Business Today - Dec 2022 - Jan 2023 issue

In-Depth
market will have to be Africa, because Europe
and the United States are mainly interested in
raw materials. “That is not viable to our economy,
as we want to boost the added value. By contrast,
targeting Africa with semi-finished goods
can be lucrative,” Gazzar explains.
Rashed shares the same point, highlighting
that the trade deals Egypt has, especially
those of the Common Market for Eastern and
Southern Africa (COMESA) and African Continental
Free Trade Area (AfCFTA), are an important
factor in attracting FDI. “That is especially
true of multinationals, which now want to
make up for the weakening of existing supply
chains and that have been proved flawed since
the outbreak of COVID-19. Egypt is one of the
countries that are eyed as a doorway to African
markets, given its location between Europe and
Asia,” Rashed clarifies.
2023
Gazzar anticipates that the “Flight to Quality”
behavior, fear of investing in developing countries,
and recession that began in 2022 will persist
in 2023, and even in 2024, if the intensity of
the war does not ease.
Rashed explains that the high inflation
that occurred in the aftermath of the Russia-
Ukraine War prompted central banks to raise
interest rates, including the Federal Reserve,
which raised the rate to 4.5 percent. “That has
incurred the withdrawal of many direct investments
from developing states, whose currencies
deteriorated because of high inflation,” Rashed
adds. However, he is more optimistic, estimating
that a gradual increase in the flow of FDI
into Egypt may happen in the second half of
2023, showcasing the very high rank the country
enjoys on the continent in terms of attractiveness
to FDI.
With regard to foreign direct investments already
in the market, the economics professor
suggests that they can be encouraged to expand
through the elimination of the malfunction in
the foreign exchange market and the currency
black market. That is in addition to offering tax
discounts, and introducing more free zones,
which grant investors tax and tariff discounts as
long as they export at least 50 percent of production.
www.BusinessTodayEgypt.com January 2023
45