The Economy of Egypt used to be highly centralised, focused on import substitution under President Gamal Abdel Nasser (1954–1970). During the rule of President Abdel Fattah el-Sisi (2014–present), the economy follows Egypt’s 2030 Vision. The policy is aimed at diversifying Egypt’s economy. The country’s economy is the second largest in Africa after Nigeria regarding nominal GDP and ranks 35th worldwide as of 2022.

Since the 2000s, the pace of structural reforms (including fiscal and monetary policies, taxation, privatisation and new business legislation) helped Egypt move towards a more market-oriented economy and prompted increased foreign investment. The reforms and policies have strengthened macroeconomic annual growth results. As Egypt’s economy healed, other prominent issues like unemployment and poverty declined significantly. From an investor perspective, Egypt is stable and well-supported by external stakeholders. The country benefits from political stability, proximity to Europe, and increased exports. It also enjoys a strong currency.

Table Of Contents

History

From the 1850s until the 1930s, Egypt’s economy relied heavily on long-staple cotton, introduced in the mid-1820s during the reign of Muhammad Ali (1805–49). It was made possible by the switch from basin to basin to perennial, modern irrigation. Cotton cultivation was a crucial ingredient in an ambitious program the Egyptian ruler undertook to diversify and develop the economy.

Another such ingredient was industrialisation. Industrialisation, however, proved less than successful for various domestic and external reasons, and until the 1930s, virtually no industrial build-up occurred. The failure of industrialisation resulted primarily from tariff restrictions Britain imposed on Egypt through an 1838 commercial treaty, which allowed only minuscule tariffs, if any. The isolated industrial ventures initiated by Egypt’s landed aristocracy members, who otherwise channelled their investment into land acquisition and speculation, were nipped in the bud by foreign competition. Foreigners owned the few surviving enterprises. These enterprises either enjoyed natural protection, as in the case of sugar and cotton processing or benefited from the unique skills that the foreign owners had acquired, as in the case of cigarettes made by Greeks and Turks.

The beginnings of industrialisation awaited the depression of the late 1920s and 1930s and World War II. The depression sent cotton prices tumbling, and Britain acceded to Egyptian demands to raise tariffs. Moreover, World War II substantially reduced the flow of foreign goods into the country and impeded the establishment of import-substitution industries. A distinguishing feature of the factories built then was that Egyptian entrepreneurs owned them.

Despite the lack of industrialisation, the economy increased throughout the nineteenth century. Growth, however, was confined to the cotton sector and the supporting transportation, financial, and other facilities. Little of the cotton revenues were invested in economic development. The gains were drained mainly out of the country as repatriated profits or repayments of debts that the state had incurred to pay for irrigation works and the extravagance of the khedives.

Rapid economic growth ended in the early 1900s. The supply of readily available land had been largely exhausted, and multiple cropping, concentration on cotton, and perennial irrigation had lessened the soil fertility. Cotton yields dropped in the early 1900s and recovered their former level only in the 1940s through investments in modern inputs such as fertilisers and drainage.

The fall in agricultural productivity and trade led to a stagnation in the per capita gross national product (GNP) between World War I and the 1952 Revolution: the GNP averaged LE 43.0 in 1954 prices at both ends. By 1952, Egypt was in the throes of economic and political crises, which culminated in the assumption of power by the Free Officers.

By necessity, if not by design, the revolutionary regime prioritised economic development considerably more than the monarchy, and the economy has been a central government concern since then. While the economy grew steadily, it sometimes exhibited sharp fluctuations. The difficulty in obtaining reliable statistics further complicates the analysis of economic growth. Growth figures are often disputed, and economists contend that growth estimates may be grossly inaccurate because of the informal economy and workers’ remittances, contributing as much as one-fourth of GNP. According to one estimate, the gross domestic product (GDP), at 1965 constant prices, grew at an annual compound rate of about 4.2 per cent between 1955 and 1975. This was about 1.7 times larger than the annual population growth rate of 2.5 per cent in the same period. However, between 1967 and 1974, the final years of Gamal Abdul Nasser’s presidency and the early part of Anwar el-Sadat’s were lean years, with only about 3.3 per cent growth rates. The slowdown was caused by many factors, including agricultural and industrial stagnation and the costs of the June 1967 war. Investments, a crucial factor for the preceding growth, also nose-dived and recovered only in 1975 after the dramatic 1973 increase in oil prices.

Like most countries in the Middle East, Egypt partook in the oil boom and suffered the subsequent slump. Available figures suggest that between 1975 and 1980, the GDP (at 1980 prices) grew at an annual rate of more than 11 per cent. This impressive achievement resulted not from the contribution of manufacturing or agriculture but oil exports, remittances, foreign aid, and grants. From the mid-1980s, GDP growth slowed due to the 1985-86 crash in oil prices. In the two succeeding years, the GDP grew at no more than an annual rate of 2.9 per cent. Of concern for the future was the decline of the fixed investment ratio from around 30 per cent during most of the 1975-85 decade to 22 per cent in 1987.

Several additional economic periods followed:

External debt crisis (1985–1990): the external debt crisis, Paris Club rescheduling, and debt reduction.
Economic reform (1991–2007): reform policies were introduced to meet the terms of international institutions, lenders and donors, including more expansive incentives for the role of the private sector in all economic activities.
The post-global financial crisis (2008–2011): soaring food prices, especially for grain, led to calls for the government to provide more immediate assistance to the 40% of the population in the “poverty tunnel” and to strike a “new deal” on agriculture policy and reform. Egypt faced long-term supply- and demand-side repercussions of the global financial crisis on the national economy.
Post-revolution (2012–present): The Egyptian economy suffered from a severe downturn following the 2011 revolution, and the government faced numerous challenges restoring growth, market, and investor confidence. Egypt’s foreign exchange reserves fell from US$36 billion in December 2010 to only US$16.3 billion in January 2012 due to propping up the Egyptian pound against the dollar. Concerns about social unrest and the country’s ability to meet its financial targets provoked credit rating agencies to lower their credit rating several times. In 2016, Egypt floated its currency and embarked on a homegrown economic reform program supported by a US$12 billion IMF loan to restore macroeconomic stability and growth. By early 2019, Egypt had received 10 of the 12 billion requested. Real growth declined from 5.6% in FY2018/19 to 3.6% during FY2019/20, as the COVID-19 crisis caused a year-on-year contraction of 1.7% from April to June (Q4-FY2019/20). According to the 2019 Global Hunger Index, Egypt suffers from a moderate hunger level, ranking 61 of 117 countries, compared to 61 of 119 countries in 2018. Food affordability, quality and safety remain challenging as Egypt relies on global markets for more than half of its staples.

Reform era

Under comprehensive economic reforms initiated in 1991, Egypt has relaxed many price controls, reduced subsidies, reduced inflation, cut taxes, and partially liberalised trade and investment. Manufacturing had become less dominated by the public sector, especially in heavy industries. Public sector reform and privatisation have begun to enhance opportunities for the private sector.

Agriculture, mainly in private hands, has been largely deregulated, except for cotton and sugar production. Construction, non-financial services, and domestic wholesale and retail trades are primarily personal. This has promoted a steady increase in GDP and the annual growth rate. The Government of Egypt tamed inflation, bringing it down from double-digit to single-digit. Due to successful diversification, GDP is rising smartly by 7% annually.

Gross domestic product (GDP) per capita based on purchasing-power-parity (PPP) increased fourfold between 1981 and 2006, from US$ 1,355 in 1981 to US$ 2,525 in 1991, US$ 3,686 in 2001 and an estimated US$ 4,535 in 2006. Based on national currency, GDP per capita at constant 1999 prices increased from LE 411 in 1981 to LE 2,098 in 1991, LE 5,493 in 2001 and LE 8,708 in 2006.

According to the World Bank Country Classification, Egypt has been promoted from the low-income category to the lower middle-income category. Based on the current US prices, GDP per capita increased from US$ 587 in 1981 to US$869 in 1991, to US$ 1,461 in 2001 and an estimated US$ 1,518 (which translates to less than US$ 130 per month) in 2006. As of 2013, the average weekly salaries in Egypt reached LE 641 (approx. US$92), which grew by 20% from the previous year.

The reform program is a work in progress. The reform record has substantially improved since the Nazif government came to power. Egypt has made substantial progress in developing its legal, tax and investment infrastructure. Indeed, over the past five years, Egypt has passed, amended and admitted over 15 legislative pieces. The economy is expected to grow by about 4% to 6% in 2009–2010.

Surging domestic inflationary pressures from economic growth and elevated international food prices led the Central Bank of Egypt to increase the overnight lending and deposit rates in sequential moves since February 2008. The rates stood at 11.5% and 13.5%, respectively, since the 18th of September 2008.

Reform of energy and food subsidies, privatisation of the state-owned Bank of Cairo, and inflation targeting were perhaps the most controversial economic issues in 2007–2008 and 2008–2009.

External trade and remittances

Egypt’s trade balance marked US$10.36 billion in FY2005 compared to US$7.5 billion. Egypt’s main exports consist of natural gas and non-petroleum products such as ready-made clothes, cotton textiles, medical and petrochemical products, citrus fruits, rice and dried onion, and, more recently, cement, steel, and ceramics.

Egypt’s principal imports include pharmaceuticals and non-petroleum products such as wheat, maise, cars and car spare parts. The current account grew from 0.7% of GDP in FY2002 to 3.3% in FY2005. Egypt’s Current Account made a surplus of US$4,478 million in FY2005 compared to a deficit of US$158 million in FY2004. Italy and the USA are the top export markets for Egyptian goods and services. In the Arab world, Egypt has the largest non-oil GDP as of 2018.

According to the International Organization for Migration, an estimated 2.7 Million Egyptians abroad contribute actively to developing their country through remittance inflows, human and social capital circulation, and investment. In 2009, Egypt was the biggest recipient of remittances in the Middle East; an estimated US$7.8 bn was received in 2009, representing approximately 5% of the national GDP, with a decline of 10% from 2008, due mainly to the effect of the financial crisis. According to data from Egypt’s Central Bank, the United States was the top sending country of remittances (23%), followed by Kuwait (15%), the United Arab Emirates (14%) and Saudi Arabia (9%).

Public finances

On the revenues side, the government’s total revenues were LE 89.1 billion in FY2002 and are projected to reach LE 184.7 billion in FY2008. Much of the increase came from a rise in customs, excise and tax revenues, particularly personal income and sales, entertainment, and vice taxes, which constituted the bulk of total domestic taxes due to recent tax reforms. This trend will likely gradually widen the tax base in the forthcoming years. Revenues, however, have remained more or less constant (about 21% ) as a percentage of the GDP over the past few years.

On the expenditures side, strong expenditure growth has remained a prominent feature of the budget. This is mainly a result of the continued substantial expansion of (1) the public-sector wages driven by government pledges. Wages and Compensations increased from LE 30.5 bn in FY2002 to LE 59.6 bn in FY2008; (2) high-interest payments on the public debt stock. Interest payments rose from LE 21.8 bn in FY2002 to LE 52.0 bn in FY2008. Significantly, a dramatic increase in domestic debt is projected to be roughly 62% of GDP in FY2008, up from 58.4% in FY2002; and (3) the costs of food and energy subsidies, which rose from LE 18.0 bn in FY2002 to LE 64.5 bn in FY2008.

After adjusting for the net acquisition of financial assets, the overall deficit remains almost unchanged from the cash deficit. The budget’s overall deficit of LE 43.8 bn or −10.2% of GDP for FY2002 has become LE 49.2 bn in FY2007, narrowed to −6.7% of GDP. The deficit is mainly financed by domestic borrowing and revenue from divestment sales, which became a standard accounting practice in budget Egypt. The government aims to sell more state assets in FY2008.

Recently, the fiscal conduct of the government faced intense criticism and heated debate in the Egyptian Parliament. Remarks were made about weak governance and management, loose implementation of tax collection procedures and penalties for offenders, and improper accounting of the overall system of essential subsidies and domestic debt, leading to domestic market disruptions, high inflation, and increased inefficiencies and waste in the domestic economy.

Treasury bonds and notes issued to the Central Bank of Egypt constitute the bulk of the government’s domestic debt. Since FY2001, net government domestic debt (i.e. after excluding budget sector deposits) has been rising at a fluctuating but increasing rate. In 2014, it reached 77%, up from 54.3% of GDP in 2001.

The opportunity cost of conflict

Strategic Foresight Group’s report has calculated that the opportunity cost of conflict for Egypt since 1991 is almost US$800 billion. In other words, if they had peace since 1991, an average Egyptian citizen would earn over US$3,000 instead of the US$1,700 they may make next year.

The financial sector

The Central Bank of Egypt is the national reserve bank and controls and regulates the financial market and the Egyptian pound. A State regulatory authority for the Cairo Stock Exchange Nationalised or Nationalised banks still accounts for 85% of bank accounts in Egypt and around 60% of the total savings. Banking penetration is low in rural areas at only 57% of households.

Monetary policy

Up until 2007, there have been several favourable conditions that allowed the Central Bank of Egypt to accumulate net international reserves, which increased from US$20 billion in FY2005 to US$23 billion in FY2006, and to US$30 billion FY2007 contributing to growth in both reserve money and broad money (M2). According to the Central Bank of Egypt, this declined to US$16.4 billion in Oct 2015.

Credit extended to the private sector in Egypt declined significantly, reaching about LE 5 billion in FY2005. This credit crunch is due to the non-performing loans extended by the banks to business tycoons and top government officials.

Lending criteria have been tightened following the passing of Money Laundry Law 80 in 2002 and Banking Law 88 in 2003. Interest rates are no longer the dominant factor in banks’ lending decisions. Both the inefficiency and absence of the role of the Central Bank of Egypt in qualitative and quantitative control, as well as implementing banking procedures and standards, were almost entirely responsible for the non-performing loans crisis. Banks steadily reduced credit from its peak of about LE 30 billion in FY1999 and alternatively invested in more liquid, no-risk securities such as treasury bills and government bonds. Improving private sector access to credit will critically depend on resolving the problem of non-performing loans with businesses and top government officials.

The era of inflation targeting—i.e. maintaining inflation within a band—has perhaps begun in Egypt more recently. Country experiences show that inflation targeting is a best-practice strategy for monetary policy. While the monetary policy recently appears more responsive to inflationary pressures in Egypt, it is noted that there is no core inflation measure, and the Central Bank of Egypt makes targeting decisions based on the inflation rate released by the CAPMAS consumer price index off the shelf.

Surging domestic inflationary pressures from both economic growth and elevated international food prices led the Central Bank of Egypt (CBE) to increase the overnight lending and deposit rates in sequential moves since 2008: it was raised by 0.25% on the 10th of February 2008, by 0.5% on the 25th of March 2008, on the 8th of May 2008, on the 26th of June 2008, on the 7th of August 2008 and most recently on the 18th of September 2008 for the sixth time in a year by 0.5% when it stood at 11.5% and 13.5%, respectively.

The rise of the World Global Financial Crisis led to fiscal-monetary policy measures to face its repercussions on the national economy, including reducing the overnight lending and deposit rates by 1% on the 12th of February 2009. The rates currently stand at 10.5% and 12.5%, respectively. The CBE is expected there to interest further t rates over 2009, with seemingly little fear of Egyptian pound depreciation resulting from decreased interest rates.

Exchange rate policy

The exchange rate has been linked to the US dollar since the 1950s. Several regimes were adopted, including the conventional peg in the sixties, the regular crawling peg in the seventies and the eighties, and crawling bands in the nineties. Over that period, several exchange rate markets existed, including the black, parallel, and official markets. With the turn of the new millennium, Egypt introduced a managed float regime and successfully unified the pound exchange rate vis-à-vis foreign currencies.

The transition to the unified exchange rate regime was completed in December 2004. Shortly later, Egypt notified the International Monetary Fund (IMF) that it had accepted the obligations of Article VIII, Section 2, 3, and 4 of the IMF Articles of Agreement, with effect from the 2nd of January 2005. IMF members accept the obligations of Article VIII to refrain from imposing restrictions on making payments and transfers for current international transactions or from engaging in discriminatory currency arrangements or multiple currency practices, except with IMF approval.

By accepting the obligations of Article VIII, Egypt assures the international community that it will pursue economic policies that will not impose restrictions on making payments and transfers for current international transactions unnecessary and will contribute to a multilateral payments system free of restrictions.

In the fiscal year 2004 and most of the fiscal year 2005, the pound depreciated against the US dollar. From the second half of the fiscal year 2006 until the end of 2007, the pound gradually appreciated to LE 5.69 per US$1. While it was likely to continue enjoying in the short-term, given the skyrocketing oil prices and the weakening US economy, the advent of the global economic crisis of 2008 and the resulting behaviour of foreign investors exiting from the stock market in Egypt increased the dollar exchange rate against the Egyptian pound, which rose by more than 4% since Lehman Brothers declared bankruptcy. As the demand pressure from exiting foreign investors eases, the dollar exchange rate against the Egyptian pound is expected to decline. It stands at LE 7 per US$1 as of the 18th of June 2013. Due to the rising power of the US dollar, as of January 2015, one dollar equals LE 7.83.

On the 3rd of November 2016, the Egyptian government announced that it would float the Egyptian pound to revive its economy, which had suffered since 2011.

Natural resources

Land, agriculture and crops

The scarcity of clean water is also a problem. Warm weather and plentiful water have produced several crops a year. However, since 2009, increasing desertification has become a problem. “Egypt loses an estimated 11,736 hectares of agricultural land every year, making the nation’s 3.1 million hectares of agricultural land prone “to destruction in the foreseeable future”, said Abdel Rahman Attia, a professor of agriculture at Cairo University, to IRIN.

The principal crops are cotton, rice, wheat, corn, sugarcane, sugar beets, onions, tobacco, and beans. The land is worked intensively, and yields are high. Increasingly, a few modern techniquesues aproducinging fruits, ve,getables and flowers, in addition to cotton, for export. Further improvement is possible. The most common traditional farms occupy 0.40 hectares (1 acre) each, typically in a canal-irrigated area along the banks of the Ncollectivisedll. Farmers also own cows, water buffalos, and chickens. Between 1953 and 1971, some farms were collectivised, especially in Upper Egypt and parts of the Nile Delta.

Several researchers questioned the domestic (and import) policies for dealing with the so-called “wheat game” since the former Minister of Agriculture Yousef Wali was in office ( 1982-2004 ).

Egypt is the US’s largest wheat and corn sales market, accounting for US$1 billion annually, and about 46% of Egypt’s needs come from imported wheat. In 2006, areas planted with wheat in Egypt exceeded 160,000 hectares (400,000 acres), producing approximately 6 million metric tons. The domestic supply price farmers receive in Egypt is LE 1,200 ({\displaystyle \approx } \approx US$211) per ton compared to approximately LE 1,940 ({\displaystyle \approx } \approx US$340) per ton for import from the US, Egypt’s leading supplier of wheat and corn. Other imported wheat sources include Kazakhstan, Canada, France, Syria, Argentina and Australia. There are plans to increase the areas planted with wheat to nearly 1,200,000 hectares (3×106 acres) by 2017 to narrow the gap between domestic food supply and demand. However, the low amount of gluten in Egyptian wheat means that foreign wheat must be mixed to produce bread that people want to eat.

Egypt would be the first-ever electronic Egyptian Commodities Exchange in the MENA region to facilitate the well-being of its small farmers and supply products at reasonable prices, abolishing the monopoly of goods.

The Western Desert accounts for about two-thirds of the country’s land area. Mostly, it is a massive sandy plateau marked by seven major depressions. One of these, Fayoum, was connected about 3,600 years ago to the Nile by canals. Today, it is an important irrigated agricultural area.

Egyptian agriculture occurs in some 25,000 km2 (6 million acres) of fertile Nile Valley and Delta soil.

Some desert lands are being developed for agriculture, including the controversial but ambitious Toshka project in Upper Egypt. Larger modern farms urbanisation is more critical in the desert. Still, some other fertile Nile Valley and Delta lands are lost to urbanisation and erosion.

The agricultural objectives of the desert lands are often questioned; the desert farmlands were offered regularly at different levels, and prices were restricted to a limited group of elites selected very carefully, who later profiteered, retailing the granted extensive desert farmland by pieces. One company, for example, bought over 70 hectares of a large desert farm for a price as low as LE 0.05 per square meter and now sells for LE 300 per square meter. In numbers, 70 hectares were bought for about US$6,000 in 2000 and sold for over US$3.7 million in 2007. This allegedly transforms the desert farms into tourist resorts, hits all government plans to develop and improve the conditions of people with low incomes and causes profound negative impacts on agriculture and the overall national economy over time. Currently, no clear solution exists to deal with these activities.

Agriculture biomass, including agricultural wastes and animal manure, produces approximately 30 million metric tons of dry material per year that could be massively and decisively used, among other things, for generating bioenergy and improving the quality of life in rural Egypt. Despite plans to establish waste-to-energy plants, this resource remains underused.

Since early 2008, with world food prices soaring, especially for grains, calls for striking a “new deal” on agriculture have increased. Indeed, 2008 arguably marks the birth of a new national agriculture policy and reform.

So-called “Egyptian Desert Land Law governs acquisition and ownership of desert land in Egypt”. It defines desert land as two kilometres outside the city’s border. Foreign partners and shareholders may be involved in the ownership of the desert land, provided Egyptians own at least 51% of the capital.

Water resources

“Egypt”, wrote the Greek historian Herodotus 25 centuries ago, “is the gift of the Nile.” The land’s seemingly inexhaustible resources of water and soil carried by this mighty river created the Nile Valley and Delta, the world’s most extensive river. Egypt would be little more than a desert without the Nile Riverasteland.

The river carves a narrow, cultivated floodplain, never more than 20 kilometres wide, as it travels northward toward Cairo from Lake Nasser on the Sudanese border, behind the Aswan High Dam. Just north of Cairo, the Nile spreads out over what was once a broad estuary that riverine deposits have filled to form a fertile delta about 250 kilometres (160 mi) wide at the seaward base and roughly 160 kilometres (99 mi) from south to north.

Before the construction of dams on the Nile, notably the Aswan High Dam (started in 1960 and completed in 1970), the fertility of the Nile Valley was sustained by the water flow and the silt deposited by the annual flood. Sedimfertilisation was constructed by the Aswan High Dam and retained in Lake Nasser. The interruption of yearly natural fertilisation and the increasing salinity of the soil has been manageable problem resulting from the dam. The benefits remain impressive: more intensive farming on thousands of square kilometres of land made possible by improved irrigation, prevention of flood damage, and the generation of millions of gigajoules of electricity at low cost.

Groundwater

The rain falling on the coast of the southern regions is the primary source of recharge of the main resource, a free-floating layer of the reservoirs r water on top of seawater up to 20 km south of the Mediterranean Sea. Most wells in the coastal plain depend on the water level in the main reservoir. The coastal water supply comes from water percolating through the coastal sand and water runoff from the south. This low-salinity water is used for many purposes.

Mineral and energy resources

Egypt’s mineral and energy resources include petroleum, natural gas, phosphates, gold and iron ore. Oil and gas accounted for approximately 7% of GDP in the fiscal year 2000–01. Crude oil is found primarily in the Gulf of Suez and the Western Desert. Natural gas is found mainly in the Nile Delta, off the Mediterranean shore, and the Western Desert.

Exporting petroleum and related products amounted to US$2.6 billion in 2000. In late 2001, Egypt’s benchmark “Suez Blend” was about US$16.73 per barrel ($105/m³), the lowest price since 1999.

Crude oil production has been in decline for several years since its peak level in 1993, from 941,000 bbl/d (149,600 m3/d) in 1993 to 873,000 bbl/d (138,800 m3/d) in 1997 and to 696,000 bbl/d (110,700 m3/d) in 2005. At the same time, the domestic consumption of oil increased steadily (531,000 bbl/d (84,400 m3/d) and 525,000 bbl/d (83,500 m3/d) in 1997 and 2005 respectively), but in 2008, oil consumption reached to 697,000 bbl/d (110,800 m3/d). It is easy to see from the graph that a line minimises projects domestic demand outpaced supply in (2008–2009), turning Egypt into a net oil importer. To minimise this potential, the government of Egypt has been encouraging the exploration, production and domestic consumption of natural gas. Oil Production was 630 bbl/d (100 m3/d) in 2008, and natural gas output continued to increase and reached 48.3 billion cubic meters in 2008.

Domestic resources meet only about 33% of Egypt’s domestic demand, meaning large imports from Saudi Arabia, UAE and Iraq are necessary.

Over the last 15 years, more than 180 petroleum exploration agreements have been signed, and multinational oil companies spent more than US$27 billion on exploration companions. These activities led to the findings of about 18 crude oil fields and 16 natural gas fields in FY 2001. The total number of findings rose to 49 in FY 2005. As a result of these findings, crude oil reserves as of 2009 are estimated at 3.7 billion barrels (590,000,000 m3), and proven natural gas reserves are 1.656 trillion cubic meters, with likely additional discoveries with more exploration camEgypt’sgns.

The leading natural gas in Egypt is the International Egyptian Oilfield Company (IEOC), a branch of Italian Eni. Other companies, including BP, APA Corporation and Royal Dutch Shell, carry out exploration and production activities using concessions granted for a generally ample time (often 20 years) and in different geographic zones of oil and gas deposits in the country. In August 2007, it was announced that signs of oil reserves in the Kom Ombo basin, about 28 miles (45 km) north of Aswan, were found. A concession agreement was signed with Centorion Energy International for drilling.

Gold mining is more recently a fast-growing industry with vast untapped gold reserves in the Eastern Desert. To develop this nascent sector, the Egyptian government took the first step by awarding mineral concessions in the first international bid round. Two miners who have produced encouraging technical results include AngloGold Ashanti and Alexander Nubia International.

Gold production facilities are now a reality from the Sukari Hills, located close to Marsa Alam in the Eastern Desert. The concession of the mine was granted to Centamin, an Australian joint stock company, with a gold exploitation lease for a 160-square-kilometre area. Sami El-Raghy, Centamin chairman, has repeatedly stated that he believes Egypt’s yearly revenues fr future could exceed the total revenues from the Suez Canal,, tourism and the petroleum in the futureindustry.

The Ministry of Petroleum and Mineral Resources has established expanding the Egyptian petrochemical industry and increasing natural gas exports as its most significant strategic objectives. In 2009, about 38% of local gas production was exported.

Egypt and Jordan agreed to construct the Arab Gas Pipeline from Al Arish to Aqaba to export natural gas to Jordan. In July 2003, Egypt also began to export 1.1 billion cubic feet (31,000,000 m3) of gas per year via pipeline. The total investment in this project is about $220 million. In 2003, Egypt, Jordan and Syria agreed to extend this pipeline to Syria, which paved the way for a future connection with Turkey, Lebanon and Cyprus by 2010. As of 2009, Egypt began to export 32.9 billion cubic feet (930,000,000 m3) of gas to Syria annually, accounting for 20% of Syria’s total consumption. As of 2009, most Egyptian gas exports (approximately 70%) are delivered as liquefied natural gas (LNG) by ship to Europe and the United States.

In addition, the East Mediterranean Gas (EMG), a joint company established in 2000 and owned by Egyptian General Petroleum Corporation (EGPC) (68.4%), the private Israeli company Merhav (25%) as well as Ampal-American Israel Corp. (6.6%), has been granted the rights to export natural gas from Egypt to Israel and other locations in the region via underwater pipelines from Al ‘Arish to Ashkelon which will provide Israel Electric Corporation (IEC) 170 million cubic feet (4.8×106 m3) of gas per day. Gas supply started experimentally in the second half of 2007. As of 2008, Egypt produces about 6.3 billion cubic feet (180×106 m3), from which Israel imports 170 million cubic feet (4.8×106 m3), accounting for about 2.7% of Egypt’s total natural gas production. According to a statement released on the 24th of March 2008, Merhav and Ampal’s director, Nimrod Novik, said that the natural gas pipeline from Egypt to Israel could sufficiently carry up to 9 billion cubic meters annually, meeting rising demand in Israel in the coming years.

Exporting natural gas to Israel faces broad, widespread opposition in Egypt. According to a memorandum of understanding, the commitment of Egypt is 680 million cubic feet (19×106 m3) contracted for 15 years at a price below US$3 per million British thermal units. However, this was renegotiated at a higher price in 2009 (between US$4 and US$5 per million BTU) while the amounts of gas supplied increased.

Agreements between Egypt and Israel allow Israeli entities to purchase up to 7 billion cubic meters of Egyptian gas annually, making Israel one of Egypt’s largest natural gas export markets. The decision to export natural gas to Israel was passed in 1993 when Dr Hamdy Al-Bambi was Minister of Petroleum, and Mr Amr Moussa was Minister of Foreign Affairs. The mandate to sign the Memorandum of Understanding (MoU) to delegate to the Ministry of Petroleum represented by the Egyptian General Petroleum Company (EGPC) to contract with EMG Company was approved by the former Prime Minister Dr Atef Ebeid in the Cabinet’s meeting No. 68 on the 5th of July 2004 when he served as the acting “President of the Republic” when President Hosni Mubarak was receiving medical treatment in Germany.

A new report by Strategic Foresight Group on the Cost of Conflict in the Middle East also details how, in the event of peace, an oil and gas pipeline from Port Said to Gaza to Lebanon would result in a transaction value for Egypt to the tune of $1–2 billion per year.

As of June, 2criticiseds reported that Cairo said Israelis would dig for oil in Sinai. This report comes in when the government is heavily criticised for exporting natural gas to Israel at a meagre rate.

Starting in 2014, the Egyptian government has been diverting gas supplies produced at home to its domestic market, reducing the volumes available for export in liquefied form. According to the memorandum of understanding, the Leviathan field off Israel’s Mediterranean coast would supply 7 billion cubic meters annually for 15 years via an underwater pipeline. This equates to average volumes of 685 million cubic feet daily, the equivalent of just over 70% of the BG-operated Idku plant’s daily books.

In March 2015, BP Signed a $12 billion deal to develop natural gas in Egypt for sale in the domestic market starting in 2017. [70] BP said it would create a large quantity of offshore gas, equivalent to about one-quarter of Egypt’s output, and bring it onshore to be consumed by customers. Gas from the project, called West Nile Delta, is expected to begin flowing in 2017. BP said that additional exploration might lead to a doubling of gas available.

Main economic sectors

Agricultural sector

Irrigation

Irrigation plays a significant role in a country; the livelihood depends upon a single river, the Nile. The most ambitious of all the irrigation projects is the Aswan High Dam, completed in 1971. A report published in March 1975 by the National Council for Production and Economic Affairs indicated that the dam had successfully controlled floodwaters and ensured regular water supply. Still, water consumption has been more than needed and shall be held. Some precious land was lost below the dam because the flow of Nile silt was stopped, and increased salinity remains a significant problem. Furthermore, after five years of drought in the Ethiopia highlands—the source of the Nile River’s water level of Lake Nasser, the Aswan Higreservoir’s water levelservoir, dropped to the lowest level in 1987.

In 1996, the water level behind the High Dam and Lake Nasser reached the maximum level since the completion of the dam. Despite this unusual abundance of water supply, Egypt can only use 55.5 billion cu m (1.96 trillion cu ft) annually, according to the Nile Basin Agreement signed in 1959 between Egypt and Sudan. Another major project designed to address the water scarcity problem is the New Valley Project (the “second Nile”), aimed at developing the sizeable artesian water supplies underlying the oases of the Western Desert.,

In 2010, Egypt’s fertile area totalled about 3.6 million hectares (8.9 million acres), and about one-quarter of Ohadhich was reclaimed from the desert after the construction of the Aswan High Dam. The government aims to increase this number to 4.8 million hectares by 2030 through additional land reclamation. Even though only 3 per cent of the land is arable, it is highly productive and can be cropped twice annually. However, the reclaimed lands only add 7 per cent to the total value of agricultural production. Pressurised Surfalocalised is forbidden by law in reclaimed lands. It is only used in the Nile Valley and the Delta, where pressurised and localised irrigation is compulsory in other parts of the country. Most land is cropped at least twice a year, but agricultural productivity is limited by salinity, which 2011 affected 25% of irrigated agriculture to varying degrees. This is mainly caused by insufficient drainage and seawater intrusion in aquifers due to groundwater salinisation; the latter primarily affects the Nile Delta. Thanks to the installation of drainage systems, salinised areas were reduced from about 1.2 million hectares in 1972 to 900,000 hectares in 2010.

In the 1970s, despite significant investment in land reclamation, agriculture lost its position as the leading economic sector. Agricultural exports, 87% of all merchandise exported by value in 1960, fell to 35% in 1974 and 11% by 2001. In 2000, agriculture accounted for 17% of the country’s GDP and employed 34% of the workforce.

Crops

According to 2016 statistics from the Food and Agriculture Organization of the United Nations, Egypt is the world’s largest producer of dates, the second largest producer of figs, the third largest producer of onions and eggplants, the fourth largest producer of strawberries and buffalo milk as well as the fifth largest producer of tomatoes and watermelon.

Cotton has long been a primary exported cash crop, but it is no longer vital as an export. Production in 1999 was 243,000 tons. Egypt is also a substantial producer of wheat, corn, sugarcane, fruit and vegetables, fodder, and rice; considerable quantities of grain are also imported, especially from the United States and Russia, even though increases in yield since 1970 and significant amounts of rice are exported.

Citrus, dates, and grapes are the main fruits in cultivated areas. Agricultural output in tons in 1999 included corn, 9,350,000; wheat, 6,347,000; rice, 5,816,000; potatoes, 1,900,000; and oranges, 1,525,000. The government exercises substantial control over agriculture to ensure the best irrigation water use and confine cotton planting in favour of food grains. However, the government’s ability to achieve this objective is limited by crop rotational constraints.

Cacti – especially cactus pears – are extensively grown throughout the country, including Sinai, and extending into neighbouring countries. They are a crop of the Columbian Exchange. Cactus hedges – both intentionally planted and wild garden escapes – formed an essential part of defensible positions during the Sinai and Palestine campaign of World War I. Some unfamiliar soldiers even tried eating them, to negative results.

Land ownership

The agrarian reform law of 1952 provided that no one might hold more than 190 feddans, that is, 79.8 hectares (197 acres) (1 Egyptian feddan=0.42 hectares=1.038 acres), for farming, and that each landholder must either farm the land himself or rent it under specified conditions. Up to 95 additional feddans might be held if the owner had children, and other land had to be sold to the government. In 1961, the upper limit of landholding was reduced to 100 feddans, and no person was allowed to lease more than 50 feddans. Compensation to the former owners was in bonds bearing a low-interest rate, redeemable within 40 years—a law enacted in 1969 reduced landholdings by one person to 50 feddans.

By the mid-1980s, 90% of all land titles were for holdings of less than five feddans (2.1 hectares (5.2 acres)), and about 300,000 families, or 8% of the rural population, had received land under the agrarian reform program. According to a 1990 agricultural census, there were some three million small land holdings, almost 96% of which were under five feddans. As these small landholdings restricted the ability of farmers to use modern machinery and agricultural techniques that improve and liberalise economies of scale, since the late 1980s, many reforms have been attempting to deregulate agriculture by liberalising input and output prices and eliminating crop area controls. As a result, the gap between the world and domestic prices for Egyptian agricultural commodities has been closed.

Industrial sector

Automobiles manufacturing

El Nasr Automotive Manufacturing Company is Egypt’s state-owned automobile company, founded in 1960 in Helwan, Egypt. Established in 1962, the company manufactures various vehicles under license from Zastava Automobili, Daimler AG, Kia, and Peugeot. Their current lineup consists of the Jeep Cherokee; the open-top, Wrangler-based Jeep AAV TJL; the Kia Spectra; the Peugeot 405; and the Peugeot 406.

Other automobile manufacturers in Egypt include Arab American Vehicles, Egy-Tech Engineering, Ghabbour Group, WAMCO (Watania Automotive Manufacturing Company) and MCV. MCV was established in 1994 to represent Mercedes-Benz in the commercial vehicle sector in Egypt, producing a range of buses and trucks for domestic sale and export throughout the Arab World, Africa, Latin America and Eastern Europe. The manufacturing fertilisers Salheya employs c. 2500 people.

Chemicals

Abu Qir Fertilizers Company is fertiliser largest producers of nitrogen fertilisers in Egypt and the MENA region. It accounts for nearly 50% of all nitrogen fertiliser production in Egypt. The company established the construction of instructing its first ammonia urea production facility in Abu Qir, 20 kilometres east of Alexandria. Egypt Basic Industries Corporation (EBIC) is also one of the country’s largest ammonia producers.

Consumer electronics and home appliances

Olympic Group is the largest Egyptian company in the field of domestic appliances. The company mainly manufactures washing machines, air conditioners, refrigerators, electric water heaters and gas cookers.

Bahgat Group is a leading electronics, home appliances, furniture and real estate company. It also owns TV stations. The group comprises the following companies: Egy Aircon, International Electronics Products, Electrical Home Appliances, General Electronics and Trading, Goldi Trading, Goldi Servicing, Egy Medical, Egyptian Plastic Industry, Egy House, Egy Speakers, Egy Marble, Dreamland and Dream TV.

Steel Industries

In 2021, Egypt was ranked the 20th largest steel-producing country, producing 10.3 million tons. EZDK is the largest steel company in Egypt and the Middle East today as part of Ezz Industries. It owns four steel plants in Alexandria, Sadat, Suez and the 10th of Ramadan. It was ranked 77th on the world’s most extensive steel companies list by the World Steel Association in 2020, producing 4.57 million tons.

Textiles and clothing

Textiles and clothing are two of the country’s most significant manufacturing and exporting processes and a vast employment absorber. The Egyptian apparel industry is attractive for two reasons. Firstly, its proximity to European markets, whose rapidly changing fashions require quick replenishment. Egypt’s geographical proximity to style-conscious Europe is a logistical advantage. Secondly, the production of garments is a low-capital and high-labour-intensive industry, and the local population of 66 million provides a ready workforce and a natural local consumer market that acts as a springboard for exports.

The private sector apparel industry is one of Egypt’s most dynamic manufacturing processes. The textile industry contributes one-quarter of Egypt’s non-oil export proceeds, with Cotton textiles comprising the bulk of Egypt’s TC export basket. The public sector accounts for 90% of cotton spinning, 60% of the fabric, and 30% of apparel production in Egypt. Misr Fine Spinning and Weaving is the largest enterprise in Africa and the Middle East.

The requirements of importers to Egypt of textiles and leather products were set out in the Egyptian Ministerial decrees 626/2011 and 660/2011. The Ministerial Decrees demand that imported goods certify their compliance with Egypt’s mandatory quality and safety standards. The Egyptian trade oversight agency, the General Organization for Export and Import Control (GOEIC), demanded in June 2012 that an inspection certificate accompany each shipment unless the importer is pre-registered with the GOEIC.

Arafa Holding is a global apparel manufacturer and retailer operating through a robust vertically integrated platform at the local & international levels.

Energy sector

Egypt suffered blackouts during the summer of 2014 that lasted up to six hours per day. A rapid series of reforms cut energy subsidies, and Egypt quickly developed the Zohr gas field in the Mediterranean, which was discovered in 2015. The country now has an oversupply of electricity and aims to source 20% of its electricity from renewables by 2022 and 55% by 2050.

Egypt and Cyprus are considering implementing the proposed EuroAfrica Interconnector project. This consists of laying a 2000 MW HVDC undersea power cable between Cyprus and Greece, thus connecting Egypt to the more excellent European power grid. The interconnector will transform Egypt into an electricity hub between Europe and Africa. President of Egypt Abdel Fattah el-Sisi, President of Cyprus Nicos Anastasiades and the Prime Minister of Greece Alexis Tsipras met in Nicosia on the 21st of November 2017 and showed their full support for the EuroAfrica Interconnector, pointing out its importance for the energy security of three countries.

On the 29th of October 2007, Egypt’s president, Hosni Mubarak, gave the go-ahead for building several nuclear power plants. Egypt’s atomic route is peaceful and fully transparent but faces technical and financing obstacles. Egypt is a member of the IAEA and has both signed and ratified the Nuclear Nonproliferation Treaty (NPT). The IAEA is reviewing a draft Law on Nuclear Energy that is expected to be passed by the Egyptian Parliament. Many other countries, including Libya, Jordan, UAE, Morocco, and Saudi Arabia, aspire to build nuclear power plants.

Construction and contracting sector

Orascom Construction Industries is a leading Egyptian EPC (engineering, procurement, construction based in Cair and more than 20 countries). OCI was established in Egypt in 1938 and owned by Onsi Sawiris. It was nationalised in 1953 and then again de-nationalised in 1977. The company is the first multinational Egyptian corporation and is one of the core Orascom Group companies. As a cement producer, OCI owned and operated cement plants in Egypt, Algeria, Turkey, Pakistan, northern Iraq and Spain, which had a combined annual production capacity of 21 million tons.”Orascom Construction Industries SAE announces OCI Invests in DPRK Cement” (Press release). Orascom. The 16th of July 2007. Archived from the original on the 4th of July 2018 and retrieved on the 8th of February 2022.

The Talaat Moustafa Group (TMG), one of the largest conglomerates in Egypt, was founded by the former Talaat Moustafa and is headed by his son, Hisham Talaat Moustafa.

New cities

The proposed new capital of Egypt is a large-scale project under construction since 2015 and was announced by then-Egyptian housing minister Moustafa Madbouly at the Egypt Economic Development Conference on March 13th, 2015.

New Alamein is another city currently being built on Egypt’s north coast, planned on an area of 48,000 feddans. New Alamein is one of the fourth-generation cities being built in Egypt, and the first phase is scheduled to be concluded in a year.

Services sector

Banking and insurance

The banking sector has gone through many stages since establishing the first bank in 1privatisation by the emergence of the private sector and joint venture banks during the Open Door Policy in the 1970s. Moreover, the Egyptian banking sector has undergone reforms, privatisation, mergers and acquisitions from 1991 to today.

The banking system comprises 57 state-owned commercial banks. This includes 28 commercial banks, four state-owned, 26 investment banks (11 joint venture banks and 15 branches of foreign banks), and three specialised banks. Although private and joint venture banks are growing, many remain relatively small with few branch networks. State-owned commercial banks still rank among the top lend-dominate role in Egypt’s banking sector. Over the past decades, European banks have been exiting Egypt’s financial sector. For instance, France’s Société Générale sold National Société Générale BanliberalisedNatiomodernisedQNB) in 2012, which has been rebranded as QNB Alahli.

Egypt’s banking system has undergone significant reforms since the 1990s; consumers face a liberalised and modernised system supervised and regulated according to internationally accepted standards. Although the mortgage market is underdeveloped in Egypt, foreigners cannot yet obtain a mortgage for a property in Egypt. A new mortgage law will soon enable purchasers to take out property loans. This will open the market considerably and create a storm of development and real estate activity shortly.

Communications

Egypt has long been the cultural and informational centre of the Arab world, and Cairo is the region’s largest publishing and broadcasting centre.

The telecommunications liberalisation process started in 1998 and is still ongoing but slowly. Private sector companies operate in mobile telephony and Internet access. There were 10 million fixed phone lines, 31 million mobile phones, and 8.1 million Internet users by August 2007.

Transport

Transport in Egypt is centred around Cairo and largely follows the pattern of settlement along the Nile. The main line of the nation’s 4,800-kilometer (3,000 mi) railway network runs from Alexandria to Aswan and is operated by Egyptian National Railways. The road network has expanded rapidly to over 21,000 miles (34,000 km), covering the Nile Valley, Nile Delta, Mediterranean and Red Sea coasts, Sinai, and Western oases.

In addition to overseas routes, Egypt Air provides reliable domestic air service to major tourist destinations from its Cairo hub. The Nile River system (about 1,600 km (990 mi).) and the principal canals (1,600 km.) are used for local transportation.

The miniTransportationortation, along with other governmental bodies, is responsible for transport in Egypt. The Suez Canal is a major waterway for international commerce and navigation, linking the Mediterranean and the Red Sea. It is run by the Suez Canal Authority, headquartered in Port Said. Major ports are Alexandria, Port Said, and Damietta on the Mediterranean, and Suez, Ain Sokhna and Safaga on the Red Sea.

Tourism sector

The Egyptian tourism industry is one of the most critical sectors in the economy in terms of high employment and incoming foreign currency. It has many constituents of tourism, mainly historical attractions, especially in Cair,o, Luxor and Aswan, bbeachesso beach and other sea activities. The government actively promotes foreign tourism since it is a significant source of currency and investment. The political instability since January 2011 ctourism r in tourismeduction, but it rose the following year. In Upper Egypt, tourists that “provided one of the most important sources of income besides farming has dried out”.

Egypt’s government announced the work on multiple projects within the tourism sector, most prominently the Grand Egyptian Museum. It is set to open in June 2021, becoming the largest museum in the world.

Emerging sectors

ICT sector

Smart Village, a business district on the 6th of October (city), was established in 2001 to facilitate the growth of high-tech businesses.

The Egyptian information and communications technology sector has grown significantly since it was separated from the transportation sector. The telecommunications market has been officially deregulated since 2006, according to the WTO agreement signed in 2003.

The government establisheas a governmental entity d ITIDA through Law 15l entity. This agency aims to pave the way for the diffusion of e-business services in Egypt, capitalising on different authority mandates such as activating the Egyptian e-signature law and supporting an export-oriented IT sector in Egypt.

While the move could open the market for new entrants, add and improve the infrastructure for its network, and, in general, create a competitive market, Telecom Egypt de facto monopolises the fixed line market.

The cellular phone market was a duopoly with prices artificial,lly htnessed in the past couple ,of years the traditional price war between the incumbents Mobinil and was witnessedVodafone. A 500-minute outbound local and long-distance calling plan currently costs approximately US$30 compared to about US$90 in 2005. While the current price is not so expensive, it is still above the international price as plans never allow “unlimited night & weekend minutes.”

A third GSM 3.5G license was awarded in April 2006 for US$3 billion to a consortium led by the UAE company Eitesalat (66%), Egypt Post (20%), the National Bank of Egypt (NBE) (10%), and the NBE’s Commercial International Bank (4%), thus moving the market from duopoly to oligopoly.

On the 24th of September 2006, the National Telecommunication Regulatory Authority (NTRA) announced a license award to the Egyptian-Arab private sector consortium of companies to extend maritime cable for international traffic. The US$120 million cable project will serve the Gulf region and south Europe. The cable construction should decrease the currently high international call costs, increase domestic demand for internet broadband services, and significantly increase exports of international telecommunication services of Egyptian companies, mainly in the Smart Village.

It is expected that NTRA will award two licenses for international gateways using open technology and deploy WiMax technology, enabling the delivery of last-mile wireless broadband access as a capitalisatioEgypt’s ICT sector’sDSL.

The main barrier to sector is the monopoly of telecommunication corporations and the quarrelling workforce.

Investment

The stock market capitalisation of listed companies in Egypt was valued at $79.672 billion in 2005, with the capitalisation dropping to $58 billion in 2012.

Investment climate

The Egyptian equity market is one of the most developed in the region, with more than 633 listed companies. Market capitalisation on the exchange doubled in 2005 from US$47.2 billion to US$93.5 billion in 2006, peaking at US$139 billion in 2007. Subsequently, it fell to US$58 billion in 2012, with turnover surging from US$1.16 billion in January 2005 to US$6 billion in January 2006.

Private equity has not been widely used in Egypt in the past as a source of business funding. The government, however, has instituted several policy changes and reforms specifically intended to develop internal private equity funds and attract private equity funding from international sources.

The major industries include tehydrocarbons,rchemicalschemical, and generic pharmaceutical products. Unemployment is high at about 10.5%.

Until 2003, the Egyptian economy suffered from shortages in foreign currency and excessively elevated interest rates. Budget reforms were conducted to redress Egypt’s economic environment’s weaknesses and boost private sector involvement and confidence in the economy.

Major fiscal reforms were introduced in 2005 to tackle the informal sector,r, which according to estimates, represents somewhere betwandn 30% to 60% of GDP. According to government figures, tax filing by individuals and corporations increased by 100%. Significant tax cuts for corporations were introduced in Egyptian history. Liberalisation Law No 91 for 2005 reduced the tax rate from 40% to 20%.

Among the legislators’ goals were tackling the Black Market, reducing bureaucracy and pushing through trade liberalisation measures. Many changes were made to cut trade tariffs. For example, the number of days required to establish a company was dramatically reduced. Amendments to Investment and Company law were introduced to attract foreign investors.

Significant improvements to the domestic economic environment increased investors’ confidence in Egypt. The Cairo & Alexandria Stock Exchange is considered among the best ten emerging markets in the world. The changes to the policy also attracted increased levels of foreign direct investment in Egypt. According to the UN Conference on Trade and Development’s World Investment Report, Egypt was ranked the largest country in attracting foreign investment in Africa.

Given many amendments to laws and regulations, Egypt has succeeded to a certain extent in conforming to international standards. The Cairo & Alexandria Stock Exchange (CASE) welcomed full membership into the World Federation of Exchanges (WFE)—the first Arab country to be invited.

Enforcement of these newly adopted regulatory frameworks remains, sometimes problematic—problems like corruption hamper economic development in Egypt. Many scandals involving bribery have been reported during the past years. “In 2002 alone, as many as 48 high-ranking officials—including former cabinet ministers, provincial governors and MPs were convicted of influence peddling, profiteering and embezzlement. Maintaining good relations with politicians is sometimes a key to business success in Egypt. On a scale from 0 to 10 (with 0 being highly corrupt), Egypt scored a 3.3.”

According to a study by the International Organization for Migration, 20% of Egyptian remittance-receiving households interviewed channelled the remittances towards various forms of investment. In comparison, the large majority (80%) was more concerned about using remittances to meet the daily needs of their families, including spending on health care and education; among the 20% of households that decided to invest, 39% invested in real estate, 22% invested in small businesses employing fewer than five people, and the minor proportion of investors (6%) invested in medium private companies using no more than 20 people. According to Egypt’s Human Development Report 2008, despite representing approximately 5% of GDP, remittances provided the initial capital for only 1.4% of newly established small and medium enterprises in Egypt in 2003–2004.

Response to the global financial crisis

The challenges of the global food crisis, followed by challenges of the global financial crisis, made room for more integrated policy reforms. Considering the massive economic measures that have been taken over the past 12 months or so, Egyptian economic policymakers score high based on the inside lag, i.e. the lapse of time between the moment that the shock began to affect the economy and the moment that economic (monetary and fiscal) policy, as well as the regulatory policy, are altered and put into effect in response to the shock to various markets: goods market (real GDP), the labour market (unemployment rate), money market (interest rate and inflation), and the financial (stock and bond) market. There were fluctuations in stock and bond market prices and nominal interest rates. Indeed, moderate financial panic occurred, driven—at least partially—by the fear that other investors were about to panic and sell.

Egypt has a population of about 97 million, concentrated within a region 20 miles (32 km) on either side of the Nile River. Most of the population is employed in the services sector, followed by agriculture and industrial production. Approximately one-third of Egyptian labour is directly engaged in farming, and many others work in processing or trading agricultural products.

The unemployment rate increased from privatisation in 2004 to 11.2% in 2005. The average growth rate of employment in the publicly owned enterprises was −2% per year between FY1998 and FY2005 due to the aggressive privatisation program. On the other hand, private sector employment grew at an average rate of 3% over that period. In addition, the government sector employment increased by almost double the speed of the private sector over the same period.

In general, the average weekly wage in the private s oftenstances, higher than that of the public sector. In some other example,es, e.g. wholesale and retail tradpublic sector’s es, the weekly wage is lowerc sector.

As a result of the privatisation role of the Ministry of Manpower and Trade Unions in creating a balance between the rights of workers and the interests of owners of companies in the private sector, privatisation has led to worsening employment problems and deterioration in their working environment and health. Many workers have recently resorted to strikes and picketing.

To quell discontent over rising food prices, Egypt offered government and public sector workers a pay rise of up to 30%. The offer came on the Mayday speech delivered by President Mubarak to the Egyptian General Federation of Trade Unions.

“deal dealing with the current global (food) crisis on two basi:c tracks (1) we must strengthen the food security of our low-income people, (2) we must achieve a balance between wages and prices.” President Mubarak said.

The pay rise initially proposed in the government budget ranged between 15%–20%. Still, the decision to double it was given on heightened worries that widespread anger over prices could lead to a social explosion. The pay rise is initiated immediately, rather than waiting for the start of the new fiscal year on the 1st of July 2008 and is to be financed from natural resources.

While the headline CPI inflation rate was 15.8% (17.6% in rural areas, 14.4% in urban areas) in March 2008, the overall food price inflation rate was 23.7% (26.9% in rural areas, 20.5% in urban areas). Moreover, in April 2008, the headline CPI inflation rate reached 16.4% in urban areas, while the food price inflation rate was 22.0%. This underlines the statement in (Nawar 2008) that “the inflation rate as measured by the headline CPI does not concern the poor and low-income people, who are the majority of people in rural and urban Egypt, since they spend most of their income on food.” Approximately 55 million poor and low-income are currently enrolled in food ration cardscitizens, representing 75% of the poon cards.

In April 2009, it was reported that Egypt feared the return of 500,000 Egyptian labourers working in the Gulf states.

In May 2019, CAPMAS reported that Egypt’s annual urban consumer price inflation had been eased to 13% in April from 14.2% in March.

Poverty and income distribution

The Minister of Economic Development, Othman Mohamed Othman, once mentioned that the poverty rate in Egypt had risen from 19 per cent of the population in 2005 to 21 per cent in 2009. In 2010–2011, the poverty rate in Egypt had increased to 25% of the population.

Various statistical databases show that Egypt has:

A population of 102 million, with 33 per cent of 14 years and below and 30 per cent living below the poverty line.
A labour force of 29 million, with 32 per cent working in agriculture, 17 per cent in industry, and 51 per cent in the service sector.
An unemployment rate of 7.3 per cent.
A literacy rate of above 76 per cent, with males at 79 per cent and females at 70 per cent

According to the 2005 Household Income, Expenditure and Consumption Survey (HIECS), estimated per capita poverty lines vary across the regions. Data from a World Bank and Ministry of Economic Development poverty assessment based on comparisons between actual expenditures (and the cost of a consumption basket securing 2470 calories per day per person) shows that individual Egyptians who spent less than LE 995 per year in 2005 were considered extremely poor, those who spent less than LE 1,423 per year are poor. Those who spent less than LE 1,853 per year are near poor.

Overall about 29.7% of the Egyptian population is in the range of extreme poor to near poor:

21% of the Egyptian population was nearly poor, meaning that about 14.6 million Egyptians could obtain their basic food requirements and some essential services.
19.6% of the Egyptian population was poor, meaning that about 13.6 million Egyptians (one out of every five) had consumption expenditures below the poverty line and could not obtain their basic food and non-food needs.
3.8% of the Egyptian population was abysmal, meaning that about 2.6 million of the Egyptian poor could not obtain their basic food requirements even if they spent all their expenditure on food.
Poverty has a strong regional dimension in Egypt and concentrates in Upper Egypt, both urban (18.6%) and rural (39.1), while metropolitan areas are the least poor (5.7%). The government is currently employing a recently completed poverty map as a tool for geographic targeting of public resources.

According to a report published by the World Bank in April 2019, 60% population of the country is “either poor or vulnerable”. Egypt’s national poverty rate was 24.3% in 2010 and increased to around 30% by 2015. According to the 2019 Global Hunger Index, Egypt suffers from a moderate hunger level, ranking 61 of 117 countries, compared to 61 of 119 countries in 2018. Food affordability, quality and safety remain challenges as Egypt continues to rely on global markets for more than half of its staples.

Causes of poverty

High cost of doing business

According to Rapid Assessment surveys conducted by the World Bank Group in 2011 and 2012, business managers rank informal gifts or payments, anti-competitive practices and regulatory policy uncertainty high on the list of obstacles to creating and growing a business. In addition, the amount of paperwork required for construction, imports, and exports is burdensome, and the time for the government to process this paperwork is lengthy. Traders need to submit eight documents to export and ten to import—unlike France, for example, where only two copies are required for imports and exports. Additionally, no bankruptcy law in Egypt and entrepreneurs who fail to repay their debts can face prison.

High population growth

Egypt’s fertility rate has dramatically declined since the 1960s (6.6 children per woman) to about 3.2 children per woman in 2021, but it is still considered relatively high. Egypt’s population grew from 44 million in 1981 to more than 106 million today.

Corruption

Businesses having more informal connections within the government receive preferable treatment navigating through Egypt’s cumbersome regulatory framework, providing a disincentive for competition. An inefficient and sporadically enforced legal system and a widespread culture of corruption leave businesses reliant on intermediaries (known as waste) to operate, and well-connected firms enjoy the privileged treatment. Facilitation payments are an established part of ‘getting things done, despite criminalising irregular payments and gifts. Egypt is the 117 least corrupt nation out of 175 countries, according to the 2017 Corruption Perceptions Index reported by Transparency International. The corruption Rank in Egypt averaged 86.48 from 1996 until 2017, reaching an all-time high of 118 in 2012 and a record low of 41 in 1996. Facilitation payments are regarded as bribery in many countries, which prevents many foreign entities from financial involvement with Egypt since they are a required part of the business. Corruption increases the costs of local goods and imports, decreasing individuals’ purchasing power, which magnifies poverty.

Ineffective policies

The country lacks sustainable, pragmatic policies to combat poverty. Although these policies were adopted to reduce economic burdens on the poor, they benefited the rich more, which caused more problems for the poor and increased the government’s responsibilities. Eighty-three per cent of food subsidies, 76 per cent of electricity subsidies, 87 per cent of petroleum subsidies and 76 per cent of the social safety net subsidy went to the non-poor instead of the poor.

Egypt sought a new loan from the International Monetary Fund (IMF) in August 2022 to deal with the fallout from a sudden price surge, devastatingly impacting the Egyptian people’s economic rights. The failure to efficiently use the past bailout by the IMF landed Egypt again in the same economic condition in August 2022, where it started. In July 2022, President Abdel Fattah al-Sisi requested his European allies to back him up in convincing the international financial institutions (IFI), including the IMF, that the “situation in our country does not tolerate the applicable standards at this stage”, raising questions about what standards did he mean. Meanwhile, Sisi has been criticised for introducing economic policies that benefited the elite instead of protecting the public from the crisis. The Human Rights Watch demanded that IMF consider the human rights record of the Sisi regime as well as the failure of efficiently using the bailout funds by the IMF and other institutions.