Reforms enacted by the Egyptian Government since July 2004 have played a crucial role in improving the investment climate. Consequently, local, Arab and foreign investments have risen, resulting in continued high growth and the creation of more jobs.
Reform efforts, especially in the facilitation of investment procedures, had a positive role in increasing the number of newly established companies and the expansion of existing firms, in addition to the noticeable rise in FDI. Below is an overview of trends in net FDI from FY 2004/05 to 2010/11.
Net FDI
Net FDI increased from USD 509.4 million in FY 2000/01 to USD 13.2 billion in 2007/08, falling to USD 8.1 billion in 2008/09, USD 6.8 billion in 2009/10 and USD 1.6 billion in Q1 of FY 2010/11.
Egypt ranked first among North African countries and second in the African Continent as an attractor of FDI, according to the World Investment Report 2010 by the United Nations Conference on Trade and Development (UNCTAD).
The diagram below shows trends in net FDI from FY 2004/05 to Q1 of FY 2010/11:
FDI distribution by sector:
Petroleum accounted for 53.1 percent of net foreign direct investment (USD 3,589.4 million) in FY 2009/10, compared to 66 percent (USD 5,356.6 million) in FY 2008/09.
Net FDI in non-petroleum sectors amounted to USD 3,168.8 million in FY 2009/10 as opposed to USD 2,756.8 million in the previous fiscal year.
Furthermore, the petroleum sector attracted USD 575.7 million in FDI (36 percent) during Q1 of FY 2010/11 against USD 1,344.3 million (77.7 percent) in Q1 of FY 2009/10.
The table below shows net FDI in the petroleum and non-petroleum sectors from FY 2004/05 to Q1 of FY 2010/11:
Table 1: Net FDI distribution by sector (USD million)
|
|
2004/05 |
2005/06 |
2006/07 |
2007/08 |
2008/09 |
2009/10 |
Q1 of 2010/11 |
|
Newly Established Companies |
925.6 |
3,347.8 |
5,227.2 |
6,368.4 |
2,314.9 |
2,690.4 |
978.3 |
|
Assets and Companies of Non-residents |
390.8 |
905.7 |
2,772.2 |
2,337.0 |
303.5 |
173.1 |
0 |
|
Real Estate Investments |
16.5 |
25.7 |
39.0 |
394.9 |
138.4 |
305.3 |
43.2 |
|
Petroleum |
2,540.2 |
1,832.2 |
3,014.8 |
4,136.2 |
5,356.6 |
3,589.4 |
575.7 |
|
Net FDI |
3,873.1 |
6,111.4 |
11,053.2 |
13,236.5 |
8,113.4 |
6,758.2 |
1597.2 |
Source: Central Bank of Egypt (CBE)
The establishment of new businesses and expansion of existing companies accounted for 62.3 percent net FDI (USD 978 million) in Q1 of FY 2010/11, compared to 2.7 percent (USD 43.2 million) in the real estate sector.
- Real estate accounted for an average 0.4 percent of net FDI from 2004/05 to 2006/07, rising to 3 percent in FY 2007/08 and falling to 1.7 percent in FY 2008/09. It rose to 4.5 percent in FY 2010/09, hitting 2.7 percent in Q1 of FY 2010/11.
