep 2014. Financing € 95 million for SMEs projects.
17
18. » Italy: Italy is granting a € 45 million credit line Egyptian and Italian small and medium-
sized enterprises (SMEs) with projects in Egyptian industry, food and services sectors.
» China: Contracted new tunnel to Sinai under Suez canal; Negotiating electrified new rail
line between Cairo and Alexandria (220 Km); Negotiating new Tram line (urban transport)
in Greater Cairo.
» South Korea: Egypt – South Korea Business Forum to launch in Aug 2014 (Energy,
Chemicals, Transport, Construction, Electronics)
» Russia: Two Egyptian mission to Russia (Aug 13 & Feb 14) and one mission to Egypt
(Nov 13) to discuss military cooperation. A Russia-Egypt intergovernmental commission
on trade and economic cooperation was formed and a $2 bn arms deal finalised.
» UAE: Khalifa Fund to provide loans of $400 million to finance small, micro
and medium enterprises in Egypt. 18
19. Has a portfolio of over € 900 million; current projects include:
» Education and TVET (€ 220 million)
» Health (€ 110 million)
» Water (€ 116 million)
» Energy (€ 110 million)
» Emergency employment € 70 million (Social Safety Net )
» Transport (€ 80 million)
» Environment (€ 40 million)
» Socio-economic development and Civil Society (€ 90 million)
» Business Development and Trade (€ 64 million) 19
20. EIB Portfolio for 2009/2014 is €1,7 bn:
» After 2011 investments 200-250 million/year, top year 2010 (€ 900 million)
» Energy, € 865 million
» Oil/gas (2010), € 346 million
» Transport (2012/13), € 250 million
» SME credit (2013), € 80 million
20
21. EBRD Portfolio for 2013/14 is € 1,25 bn; major allocations are:
» Power € 650 mn
» Transport € 171 mn
» Agribusiness loans € 190 mn
» SME loans € 73 mn
21
22. WB current portfolio in Egypt is $4.9 bn: (through IBRD and IDA)
» Power $2,177 mn
» Finance $900 mn
» Transport $880 mn
» Social sectors (health, education and employment) $418 mn
» Water and sanitation $416 mn
» Agriculture $100 mn
» Environment $27 mn
Additionally IFC, part of WB group, has total commitments in Egypt since 2011
close to $1 bn. IFC mission is private sector development.
22
23. 23
Current portfolio consists of 27 projects with ongoing commitment of Euro 1.4
bn:
• 7 public sector loans (87% of ongoing commitments)
• 3 private sector loans (12% of ongoing commitments)
• 17 grants (1% of ongoing commitments)
Ongoing commitment by sector:
• Power (80%), finance (12.2%), water and sanitation (4%), social (3.6%),
and agriculture (0.2%)
24. 24
Nationality Name of the company Amount of
investment
Timing of
the
investment
Type of investment Employment
NL Shell USD 402 million 2014/2015
Budget
Investment in Badr El Din Petroleum
Company used in excavation,
exploration, development and
establishment of new production
facilities
NL Orascom Construction BV USD 300 million to support real estate developers including Emaar Misr
& Palm Hills developments
Int'l Coca Cola USD 500 million in 3 years
time
new factories 12000
Int'l Chipsy USD 64 million in 5 years
time
new production line 9000
USA Apache Corporation $24 million Oil & gas exploration
UK British Dragon Oil $39 million Oil & gas exploration
Gernmay Porsche Automobiles EUR450,000 Construction of dealerships in Egypt
Korea Samsung EGP 1.7 bn 2014 transform its Upper Egypt plant into an
integrated LED screen production center
Russia New Russian Industrial zone Renovation of Helwan Iron & Steel
Factory, Renovation of Nasr Automotive
Company
Italy EUR 45 million to finance small & medium-sized enterprises (SMEs) in
Egypt
Japan JICA EUR 260 million
(loan)
to be repaid
over 25 years
to establish a new wind farm plant in
Suez Gulf Area
Japan Panasonic EGP 200 million Over 2 years Establish a new factory in Bani Suef to produce an
export home appliances
25. 25
Nationality Name of the company Amount of
investment
Timing of
the
investment
Type of investment Employment
Russia Gazprom Neft-Lubricants Distributorship agreement with GB
Auto
to include lubricants and other products to the
automotive market in Egypt
UAE Emaar EGP 8 bn establish the largest commercial, office and
housing center in Cairo
UAE Al-Futtaim EGP 16.5 bn in 5 years time Commercial Malls 38000
opportunities
UAE Collaboration between United Arab
Shipping Company & Holding Company
for Inland and Maritime
Transport
USD 760 million to establish a container handling facility
UAE Financial Aid of EGP 20 bn EGP 20 bn constructing 50,000 residential units, completing sewage projects in
151 villages & building 100 new schools
UAE Khalifa Fund for Enterprise Development USD 200 million
(loan)
to be repaid over
15 years
to finance SME-projects in Egypt
China China Harbor Engineering EGP 3 bn (loan) to finance Ismailia governorate's "Thalatini tunnel" project.
Gulf Countries Al-Ahly for Real Estate + Saudi Group Al-
Rabeaat
EGP 1.2 bn residential project in New Cairo
KSA Almarai Dairy Company USD 345 million Over 5 years expansion of its subsidiary “Bayti” existing factory
in addition to establishing new plant for juices and
dairy products
KSA Saudi Egyptian Construction Company
(SECON)
USD 245 housing project to establish large number of med-
income housing units in three different cities.
27. » Egypt has a long term potential for economic development and offers an
important market for Dutch companies.
» Clearly Egypt has its challenges, however, the present government is aware of
the problems and has started economic reforms.
» Many countries, in the gulf region but also in Europe, Asia and the US, are
showing interest in Egypt for investment and trade.
» The large international companies are ready to increase investments if the
present trend of reforms materialises and security further improves. No
companies have withdrawn.
» Investments are picking up and stock market has recovered, reflecting
improved investors confidence.
» Large investment projects, like the Suez Canal Corridor, offer opportunities for
Dutch business.
» Now is the time to get reconnected.
27
Editor's Notes
Tourism Luxor has 1/3 of all monuments in the world + wide sandy beaches are major attraction for leisure tourism. Tourism revenues reached $12 bn in 2009/10; it recorded $6 bn in 2013/14.
Young population (50% < 25 yrs).
Trade agreements such as: Comesa, EU Partnership, QIZ, FTA-ARAB countries and Agadir.
Unemployment was 10% in 2010.
Budget Deficit: planned to be 10% for 2014/15.
NIR (Net International Reserves) was $35 bn in 2010.
BOP, Balance of Payment
Headline inflation: increase in prices as reported through the Consumer Price Index (CPI). The CPI calculates the cost to purchase a fixed basket of goods as a way of determining how much inflation is occurring in the broad economy.
Core Inflation: A measure of inflation that excludes food and energy from the CPI (as they face volatile price movements).
Investment figures are based on GAFI (General Authority for Investment and Free Zones)
These figures are not 100% reliable as some companies (like Vodafone and CEMEX) are considered Dutch. GAFI is not willing to share their list of Dutch companies as this is considered confidential.
Trade figures are reliable as its source is EU stat.
Major exports from NL to Egypt are: Minerals and petroleum oils (not crude), machinery, organic chemicals, fish and iron or steel (mainly scrap)
Major imports to NL from Egypt are: Minerals and petroleum oils, edible fruits and vegetables, aluminium, iron and steel, textile products.
On 28 July 2013, Dutch parent company Orascom Construction Industries (OCI NV) acquired over 97% of OCI shares on the Egyptian Stock Exchange, removing Egypt's largest listed company from EGX30 index. Although the deal meant total amount around $1 bn, transactions on other heavyweight shares in EGX 30 (Orascom Telecom, banks and property shares) succeeded to buoy the market and even gained around 1% during same week.
Another factor minimized the effect of OCI exit from EGX30 is that the management of the stock market decided to implement changes to major stock indexes during the same week. The EGX30 delisted six companies (including OCI) and the EGX70 index delisted 14 companies, five of which joined the benchmark EGX30. The relative weight of OCI shares was distributed as it was equal to the relative weight of shares of another companies, so it didn’t affect anything.
Currently OCI NV is listed on the NYSE Euronext in Amsterdam and began trading on 25 January, 2013. OCI N.V. is listed as part of the AEX Index, the flagship index for Netherlands-listed companies with a total market capitalization exceeding EUR 7.5 bn. OCI N.V. ranked 20th in the AEX Index. The AEX is a leading European index representing the largest 25 companies listed on Euronext Amsterdam.
Fiscal balance:
Gulf aids since July 2013 till are over $20 bn.
Deficit 12% of GDP expected 2013/14, planned for 10% 2014/15.
Subsidies: was 9.5% of GDP in 2013/14.
Business climate: as per Doing Business 2014 report issued by the World Bank Egypt is ranked 128 of 189; MENA average is ranked 107.
Restructuring reforms on subsidies:
Petroleum products subsidies (fuel and gas) reduced from EGP 130 bn to EGP 100 bn (23% reduction). GoE is convinced that these subsidies have to be further reduced, however, no clear plan for the further reduction of fuel subsidies has been announced.
Electricity prices increased by around 25% with announced 5-year plan to totally lift the subsidies.
Legislative reform includes laws to protect investment (E.g.: recent law prohibiting court cases against investment contracts except by involved parties)
