Reform measures undertaken by the government of Egypt since 2004 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. Moreover inflows of foreign direct investment (FDI) have also significantly increased.

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 FY 2004/05 up to the first nine months (July-March) of FY 2009/10.

NET FDI Inflows: 

Net FDI inflows increased from USD 509.4 million in FY 2000/01, to reach USD 13.2 billion in FY 2007/08, USD 8.1 billion in FY 2008/09 and USD 4.3 billion during the first nine months (July-March) of FY 2009/10. According to the World Investment Report published in 2009 by the United Nations Conference on Trade and Development (UNCTAD), Egypt has emerged as the lead FDI recipient country in North Africa and the third on the basis of the African continent. Figure 1 reflects the increase in net FDI inflows during the period 2004/05- first nine months (July-March) of FY 2009/10.

Source: Central Bank of Egypt

Figure 1 depicts the percentage of net FDI inflows to GDP during the period 2004/05- first nine months (July-March) of FY 2009/10.

Source: Central Bank of Egypt

Sectoral Distribution of Net FDI Inflows

With respect to the distribution of FDI inflows, the petroleum sector absorbed USD 2,764.7 million worth of net inflows during the first nine months (July-March) of FY 2009/10 (63.8 percent of net inflows) compared to USD 2,813.0 million during the same period of FY 2008/09 (53.7 percent of net inflows). Net FDI inflows in the non-petroleum sectors have reached USD 1,567.3 million during the referred period, compared to USD 2,425.9 million during the correspondent period of FY 2008/09.

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 FY 2009/10:

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

Source: Central Bank of Egypt
 
During the first nine months (July-March) of FY 2009/10 a total of USD 1,197.4 million was accounted for by the establishment of new companies as well as increases in the issued capital of companies already in operation (27.6 percent of net inflows). The sale of companies and productive assets (both in the private and public sectors) to non-residents stood at USD 157.1 million (3.6 percent of net inflows). FDI inflows in the real estate sector have reached USD 212.8 million (4.9 percent of net inflows) during same period.

* FDI in the real estate sector has remained consistently at an average of 0.4% during the period 04/05-06/07, then it raised up to 3% during 2007/2008, then it decreased again to 1.7% during 2008/2009 then it blows up to 4.9% during the first nine months (July-March) of 09/10.         

Source: Central Bank of Egypt