The Arab-German Trade Directory - Ghorfa

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Egypt Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. One of the largest economies in the Arab world, Egypt is rich in resources and boasts thriving tourism and agricultural sectors. Its natural resources include oil, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead and zinc. The country borders the Mediterranean Sea, between Libya and the Gaza Strip, and the Red Sea north of Sudan, and includes the Asian Sinai Peninsula. Population Egypt has the largest population in the Arab world, but only the fourth-largest economy after Saudi Arabia, the UAE and Algeria. Egypt's GDP per head at market exchange rates is expected to rise steadily throughout the forecast period (2009-2013), after falling in the period 2002-04 in dollar terms as a result of slow growth and the 45% depreciation of the Egyptian pound against the US currency between 2000 and end- 2003. Real annual GDP growth is expected to average around 6%, which will almost double real GDP per head in dollar terms owing to the pound's strong appreciation. Egypt will continue to be a relatively attractive market. The size of its population makes it an important and influential market, with huge potential, and one that will continue to grow fast. The Egypt section is sponsored by This expanding middle class has substantial disposable income, and is prepared to spend it on consumer goods. Over the forecast period, there will be increasingly strong demand for items such as cars, mobile phones, flat-screen televisions and home computers. Economy Egypt’s primary economic strength stems from its diversity in comparison with the rest of the region. In 2008/2009, hydrocarbons extractions constituted 15%; manufacturing 16.6%; agriculture nearly 13.7%; wholesale and retail trade 11.5%; construction and real estate 7.1%; financial and telecommunications services 6.8%; and externally oriented sources, such as the Suez Canal, 2.7% and tourism 3.5%. Reforms The Egyptian economy has been gaining thanks to the wide-ranging reforms that the country began implementing in 2004 and the subsequent awakening of domestic demand long depressed due to decades of slow growth. The reforms now have a measurable impact on the country’s economic performance and have sustained high growth for the past 10 years. Changes in economic policy have been made to minimise the state's role. The prime drivers of the economy are foreign direct investment (FDI), remittances, Suez Canal fees and tourism. In 2005, Egypt reduced personal and corporate tax rates, reduced energy subsidies, and privatized several enterprises. The stock market boomed, and GDP grew about 7% each year since 2006.Despite these achievements, the government has failed to raise living standards for the average Egyptian, and has had to continue providing subsidies for basic necessities. The subsidies have contributed to a sizeable budget deficit - roughly 7% of GDP in 2007-08. FDI has increased significantly in the past two years, but the government will need to continue its aggressive pursuit of reforms in order to sustain the spike in investment and growth and begin to improve economic conditions for the broader population. Egypt's export sectors - particularly natural gas - have bright prospects. Oil & Gas Egypt’s crude oil and condensates reserves were at 4.19 bn barrels in mid-2008 according to government figures, but rising to 4.4 bn in June 2009 following new discoveries. This would last some 15 years at current extraction rates. The mature fields in the Gulf of Suez produce about 50% of the country's oil, but exploration activity is focused on frontier areas such as the Western Desert near the Libyan border, the offshore Mediterranean and Sinai. Exploration is largely undertaken by foreign companies, especially BP of the UK and Eni of Italy, in partnership with the state-owned Egyptian General Petroleum Corporation (EGPC). Eni, which produces 500,000 barrels of oil equivalent per day in Egypt, of which 1.4bn cu ft/day is gas, has said that it will invest US $6bn in the oil sector until 2010, with its partners providing another US $6bn. Two-thirds of oil output is refined domestically. Because of depletion in the ageing Gulf of Suez oilfields, crude oil production has declined significantly since 1996, when it reached a high of 922,000 b/d, to around 667,000 b/d
The Egypt section is sponsored by in 2007 (including condensates and natural gas liquids), according to the EGPC. Crude oil exports are constrained by lower production and by rising local demand. Egypt’s proven reserves of natural gas were 77.2 trn cu ft in mid-2009. The government is encouraging additional exploration, as a minimum total of 120trn cu ft would be necessary for the government to realise its ambitious plans for the sector, which include LNG projects, gas export pipelines, gas-to-liquids schemes, petrochemicals expansion and increased domestic consumption. Egypt has also rapidly expanded its LNG export capability, becoming the world's sixth-largest gas producer and the thirdlargest in Africa, behind Algeria and Nigeria. Banking Sector Rationalisation of the tax code has encouraged more FDI, with 27 tariff categories cut down to six and a reduction of duties of around 75%. New policies have been adopted to encourage various business sectors, while stocks have made impressive advances. Since 2003 the most significant reform achieved by the state in terms of the everyday operation of the Egyptian economy has been the complete overhaul of the banking system. The dominance of public banks is starting to subside with four of the country's major banks being sold, a move which included the eradication of a large percentage of non-performing loans that had been hindering sector growth. The World Bank loan of $500m was given to allow the recapitalization required in order for two of the biggest public banks to comply with Basel II standards. The venture into the private sector is helping banks recruit higher-quality employees and target parts of the market traditionally left untouched, such as the local retail market, ultimately benefiting local consumers. Along with privatization comes new legislation, so that the sector will operate to international standards and setting off a trend of mergers and acquisitions. Deposits at Egyptian banks are forecasted to grow at Compound Annual Growth Rate (CAGR) of about 14% between 2008-09 and 2010-11, with household sector accounting for majority of deposits. Meanwhile, Bank loans to the private business sector are forecasted to grow at a CAGR of about 9.5% during 2008-09 to 2010-11. The manufacturing sector will remain the major recipient of bank loans in local as well as foreign currencies during 2007-08 to 2010-11, and net interest income is projected to grow at a CAGR of over 12% during 2008-2012. The banking system comprised 39 total banks in Egypt in 2008/09 with total branches of 3441 banks. Private and joint venture banks are increasingly growing, but many remain relatively small with few branch networks. Insurance Sector Egypt’s insurance sector can be generally described as in the process of developing with big potential for growth. The sector has been long hampered by a lack of public appreciation of the significance of insurance as well as heavy state dominance. However, the picture is expected to brighten with the planned privatization and liberalization of the sector. Several developments have been taking place to open up the sector. Ongoing changes include redefining the supervisory role of the Egyptian Insurance Supervisory Authority (EISA), encouraging more private sector participation through new licenses and acquisitions, as well as enhancing efficiency and dissemination of information. The Egyptian insurance sector has traditionally dealt with a limited range of insurance covers, but with the upsurge of international competition and the changing needs of the market itself, the sector is expected to witness the emergence of various activities, especially in the untapped areas of life insurance, third-party liability and health insurance. Tourism Tourism is one of Egypt's key foreign currency earnings, with its fascinating ancient monuments, year-round sunshine and beautiful beaches which attract visitors from around the world in ever growing numbers. Arab tourists rose to 1.8 million in 2007 from 1.1m in 2002, with revenues spiking to $2.2bn per year. The UAE invested $4bn in the country’s tourism sector accounting for 30% of total Arab investment in the country, a senior Egyptian official revealed. Speaking at the Arabian Travel Market in Dubai, in May, Fact File Country name: Arab Republic of Egypt Population: 76.054.112 (Jan. 2009) Land Area: 1,001,450km 2 Official Language: Arabic Currency: 1 Egyptian Pound = 100 piaster Main Cities: Cairo (Capital), Giza, Tanta, Alexandria, Shubra el-Khema, Port Said, Suez, Mahalla el-Kubra, Hurghada, Sharm el-Sheikh Useful Contacts Embassy of the Arab Republic of Egypt Stauffenbergstr. 6-7 10785 Berlin Germany Tel: (+49) 30 477 54 70 Fax: (+49) 30 447 10 49 Email: embassy@egyptian-embassy.de Website: www.egyptian-embassy.de Commercial & Economic Office Friedrichstr. 60 10117 Berlin Tel: (+49) 30 2064113 Fax: (+49) 30 20641140 Email: info@ecrg-trade.de Website: www.ecrg-trade.de Egypt 48 - 49 Embassy of the Federal Republic of Germany 8 B, Sharia Hassan Sabri, Zamalek, Cairo, Egypt Tel: (+20) 2 739 96 00 Fax: (+20) 2 736 05 30 Email: info@cairo.diplo.de Website: www.cairo.diplo.de Federation of Egyptian Chambers of Commerce 4, Al Falaqi Square Cairo Egypt Tel: (+202) 279 536 77 Fax: (+202) 279 511 64 Email: fedcoc@menanet.net Website: www.fedcoc.org.eg/chamberportal
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