The German-Arab Chamber of Industry and Commerce was established in Egypt in 1951. Representing more than 3,200 member companies, it is the largest organization operating in the field of business cooperation between Germany and the Arab world, and plays a pivotal role in building Egyptian and German partnerships and the development of mutual interests
How would you describe the current economic situation in Egypt?
Egypt’s economic development is gaining momentum, something which is widely recognized by international analysts and business representatives. It is safe to say that the start of the cooperation with the IMF in 2016 not only paved the way towards economic and fiscal stability, it also opened the door to meeting pressing challenges, such as the preservation of social stability in line with demographic development and the further implementation of infrastructure and logistical upgrades aiming at a leadership role in the Gateway to Africa initiative. All of Egypt’s endeavors pursue the idea of enhancement of its potential to foster international cooperation, and Germany has been identified as one of the main partners in this strategy. If we take a snapshot of Egypt’s economic status, it reveals both strengths and challenges. The GDP growth rate of Egypt reached 5.5% last year, and is expected to achieve even higher numbers in the years to come. This is remarkable given the implementation of a reform program, which we could describe as something that is necessary but painful. On top of this impressive growth rate, another number evidences the strength and, above all, the economic stability of Egypt. During the last fiscal year, foreign currency reserves grew to $44 billion, which represents eight months of import coverage.
What are the main sectors generating growth in the Egyptian economy, and what could the future hold for these industries?
The main drivers of the Egyptian economy are services, which account for more than 55% of the contribution to the growth rate. Another third is made up by industrial activities, and the rest, around 12%, is due to agriculture. Whereas the service industry was hit hard in the years after 2011, the recent rebound seems to be a solid one. For example, the tourism sector is making a steady recovery, and welcomed more than 10 million foreign visitors last year. Upgrades in both the hotel infrastructure and the quality of services will lead to numbers of approximately 15 million tourist arrivals in the next couple of years, mainly from the EU, Russia and the Middle East region. Egypt’s industrial activities are dominated by oil and gas, the automotive sector and the chemical industry. The exploration of new gas fields will not only dramatically enhance the financial flexibility of the government, it will moreover lead to a more visible petrochemical industry in Egypt. Last but not least, the agricultural sector is currently in the process of upgrading its value chain. Food processing technologies and sustainable logistical chains will lead to further export growth, mainly to the EU.
Could you highlight some recent developments and initiatives from the Egyptian and regional authorities that could lead to greater opportunities for international investors in the country?
One of Egypt’s key success factors is its competitive production costs, combined with high industrial output. A minimum wage that was recently set at EGP2,000 (€106) and industrial expertise developed over decades combine to create the conclusion that Egypt really needs to be on the horizon of an international business community members who wish to do business in or with Africa. But even this viewpoint may be shortsighted in focusing only on labor intensive activities; Egypt’s Vision 2030 is far broader, and the current measures promise to bring success. Egypt’s central location within the MENA (Middle East and North Africa) region has always made the country a logistics hub and a trading platform. Given the current upgrades of the road, railway and port infrastructure, Egypt is about to brand itself as the main Gateway to Africa. The existing Free Trade Agreement with the EU and the launch of the Africa Union’s AfCFTA free trade area suggest we are looking at the infant stages of a truly relevant marketplace. However, Egypt’s vision will not be successful if the global challenges are disregarded. That is why the government and industry are currently undergoing major adjustments to prepare for a digital and an environment-friendly future. Egypt’s 100-million-strong population not only offers great potential when it comes to a young and eager workforce, it also constitutes a consumer market of growing potential. This opportunity goes however hand in hand with the currently biggest threat. The population size and its current growth rate also emphasizes the need to further strengthen the various ongoing efforts in education and job creation. Among others, German organizations such as the German Corporation for International Cooperation (GmbH), the KfW development bank and the German-Arab Chamber of Industry and Commerce are assisting Egypt’s endeavors to enhance the education framework aiming to meet the demands of the various industries at all levels, whether in production or trade.
How does the German-Arab Chamber of Industry and Commerce assist German investment in Egypt?
The main task of the Chamber is to foster economic relationship between our esteemed host country Egypt and Germany. The Chamber fulfills the role of platform moderator, and brings together a broad number of stakeholders to discuss pressing topics of common concern. Our partners range from businesses to ministries, associations, embassies and other organizations in pursuit of mutually beneficial cooperation. Separately, the German-Arab Chamber assists individual corporate activities in Egypt and in Germany. Whether organizing trade fair activities in Germany or in Egypt, business partner or location search, delegation visit preparations, staff training initiatives or legal assistance for company activities in Egypt, the Chamber considers itself a reliable tool of its members and customers. The Chamber recently upgraded its portfolio and expertise to cope with the regional demands in Lebanon and Jordan, and to assist members’ strategies in the field of the German Dual system vocational training initiative.
Is this the right time to invest in Egypt?
The short answer is “yes”. Investors looking for a return on investment, a stable environment and seeking to establish trustworthy business relationships can cope with the administrative challenges and build strategic alliances to cover Africa out of Egypt. In this context, a recent survey of the German-Arab Chamber of Industry and Commerce with 150 participants reveals that its members are not only very satisfied with their current business developments, 73% expect even better times to come. When it comes to stability, 95% of those questioned gave a positive verdict. It is safe to say that the rebound of the Egyptian economy is impressive, and that the future of Egypt has begun.