Foreign Direct Investment

Reform measures undertaken by the government of Egypt have played a key role in terms of improving the outlook for Egyptian, Arab and foreign investment, as well as instigating and sustaining high levels of growth and employment creation. A positive response to streamlining investment procedures has been reflected in the increase in the number of newly established companies as well as expansions undertaken by companies already in operation. Inflows of foreign direct investment (FDI) have also significantly increased, particularly starting FY 2003/04.

The following sections present a brief overview of the inflows as well as sectoral composition of FDI in Egypt over a period which begins with FY2000/2001 up to July-March of FY 2007/08.

NET FDI Inflows:  FY 2000/01- (July-March) 2007/08

Net FDI inflows increased from USD 509.4 million in FY 2000/01, to reach USD 6.1 billion in FY 2005/06, USD 11.1 billion in FY 2006/07 and USD 11.3 billion during the first nine months (July-March) of FY 2007/08. According to the World Investment Report published in 2007 by the United Nations Conference on Trade and Development (UNCTAD), Egypt has emerged as the lead FDI recipient country in the African continent. Figure 1 reflects the increase in net FDI inflows during the period 2000/01- (July-March) of 2007/08.

Source: Central Bank of Egypt

Net FDI inflows have stood at 8.5 percent of GDP in FY 2006/07, up from 5.7 percent in FY 2005/06. During Q1 and Q2 of FY 2007/08, net FDI inflows as a percent of GDP stood at 2.0 and 3.1 respectively.

Source: Central Bank of Egypt

Sectoral Distribution of FDI

With respect to the distribution of FDI inflows, the petroleum sector absorbed USD  3,746.2 million worth of net inflows during the first nine months (July-March) of FY 2007/08 (33.3 percent of net inflows) compared to USD 2,135.7 million during same period of FY 2006/07 (23.6 percent of net inflows). Net FDI inflows in the non-petroleum sectors have reached USD 7,505.5 million during the first nine months (July-March) of FY 2007/08, compared to USD 6,909.6 million during same period of FY 2006/07. Table 1 compares net FDI inflows in the petroleum and non-petroleum sectors during the period FY 2004/05- first nine months (July-March) of FY2007/08:

Table 1: Sectoral Distribution of Net FDI Inflows (USD million)

Source: Central Bank of Egypt

During the first nine months (July-March) of FY 2007/08 a total of USD 5,686.2 million was accounted for by the establishment of new companies as well as increases in the issued capital of companies already in operation (50.4 percent of net inflows). The sale of companies and productive assets (both in the private and public sectors) to non-residents stood at USD 1,760.3 million (15.6 percent of net inflows). FDI inflows in the real estate sector have reached USD 77 million (0.68 percent of net inflows) during same period. FDI in the real estate sector has remained consistently low at an average of 0.4 percent of net inflows during the period 2004/05- 2006/07.

* FDI in the real estate sector has remained consistently low at an average of 0.4% during the period 04/05- first half of 07/08
Source: Central Bank of Egypt