The construction industry in Egypt is a rapidly growing sector, contributing significantly to the economy with a growth rate of 20-22% annually, driven by infrastructure projects and housing demand. Forecasts indicate continued growth, with total construction investments expected to reach LE 257 billion during Egypt's fifth five-year plan. However, challenges such as high country risk, bureaucratic inefficiencies, and quality issues pose significant threats to the industry's future.

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Table of Contents
I. Preface .............................................3
II. Introduction .....................................3
III. Market Overview .............................4
IV. Construction Market Statics ............5
V. SWOT analysis .................................6
References ............................................7

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I. Preface:
The construction sector is a major contributor to the Egyptian economy and one of
its fastest-growing sectors. This growth, estimated at an average of 20 to 22 percent
annually since the 1980s, is fueled by the ever-increasing demand for housing and by
the state's large infrastructure projects. Among these projects are the Greater Cairo
Wastewater Project, considered one of the largest sewerage developments in the
world, and the US$88.5 billion South Valley Development project, which aims to
create an alternative delta along the Nile and relocate urban communities so as to
ease the severe congestion in the major cities.
Most of the material required for the construction sector is produced locally. Local
cement production, amounting to 24 million tons annually and meeting more than
70 percent of domestic demand, is expected to increase over the coming decade due
to heavy government investment in the sector. Private companies have also been
allowed to compete in the production of cement, which continues to be dominated
by state-owned companies. The construction industry is expected to continue its
upward trend in the coming years as a result of continued government and private
business expenditure, anticipated to reach 20 billion Egyptian pounds annually.
II. Introduction:
The construction sector is one of the most dynamic sectors in the Egyptian economy
and has been growing rapidly since the 1980s. In 2000, the Egyptian construction
market ranked 36th in the global construction market, constituting 0.4% of this
market, for a value of $12.711 billion. Despite its fall from its 1998 ranking of 33rd,
the Egyptian construction market actually increased in size by 23%.
The sector has a significant impact on GDP, employment and investment. In
2001/2002 its GDP share reached a value of LE16.56 ($3.84)* billion, representing
4.7% of the total GDP. It also employed 8.3% of the workforce in the same year.
Construction investments reached LE41.2 ($9.5) billion in 2001/2002 which
represents 48.2% of the country’s total investment.
The development and competitiveness of the Egyptian construction sector in the
local and international markets is affected by factors that can be classified under five
main categories: construction companies, government policies and strategies,
available resources, institutional backing and supporting industries. Modifications

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and developments within these categories will lead to further growth and greater
competitiveness for the sector.
Official forecasts indicate that the Egyptian construction sector is expected to
experience higher average annual growth rates, at 8.3%, than those of the total GDP
(7.4%) and of the total commodity sector (7.8%) during Egypt’s fifth five-year plan
from 2002/2003 through 2006/2007. The forecasted total investment in
construction for that period is LE257 ($59.24) billion.
III. Market Overview:
A. Spending in the construction sector will increase at a CAGR* of 3.9%, from
US$5 billion to US$7.3 billion during 2005-15. Increasing foreign direct
investment (FDI) coupled with various government-initiated development
programs, such as healthcare development, will boost the economic
development of the country, which will drive the growth in this sector.
B. Spending on residential construction will increase from US$443 million in
2005 to US$606 million in 2015 at a CAGR of 3.2%, owing to such factors as
increased disposable income, the development of new residential regions,
such as villages, and the formulation of government policies to develop the
housing finance system during 2005-15.
C. Spending in the nonresidential construction sector will grow at a CAGR of 4%,
from US$4.6 billion in 2005 to US$6.7 billion in 2015. Government policies to
encourage private investment in business as well as infrastructure
development will encourage expenditure in this sector.
D. Egypt is a high-risk country as its one-year risk score is above the world
average and five-year risk score is comparable with the world average score.
High bureaucracy and corruption levels, low income, rising unemployment,
and continued security threats have increased the country risk.
*CAGR stands for: Compound Annual Growth Rate.

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IV. Construction Market Statics*:
Construction industry Growth in Egypt:
Based on this graph we can conclude that the construction sector is going to be growing at a
gradual rate until 2015 which creates a very attractive market for investors both in domestic.
Egyptian Construction Market Outlook Summary:
Years 2005 2006 2007 2008 2009 2010 2015
Total Construction (Billions of US$) 3.9 4.3 4.5 4.7 4.9 5.2 6.4
Residential 0.3 0.4 0.4 0.4 0.4 0.4 0.5
Nonresidential 3.6 3.9 4.1 4.3 4.5 4.8 5.9
Infrastructure 1.7 1.9 2.0 2.1 2.2 2.3 2.8
Structures 1.9 2.0 2.1 2.3 2.4 2.4 3.0
Egyptian Construction Market Risks:
*This Statics are from Global Insight, Inc.

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V. SWOT* analysis:
*SWOT Stands for Strengths, Weaknesses, Opportunities and Threats.
A.Strengths:
1. Workforce: Construction accounts for around 8 per cent of the total
employment in Egypt, with about 100 different industries linked to the
sector. The local construction workforce of around 1.2 million is currently the
largest in the Middle East.
2. Materials: Construction materials are in abundance is Egypt, e.g. large
aggregates (gravel and pink limestone), small aggregates (sand), and cement
constituent materials (limestone, sand, silt, ores). Admixtures are locally
produced under license. Steel constituents are imported, locally
manufactured, used, and sometimes exported.
B.Weaknesses:
1. Quality: although that there’s clear quality standards and Egyptian code for
construction industry there’s no real guarantees that contractors and sub-
contractors will commit and execute it.
2. Strategy: there’s no clear urbanization and new cities construction strategy
due to the current political situation and the past administrative failure.
C.Opportunities:
1. Egypt has an abundant, competitive labor force.
2. Foreign investments.
3. Privatization program, improving the business climate, and introducing
numerous investment incentives targeting upgrading of the business
environment and modernization of the economy and construction sector.
D.Threats:
1. Egypt is a high-risk country as its one-year risk score is above the world
average and five-year risk score is comparable with the world average score.
Shortcomings in the legal and political system, accompanied by terror threats
and scarcity of skilled labor, have amplified the country risk in the past few
years.
2. Poor infrastructure, low productivity, scarcity of skilled labor and other
factors are adversely affecting the construction sector in Egypt.
3. The banking system is not yet capable of meeting the market needs.

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References:
 http://enpub.fulton.asu.edu/cement/cbm_CI/CBMI_Separate_Articles/Article%2023
.pdf
 http://www.nabc.nl/Portals/0/docs/Country%20information%20pdf/EGYPT%20BUSI
NESS%20FACT%20SHEET.pdf
 www.construction-int.com/article/construction-spending-analysis-and-forecast-for-
egypt.html
 http://www.nationsencyclopedia.com/economies/Africa/Egypt.html
 http://library.medibtikar.eu/Med_docs/AX_4/27_SWOT_analysis/SWOT%20report.
pdf
 http://www.globaltrade.net/f/market-research/text/Egypt/Building-Products-and-
Construction-Building-Construction-Building-Products-and-Materials-in-Egypt.html
 www.amcham.org.eg/resources_publications/publications/business_studies/PDF%2
0Files/constructionsummarycontents.pdf