FDI
Egyptian Reforms Drive FDI Uptick Although foreign direct investment to Egypt remains highly concentrated in oil, FDI struck a decade-high in 2019 thanks to Chinese investment, renewable energy and ongoing economic recovery, Sebastian Shehadi, of fDi Markets, reports. Egypt welcomed $8.5bn of headline foreign investment in 2019, a modest y-o-y increase, but it was the largest figure since 2009, according to preliminary data from Unctad (the United Nations Conference on Trade and Development). Egyptian Reforms Drive FDI Uptick
programme, following exchange rate liberalisation in late 2016. Egypt has also seen key energy sector reforms and legislative reforms that have enhanced the business environment. The country’s real GDP has continued to recover since plummeting in 2011, hitting 5.6% in 2019 - its highest since the 2008 financial crisis, shows World Bank data.
Growing stability in Egypt, especially in terms of security, is highlighted by Although direct investment to Egypt remains highly concentrated in oil, FDIin struck Moreforeign noteworthy was Egypt’s growth thea country’s tourism industry. decade-high in 2019 thanks to Chinese investment, renewable energy and ongoing reception of job and facility-creating economic recovery, Sebastian Shehadi, of fDi Markets, reports. Although still below pre-2011 levels, foreign investment - known as Egypt welcomed $8.5bn of headline foreign investment in 2019, a modest increase, but they-o-y number of international tourist ‘greenfield’ FDI which hit an it was the largest figure since 2009, according to preliminary data from Unctad (the United arrivals to Egypt has increased over all-time-high 133 Nations Conference on of Trade and investment Development). the last three years, shows data from projects, shows fDi Markets, an FT More noteworthy was Egypt’s reception of job and facility-creating foreign theinvestment UNWTO, not least thanks to a data service tracking greenfield FDI known as ‘greenfield’ FDI - which hit an all-time-high of 133 investment projects, shows fDi cheaper Egyptian Pound. announcements sincegreenfield 2003. FDI announcements since 2003. Markets, an FT data service tracking
$830m in the Suez Canal Economic Zone, Egypt’s largest free zone that is part-owned TEDA, a Chinese stateowned industrial developer. Following President Sisi’s three-day trip to China in early 2019 - where he participated in the Belt and Road Initiative forum - Egypt signed a $3bn loan with the Industrial and Commercial Bank of China to design and establish a central business zone in the NAC. Other than China, another key source of greenfield FDI to Egypt recently has been Germany, with last year seeing a record high number of greenfield projects, according to fDi Markets. BMW, Mercedes, Bosch, and Allianz were the major names in this picture, however significant German investments were also recorded into Egyptian chemicals, pharmaceuticals, food & beverage and tourism.
The number of foreign investment projects to Egypt’s hotels & tourism market hit an all-time high in 2019, Although the oil and gas sector according toGDP fDihasMarkets. The country’s real continued to recover since plummeting in 2011, hitting 5.6% in remained, by far, the largest driver of 2019 - its highest since the 2008 financial crisis, shows World Bank data. headline FDI into Egypt, greenfield Chinese tourists have become one of Growing stability in Egypt, especially in terms of security, is highlighted by growth in the into the non-oil economy investments the fastest growing demographics to country’s tourism industry. increased substantially in 2019. Egypt in recent years, while Chinese Although still below levels, the number of international tourist arrivals to Egypt has investment topre-2011 the country has also increased over the last three years, shows data from the UNWTO, not least thanks to a Egypt’s renewable energy For example, risen cheapersharply. Egyptian Pound. market has seen stellar greenfield Following the Egyptian revolution in 2011, foreign investment to North Africa’s most The number of foreign projects tobefore Egypt’s hotels & tourism market hit an all-time FDI growth since 2015, before which Insignificant andinvestment inconsistent populous country dropped very sharply. However, it has over the last six Following the Egyptian revolution ingradually recovered high in 2019, according to fDi Markets. the market was very quiet, shows fDi 2016, Chinese FDI has shot up since years. 2011, foreign investment to North Markets. Inrecent fact, Egypt is the second top then, fDibecome Markets. Chineseshows tourists have one of In the fact, fastest China growing demographics to Egypt in Africa’s mostof populous country Indeed, the number greenfield projects to Egyptdropped has grown non-stop since 2013 - shows years, while Chinese investment to the country has also risen sharply. destination for FDI in renewables out of is now Egypt’s fDivery Markets - while capital from headline foreign investment has displayed a largely positive second top source of sharply. However, it has gradually trend too, according to Unctad. greenfield bothbefore in terms of projects and Middle East - second only to Insignificant andFDI, inconsistent 2016, Chinese FDI has shot upAfrica since then, shows fDi recovered over the last six years. Markets. In fact, China is now Egypt’s second top source of greenfield FDI, both in terms of and capital invested since 2015. South Africa according to fDi Markets. Both datasets show that the country retained its spot last year as Africa’s leading destination projects and capital invested since 2015. forIndeed, foreign investment, in terms of of capital - a position that it has held very often over the last the number greenfield fifteen years. Egypt’s Benban Solar Park is one of Top sources of FDI to Egypt since 2015 - fDi Markets projects to Egypt has grown non-stop the world’s largest and most ambitious Country No. projects Capex (USD m) sinceeconomic 2013 recovery - shows Markets while “Egypt’s wasfDi underpinned by a- bold macroeconomic stabilisation and projects - back by a 3bn loan from the UAE 61 15,544 structural reform programme, with four cornerstones,” says Ibrahim Chowdhury, Senior capital from headline foreign investment Economist in the World Bank’s Cairo office. World Bank. China 44 27,283 has displayed a largely positive trend United States 39 1,381 Indeed, country has undertaken an ambitious fiscal consolidation programme, following too,the according to Unctad. Meanwhile, last year, the financial exchange rate liberalisation in late 2016. Egypt has also seen key energySaudi sectorArabia reforms and 34 12,812 legislative reforms that have enhanced the business environment. services sector saw a 375% y-o-y Both datasets show that the country Germany 29 2,243 increase in foreign investment projects, retained its spot last year as Africa’s UK 27 3,784 as several foreign banks from the MEA leading destination for foreign France 26 1,374 region expanded their presence across investment, in terms of capital - a Japan 21 2,326 Egypt, shows fDi Markets. position that it has held very often over Italy 11 9,308 the last fifteen years. India 10 806 Despite signs of greenfield FDI Morocco 9 86.8 diversification, non-oil exports and headline “Egypt’s economic recovery Russia 9 30,382 foreign investment inflows outside of the was underpinned by a bold sector remain sluggish. macroeconomic stabilisation and Half of China’s investment since 2015 has gone into manufacturing,extractive namely consumer electronics, automotive components, and the food & beverage sector. structural reform programme, with Half of China’s investment since 2015 has Indeed, the share of total FDI in the four cornerstones,” says Ibrahim gone into Shandong manufacturing, namely consumer For example, Ruyi Technology Group, a textile manufacturer, invested $830m in petroleum the Suez Canal Economic Zone, Egypt’s largest free zone that is part-owned TEDA, asector has progressively Chowdhury, Senior Economist in the electronics, automotive components, and Chinese state-owned industrial developer. increased since fiscal year 2017 World Bank’s Cairo office. the food & beverage sector. (FY2017), to almost three-quarters of total FDI in FY2019, according to data Indeed, the country has undertaken For example, Shandong Ruyi Technology an ambitious fiscal consolidation from the Central Bank of Egypt. Group, a textile manufacturer, invested
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