Snapshot 2

ASnapshotoftheEgyptianEconomy2013
ASnapshotof..
theEgyptianEconomy

2013
General Authority for Investment and Free Zones

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1.IntroductiontothePoliticalandEconomicDevelopmentsinEgypt 5

2.EgyptintheInternationalInvestmentReports 11

3.MacroeconomicIndicators: 13
Economicgrowth 13
Inflation 13
Unemployment 14
Sectoralgrowthrates 14
Netinternationalreserves 15
ImportsandExports 15
Interestrates 16
Exchangerates 16

4.LeadingSectorsoftheEgyptianeconomy: 17
Tourism 17
Constructionandbuilding 19
Communicationsandinformationtechnology 20
Manufacturing 22
Financialservices(banking) 24
5.CapitalMarket 27

6.ForeignDirectInvestment 35

4.InvestmentsandEstablishments 36
Totalimplementedinvestments 36
Newestablishments 36
Sectoralandgeographicaldistributionandjobsinnewestablishments 38
Companiesexpansions 41
ProcedurestoimprovetheinvestmentclimateinEgypt 42

4.Freezones,InvestmentZonesandNorthWestSuezGulfZone 45

9.SmallandMediumsizedEnterprises 48

10.InvestmentProjects 50

11.PublicprivatePartnerships 52

12.SuccessStoriesinEgypt 54


3
Population:
84.1million(March2013)
Economicgrowth:
) 2011/12 ( 2.2 %
2.4 % (Firsthalf2012/13)
GDPatcurrentprices:
EGP1542.3billion(2011/12)
EGP867billion(JulyDecember2012/13)
Netinternationalreserves:
USD13.4billion(March2013)
Foreigndirectinvestment:
USD2.1billion(2011/12)
USD301million(firsthalf2012/13)
Unemployment:
13 % (Q42012)
Inflation:
8.2 % (March2013)
Exports:
USD13.5billion(JulyDecember2012/13)
Imports:
USD30.2billion(JulyDecember2012/13)
Exchangerate:
(March2013)
USD1 =EGP6.8519
Euro1 =EGP8.9664
PoundSterling=EGP10.4902


Action has continued toachieve more political growth in Egypt over the pastfew months in or
der to build the state's institutions and attain the political stability, which is indispensable for
economic progressanddevelopments. Main developmentsin thepolitical arena include the
following:
Finalizing the new Egyptian Constitution, offering it for referendum and adopting it in De
cember2012;
Accordingtothenewconstitution,theShuraCouncilhastakenupthetaskoflegislationuntil
electionisoverandanewPeople'sassemblyissetup;
Taking procedures and arrangements to organize parliamentary election to set up the Peo
ple's Assembly in order to complete the building of the States bodies and institutions in a
democraticmanner,whichissupportivetotheclimateoffreedomandrespectforrightsand
freedoms;
Action to support Egypt's bilateral relations with Arab and foreign countries in order to re
store its regional role and enhance economic and investment cooperation with different
countriesoftheworld.

PoliticaldevelopmentsinEgyptoverthepastyearhaveundoubtedlyconstitutedasignifi
cantchallengetotheeconomicactivityandaffecteddifferenteconomicsectors.TheEgyp
tian economy, however, is one of the most diversified economies in the Middle East with
itsmultipleanddiversifiedpillars,flexibleproductivestructureandcapabilitytoadaptto
theeconomicchanges.Thiswouldrenderitabletofacesuchchallengesandsetoffrobus
tly towards high growth rate and attract more domestic, Arab and foreign investments.
MainrecenteconomicdevelopmentsinEgyptincludethefollowing:
The economic growth rate in Egypt hit 2.2 percent during Q2 FY 2012/13, bringing the
growth rate during the first half of FY 2012/13 to 2.4 percent. Final consumption remains
the main positive contributor to economic growth over the first half of FY 2012/13. This
highlightsthevitalityofexpansionpolicies,whichtargettoactivatelocalmarketsintermsof
increasingdemandandenhanceproduction.
1

The overall inflation rate (consumer price index) amounted to 8.7 percent during February
2013 and 8.2 percent during March of the same year compared to 6.27 percent in January
2013, according to the Central Agency for Public Mobilization and Statistics (CAPMAS).
Meanwhile, the basic inflation rate issued by the Central Bank of Egypt (CBE) recorded an
increaseintheannualrateupto7.68percentinFebruary2013from5.23percentinJanuary
2013. The increase in the inflation rate is attributed to the price increase in food and non
fooditemscomparedtopreviousmonths.
2
Total investments implemented during the first half of FY 2012/13 amounted to some EGP
111.3billion,wherebytheprivatesectoraccountedforthebulkwithEGP78.6billionor70.6
percent of total investments implemented. The public sector accounted for EGP 32.7 billion
or29.4percentofthoseinvestments.
3

Net foreign direct investments amounted to EGP 301 million during the first half of FY
2012/13 due to the negative repercussions caused by the political and economic develop
mentsinEgypt.
4

1
MinistryofPlanning,FollowupReportontheFirstHalfofFY2012/13
2
CentralBankofEgypt
3
MinistryofPlanning,FollowupReportontheFirstHalfofFY2012/13
4
CentralBankofEgypt
Politicaldevelopments
Economicdevelopments
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NetinternationalreservesdeclinedtoUSD13.4billionbythe endofMarch2013compared
to USD 15.1 billion by the end of March 2012.
1
Combined with political disorders, this
causedinternationalagenciestoreduceEgypt'screditratingseveraltimessincetheRevolu
tion. Standard and Poor's reduced Egypt's rating from B to B with a negative outlook.
Moody'salsoreducedEgypt'sratingfromB2toB3whileFitchreducedEgypt'sratingfrom
B+toBwithanegativeoutlook.
2
The state's public budget was affected during the first half of FY 2012/13 with the overall
deficitreaching5.1percentofGDPorEGP91.5billioncomparedtoadeficitofEGP73.8bil
lionpercentduringthesameperiodofFY2011/12.
Within Egypt's comprehensive development vision for 2022, the government has final
izedanintegratedeconomicanddevelopmentplan,whichissharedbyallofficialinstitu
tions and target to stimulate investments, double productivity to improve the economic
situation,enforcesocialjusticeandrealizehighgrowthrateof7percentonaverageuntil
2022asfollows:
1. Shortterm plan (20122014): focuses on striking balance between employment and social
justiceandincreasingeconomicgrowthfrom2.2percentinFY2011/12to3or3.5percent
in FY 2012/13 and then to 4.1 percent in FY 2013/14. This would achieve a sustainable
growth, which enable the Egyptian economy to hit high growth rates of 7 percent on aver
age until 2022. To this end, the government will attract domestic and foreign investments,
set up giant projects in Canal, Sinai, New Valley and Upper Egypt, development an invest
mentmapofEgypt,supportingSMEs,creatingpartnershipswiththecivilsocietyandbene
fitingfromEgypt'sforeignrelationsandagreementssignedwiththedevelopmentpartners
inordertoenhancetheEgyptianeconomy.
2. Mediumterm plan (20142017): depends on establishing pillars for the knowledge eco
nomic, gradual transformation into an innovative community, proper management of the
usesoflands,waterresourcesandfiniteresourcesandreducethesocialgap.
3. Longtermplan(20172022):aimsattransformationintotheknowledgeeconomy,sustain
ability of competitive advantages, deepening the level of integration into the global econ
omy, transformation of productive structure from primary activities (agriculture and min
ing) and secondary activities (manufacturing) to the third sector (hightech services) and
expandingthedevelopmentplanstoincludeallareasinabalancedmanner.

Within the course of this plan, the government has prepared an economic reform pro
gram, which includes seven main pillars: investment and employment, social justice, fi
nancialandmonetaryreform,fightcorruption,energy,tourismdevelopmentandcreativ
ity and entrepreneurship. The program is scheduled to be finalized within a few days to
beofferedtotheEgyptianandinternationalcommunities,developmentpartnersandin
ternationaldonors,mostnotablytheInternationalMonetaryFund.Thisistoachievethe
government's shortterm plan to skip the current crisis in order to restore the financial
andmonetarystabilityinthecomingperiodasamainstartingpointtoachievesocialjus
ticebylinkingtheinvestmentmaptothepovertymaptoprovidejobsintheneediestar
eas,enablingthegovernmenttotakethemoutofpoverty.Theobjectivesoftheprogram
areoutlinedasfollows:
3
Increasingtheeconomicgrowthratesto3or3.5percentbytheendof2012/13andthento
4.1percentinFY2013/14inordertoachieveasustainabledevelopment,takingthegrowth
ratesupto7percentonaverageuntil2022.
Increasingtheincomepercapitafrom0.6percentto2.1percentin2013/14.
Increasing the volume of targeted investments to some EGP 291 billion distributed over
differentsectors,witha12percentincreaseovertheexpectedrateofthecurrentyear,tobe
accountedforbytheprivatesectorwith59percentinFY2013/14.

1
CentralBankofEgypt
2
CentralBankofEgyptandMoody's,StandardandPoor'sandFitchCreditRatingAgencies
3
OfficialCabinet'swebsite
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Implementing 336 investment projects in different governorates in industrial, tourist and

technological sectors in addition to giant development projects. Topped by these projects is
theSuezCanalAxis,whichaimstodeveloptheSharqAlTafreeaPort,theMiddleUpperEgypt
Project,theAlameinProjectanddevelopmentprojectsalongtheUpperEgyptRedSeaRoad.
Reducing the unemployment rate from 13 percent to 12.4 percent by the end of 2013 while
linkingtheinvestmentmaptothepovertymaptoprovidejobsintheneediestareas.
TakingthebudgetdeficittoEGP196.1billionor9.5percentofGDPinFY2013/14andtoEGP
183.5billionor7.7percentofGDPinFY2014/15.
IncreasingforeigncurrencyreservestoUSD19billionbytheendofFY2012/13andthento
USD22.5billioninFY2013/14.
Under changes to the political life in Egypt after the 25

th
of January Revolution and differ
ent approaches to solving the economic crisis in Egypt, the government has taken the fol
lowingprocedurestoachievetheseobjectives:
1. The government has initiated executive procedures to launch a national program for youth
trainingandemploymentontheshortandmediumterms.Theprogramwillprovide700,000
realjobsforyouthfromadevelopmentperspective,whichisrelatedtoopportunitiesineach
sector.Theprogramfocusesongeographicalareasandcategorieswithahighunemployment
rateandconsidersthedifferencebetweentheunemploymentrateamongmales(9.2percent)
andfemales(24percent).
1
2. Thegovernmenthaspursuedsomepoliciestoincreasethestate'srevenuesanddecreasethe
budget deficit including economization of subsidy to petroleum products and natural gas
through: a. maintaining the policy of lifting subsidy off natural gas used in energyintensive
industries,b.listingsubsidyoffsomepetroleumproductssuchaspetroloctane95andusing
smartcardstoeconomizetheconsumptionofpetrol,dieselandbutane.
2
3. The Minister of Investment has issued adecree to exemptthe informal economyenterprises

fromtaxesforawhileoncetheyjointheformaleconomysystem.
4. Thelegalreserveonlocalcurrencydepositshasbeenreducedby400bps.from14to10per
cent in 2012 in an attempt to make available additional liquidity in the banking system and
facilitatethecreditsituationsinthemarket.
3
5. Withthedeclineofnetinternationalreserves,whichreachedtheirminimum,theCentralBankof
Egypthasannouncedthelaunchingofanewmechanism,FXAuctions,asofSunday,December
30,2012.Themechanism,usedtoofferregularauctionsforbankstopurchaseorsellUSD,is
effective in several countries, which endeavour to maintain their monetary reserve and
economize its purchases. It will not affect but rather complement and support the US Inter
banksystem.
6. March, 2013 has witnessed a series of resolutions by the Central Bank of Egypt and the gov
ernmentasfollows:
4
Launching an initiative to support the tourism sector especially with regards to credit facili
ties to investors in that sector; the initiative covers both performing and nonperforming cli
ents.
TheCabinethasamendedtheCentralBankLawonallowingtravellersto"enterforeigncash"
providedthatitshouldbedisclosedifexceedingUSD10,000.Thisresolutionhashadaposi
tiveimpactontheFXmarket,helpingtomakeavailableforeigncurrencies,partiallyproviding
additionalliquidityofmainforeigncurrencies,acquiringtheconfidenceofEgyptianstransfer
ring their money for investments or as expenses and achieving more flexibility in the move
mentofmoney.
Adecisionhasbeentakentoreactivatethemechanismofrepatriationoffundsofforeignin
vestors, which was implemented in 2000. The mechanism has been expanded to include
treasurybillsandbondstogetherwithshares.

1
EgyptStateInformationService'swebsite
2
MinistryofPlanning
3
CentralBankofEgypt,"MPCPressRelease".
4
MinistryofPlanning
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All in all, these actions target to acquire investors' confidence, encourage foreign investments
andreactivatetheFXmarketpositively.
7. Thedepositandlendingratesovernighthavebeenincreasedby 50bps.upto9.75percent
and10.75percentrespectively.Therateofmaintransactions(repurchasesorauctions)has
been increased by 50 bps. up to 10.25 percent. The credit and discount rate has been in
creased by 75 bps. up to 10.25 percent.
1
There is a consensus over the importance of the
resolutionoftheCBE'sMonetaryPolicyCommitteetoraisethe interestrateby0.5percent
ondepositsandloansinordertofightinflationandtheincreaseddollarization.Thisreflects
the that fact the CEB has carried out mechanisms and instruments, which strike balance
betweenprioritiesunderthecurrenteconomicconditionsandthecurrentgapinsupplyand
demandintheFXmarketduetotheshortageofFXresources,whichnecessitateprotection
andmaintenanceofthevalueoflocalcurrencygiventheincreaseddemandondollar.
Together with these procedures, the government is discussing new techniques and in
struments to finance economic projects in order to increase investments and growth
rates. Following is an overview of procedures and legislations suggested by the govern
mentandthestate'sinstitutionstoenhancetheEgyptianeconomy:
1. The Ministry of Petroleum has finalized studies on petrol distribution using smart cards in
order to address abnormal forms of subsidy to petroleum products. According to the new
system, the government will not implement the subsidy system for one car per family.
Rather,itwillimplementthesubsidysystemforacitizen'sindividualownership.Eachciti
zen will receive smart petrol cards together with his/her car license while petrol stations
will be equipped withaspecial machine to discountfromthe citizen's balanceon the card.
Eachownerwillhave1,800litresofsubsidizedpetrolfora1,600CCcar.Onceexceedingthe
amount of subsidized petrol, the owner should purchase petrol for free nonsubsidised
prices.Moderncarsover1,600CCwillhavepetrolforfreeprices
.2
2. WithintheNationalInitiativeforEconomicTakeoff
3
adoptedbytheMinistryofInvestment,
an SMEs development program was suggested based on the following pillars: access to fi
nance,provisionofbusinessdevelopmentservicesinCairoandgovernorates,accesstomar
kets,accesstoinformation,provisionoftrainedlabour,provisionofanincentivepackageto
SMEsandrebuildingthepioneeringclimateinEgyptinordertocreateanewgenerationof
entrepreneursanddevelopthinkingandinnovationskills.
3. Within the efforts to integrate the informal sector into the formal sector, the government
hassuggestedaplantoovercometheincreasingnumberofprojectsoutsidetheformalsec
tor. This includes reduction of bureaucracy and administrative complexities related to the
government bodies, provision of alternative sites for workshops in populated areas, ap
proval of the tax exemption law for years preceding official registration, provision of advi
sory services (financial and nonfinancial) and facilitation of a safe market exist for such
projects.
4. Thegovernmenthastheideaof"IslamicSukuk"
4
beingthewayoutfromthecurrentcrisis.
The aim of the sukuk is to provide new and diversified sources of finance together with
treasurynotesandbondstoovercomethebudgetdeficit.
1
CentralBankofEgypt,pressrelease
2
EgyptStateInformationService'swebsite
3
Anationalinitiativeforagreementandeconomictakeoff,whichtargetstoestablishthetakeoffandcomprehensivedevelop
mentphaseusingthepillarofinvestmentandemployment.Theinvestmentandemploymentpillartargetsallthestate'ssectors
andgovernoratesinordertoprovidenewresourcesandachieveeconomicgrowthratesstartingfrom3.5percentandinjectinvest
mentsclosetoEGP276billionduringthisyearFY2012/13inordertoreachaneconomicgrowthrateof7percentoverthecoming
fiveyears.Theinitiativefocusesinfivepillars:businessfacilitationandclearingoutinvestmentbarriers;providinginvestmentop
portunitiesandnationalprojectstoensuresustainabledevelopment,supporttoSMEsandentrepreneurship,transformationof
unofficialtoofficialsectorandthepublicbusinesssectordevelopmentprogram(theMinistryofInvestment).
4
Sukukmeanstheinvolvementofsukukholdersintoindustrial,agriculturalorservicesprojectswheretheyareentitledtodispose
thembysale.Sukukaresubjecttoprofitsandlossesi.e.asukukholdermayobtainprofitswhentherelevantprojecthasmade
profitsandbearslossesincludingthelossofcapitalitselfiftheprojectachieveslosses.Theyarebynomeansdifferentfromhigh
riskinvestmentfundscreatedbywesternbankstwocenturiesago,equityrightsinanylistedcompanyorformsofparticipationin
ancientcivilizationsthousandsofyearsago.

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The sukuk are the solely available alternative to borrowing from external donor and means to
provide financial liquidity necessary to establish investment and development projects.
1
It is
worthyofnotethatitisimportantforforeignerstotakepartintothesesukukduetothelowlev
els of local saving whereas the achieving an economic growth rate of more than 7 percent re
quirestotakethatlevelto30percentatleast.Smallsaverscanalsotakepartinthosesukuk.Ma
laysia,for example, which is the largestmarketfor issuing sukuk, allotsa specificportion of su
kuk issuances to small investors and guarantees their capitals. The government is keen on pro
viding benefits to attract small savers to take part in the sukuk subscriptions including tax ex
emption on returns and stipulating that sukuk shall be listed into the stock market, allowing
smallinvestorsatradingmechanismoncetheyarewillingtoliquidatetheirequity.

1
MinistryofFinance
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The Global Consumer Confidence Survey, Nielsen issued in Q2 of 2012 has demonstrated
thattheEgyptians'confidenceintheireconomyisstillhighfollowingayearafterthe25
th
of
January Revolution in spite of disturbances, which pervaded the country. Nielsen's inves
tor's confidence index reported that the Egyptian people's confidence in the economy in
creasedby6pointsinQ2of2012.
AreportissuedinFebruary1,2012byCICapitalstatedthatEgyptstillremainsamajordes
tination for investment and investors in spite of all demonstrations and sitins, which oc
curred during 2011. The report indicated that the main reason for this is the overpopula
tion, which represents a real potential for demand in addition to the close transformation
intoademocraticcivilrule,whichstimulatesinvestment.
The report issued by Capital Link Globe in 2013 on the movement of mergers and acquisi
tions in the Arab world indicated that Egypt accounted for the bulk of acquisitions during
2012 albeit being the most risky year. It highlighted major transactions on the Egyptian
marketincludingFranceTelecom'sacquisitionofMobinil,QInvest'sacquisitionofHermes,
NationalBankofQatar'sacquisitionofSocietieGeneral,NationalDubai'sacquisitionofBNP
Paribas, Al Fatim's acquisition of Metro and Kheir Zaman and Gulf Capital's acquisition of
HaidlinaMedical.
Egypt was ranked first as the most attractor of transactions in the Middle East for USD 4.6
billioninthefirstninemonthsof2012accordingtodataissuedbyMergerMarket,aBritish
agency,whichisspecialisedinmergersandacquisitionsinQ4of2012.
The Arab Monetary Fund, Standard and Poor's and Middle East News Agency hailed the
EgyptianExchange'sperformance,whichhasbeenclassifiedasoneofthehighestattractors
of investments, having realized relatively high returns in 2012 by 8.3 percent comparedto
3.2percentfortheMiddleEastandAfricaand2.6percentfortheemergingmarkets.
EgypthasadvancedforpositionintheDoingBusinessReportissuedbytheWorldBankand
the International Finance Corporation in 2013 compared to the 2012 Report. Egypt was
rankedthe109thoutof185countries,havingoccupiedthebestrankintheresolvinginsol
vencyindexin2013comparedto2012.
Egypt was ranked third on GDP as the third largest Arab economy in 2012, having
amountedtoUSD 257 billion in spite of the country'seconomic crises, accordingtothe In
ternationalInstituteofFinance,basedonWashington.
A World Bank's report issued by the end of November 2012 indicated that Egypt was
ranked sixth among the largest ten recipients of remittances by Egyptian working abroad
totallingUSD18billion.
AccordingtotheAnnualInvestmentClimateReportissuedbytheArabInvestmentandEx
port Credit Guarantee Corporation in 2011, Egypt was ranked first in the Arab World in
terms of nest capital inflows during the past eleven years, having amounted to USD 51.2
billion,followedbySaudiArabiaforUSD33.5billionandLebanonforUSD26.1billion.The
report expected that total investment expenditure in the Arab World (21 countries) will
amount to some USD 4260 billion during the six years between 2012 and 2017. It is ex
pected to maintaina permanent growthfrom USD 559billion in 2012 to USD 778.6 billion
in2017.
StandardandPoor'shasreducedthecreditratingofthreeEgyptianbanksfromB/BtoB/C
just two days after reducing Egypt's sovereign rating from B to B in December 2012. The
agencystatedthatithasreduceditslongandshorttermcreditratingsoftheNationalBank
of Egypt, Misr Bank and the Commercial InternationalBank. Itadded that it hasa negative
outlookofthosebanks.StandardandPoor'shadreducedthelongtermsovereignratingto
B.Itnotedthattheratingissubjecttomorereductioniftheexacerbationofpoliticalcondi
tionsunderminestheeffortsexertedtosupporttheeconomyandpublicbudget.
Moody's has reducedthecredit ratingoffive Egyptianbanks includingthree statedowned
banks:theNationalBankofEgypt,MisrBankandBanqueduCairefromB3toCaa2andtwo
privatebanks:theCommercialInternationalBankandBankofAlexandriafromB3toCaa1.
Also,ithasdowngradedallbanks'foreigncurrencydepositratingstoCaa2fromCaa1.This
followedMoody'sreductionofthecreditratingofthegovernment'sbondsfromB3toCaa1
in March 2013, with the increased purchase of bonds by those five banks and the banking
sectorincreasedexposuretorisks.
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Reductionofthefivebanks'creditratingsresultedfromtheemergencycaseandcurfewinthethreeCanalgovernorates(Ismailia,
PortSaidandSuez)imposedbyapresidentialdecree,


ItisworthyofnotethatthisreductiondoesnotmeanlossofconfidenceintheEgyptianbanking
sector.Rather,ithighlightsadifficultyinobtainingexternalloansbythosebanks.
FitchhasreducedthecreditratingofEgyptfromB+toBduetotheconfusionsurrounding
thepoliticalscene,declineofcashreserves,uncertaintyofobtainingtheIMFloan,thediffi
cult financial situation of the government and foreign money exist from the Egyptian mar
ket.
In spite of Egypt's position falling back from the second to fourth rank generally in the
2011/12report,ithasbeenrankedfirstintheeconomicandhumanresourcesindex,which
is primarily attributed to the big number of large and giant FDI projects established since
2003inEgyptcomparedtootherAfricancountries,accordingtotheFDIAfricanCountries
oftheFuture2011/12Report.Moreover,EgyptwasrankedsecondasthebestFDIrecipient
andthebestinfrastructureowner.

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thedeclineofforeignreservesduringJanuary2013byUSD1.4billiondowntoUSD13.6billioncomparedtoUSD15billionbythe
end of last December and the rating of the government's bonds being affected by the uncertain conclusion of a final agreement
withIMFonaloantoEgyptamountingtoUSD4.8billion,whichquestionsthegovernment'scapabilityofimplementingaprogram
toenhancethecountry'seconomy.


ThegrossnationalproductinmarketpricesdeclinedduringQ2ofFY2012/13,wherebyitgrew
by2.2percentcomparedto2.6percentduringQ1ofFY2012/13.

The inflation rate recorded by the headline consumer price index (CPI) (yearonyear basis)
amountedto9 percent during May 2013 compared to8.6 percent during May 2012, according
tothedataissuedbytheCentralAgencyforPublicMobilizationandStatistics.

GrossNationalProduct(GDP)
Fig(1):GDPGrowthRates:(Q12008/09Q22012/13)
Source:MinistryofPlanning
Inflation
Fig(2):ConsumerPriceIndex(yearonyearbasis)
Source:CAPMAS

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AccordingtotheILO'sstandards,theunemploymentraterecordedrelativestability,wherebyit
hit13.2percentoftheworkforceduringQ1of2013comparedto13percentduringQ4of2012,
whereasitrecorded12.6percentduringQ1of2012.

Some major sectors have recorded a gradual improvement, whereby the manufacturing sector
grew from 3.1 percent during the first half of FY 2011/12 to a positive growth of 2.4 percent
during the first half of FY 2012/13. The tourism sector also recorded a growth of 7.8 percent
duringthefirsthalfofthecurrentfiscalyearcomparedto8.6percentduringthesameperiodof
FY2011/12.Theconstructionandbuildingsectorgrewby4.5percentduringthefirsthalfofFY
2012/13comparedto1.6percentduringthecorrespondingperiodofthepreviousfiscalyear.
The manufacturing, tourism, agriculture, construction and building and retail and wholesale
tradeaccountedfor70percentoftheGDPincreaseachievedduringthefirsthalfofFY2012/13.

Unemployment
Fig(3):UnemploymentRate
Source:CAPMAS
SectoralGrowthRates
Fig(4):SectoralGrowthRates
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The net international reserves held by the Central Bank of Egypt declined to USD 16 billion by
theendofMay2013,downby55.6percentcomparedtoabalanceofUSD36billionbytheendof
December 2010, which is the highest level. In May 2013, the cash reserve went up by 11.1 per
centcomparedtoApril2013.

The trade deficit increased by 7.6 percent up to USD 16.8 billion during the period from July to
December of FY 2012/13 compared to USD 15.6 billion during the corresponding period of the
previousfiscalyear.Thisisattributedtotheincreaseofpaymentsforcommodityimportsby3.6
percentto reach USD 30.2 billion during the first halfof FY 2012/13 compared toUSD 29.2 bil
lion during the same period of the previous fiscal year, in addition to the decrease of the pay
mentsforcommodityexportsby1%reachingUSD13.4billionduringthefirsthalfofthecurrent
fiscalyearcomparedtoUSD13.6billionduringthesameperiodofpreviousfiscalyear.
Fig(5):NetInternationalReserves
Source:CentralBankofEgypt
Fig(6):Imports&Exports
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ImportsandExports
NetInternationalReserves


FollowingitsmeetingheldonThursday,March21,2013,theMonetaryPolicyCommittee(MPC)
decided to raise the overnight deposit and lending rates by 50 bps to reach 9.75 percent and
10.75percent,respectivelycomparedtotheirpreviouslevelsof9.25percentand10.25percent
respectively. Moreover, the CBE decided to raise the credit and discount rates to reach 10.25
percent by 75 bps from its previous level of 9.5 percent and raise the repurchase transactions
(Repo)rateto10.25percentcomparedtoitspreviouslevelof9.75percent.

TheArabandforeignexchangeratescontinuedtheirupwardtrendwiththeUSDreachingnew
recordlevelduetotheraredemandatexchangers.DuringApril2013,theUSDexchangeratein
banks reached EGP 6.965 with projections to maintain its upward trend in the coming period.
TheexchangeratesofEuro,PoundSterlingandothercurrenciesrecordedanupwardtrend.

Fig(7):Deposit&LendingRates
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InterestRates
ExchangeRates
Fig(8):ExchangeRates(EGPvsUSD)
Source:MinistryofFinanceandCentralBankofEgypt


During the first half of FY 2012/13, a significant number of economic sectors achieved positive
growth rates compared to the corresponding period of FY 2011/12, especially such sectors as
tourism,constructionandbuildingandmanufacturingindustrieswhileothersectorssuchasthe
communicationsandinformationtechnology,realestateactivities,publicutilitiesandagriculture
achieved high growth rates during the first half of FY 2012/13 compared to the corresponding
period of the previous fiscal. The following graph shows the leading sectoral economic
growthratesduringthefirsthalfofFY2012/13:

Thefollowingpartshowsthemajoreconomicsectorsi.e.tourism,constructionandbuild
ing, communications and information technology and manufacturing industries in addi
tiontothebankingsectorwhichhadasignificantroleinsupportingtheEgyptianeconomy
duringthepastperiod:

Tourism isone of themaineconomicsectors inEgypt being amajor sourceof foreign exchange
duringtheperiodfrom2001to2010.Moreover,itisamainsourceofnationaleconomy,attract
ing to Egypt some USD 12.5 billion per year, accounting for 12 percent of GDP and absorbing
some1.4milliondirectandfourmillionindirectworkers.
1
In spite of the economic recession in EU markets, which caused the decrease in the number of
EuropeantouristsvisitingEgypt,thecountryenjoysanoutstandinglocationandamildweather,
which enables it to attract middleclass tourists from emerging markets in order to offset the
declineinthenumberofEuropeantourists.
2
Egypt was ranked fourth in terms of price competition in the tourism industry although Egypt
wentbackbytenranksintheclassificationoftheGlobalEconomicForumforTourismin2013to
occupy the 85
th
rank out of 140 countries instead of the 75
th
rank in 2011. This is attributed to
theabsenceofsufficientsafetyandsecurityinadditiontothelowqualityofpublicservicesinthe
Egyptianstreet.
Egypt was ranked 76
th
in terms of the rules of politics and regulations; ranked 18
th
in terms of
priorities of travel and tourism; ranked 57
th
in terms of health care and infrastructure of air
transport;ranked80
th
inprovidingcommunicationsandinformationtechnology;ranked96
th
in
termsoftheinfrastructureofinlandtransportandranked90
th
inthetourisminfrastructure.
ThereportexplainedthattheEgyptianhumanresourcesinthetourismsectoroccupiedthe105
th
rankontheinternationalranking,the60
th
rankintheavailabilityoftouristattractionfactorsand
the87
th
ranksinthewayofnaturalresourcesusage.
3

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Fig(1):SectoralEconomicGrowthRates(FirstHalfofFY2012/13)
TourismSector
1
OxfordBusinessGroup,TheReportEgypt2012.
2
OxfordBusinessGroup,TheReportEgypt2012.
3
WorldEconomicForum(2013),"TheTravelandCompetitivenessReport".
7.8
4.5
4.3
3.6
2.9
2.4
0
1
2
3
4
5
6
7
8
9
Tourism Buildingand
Construction
Communicationand
InformationTechnology
Realestate Agriculture Manufacturing
15


Recently, Russian tourists have been among the
most frequent visitors to Egypt, having accounted
for 1.8 million tourists in 2011 while the Gulf area
representsapromisingmarketfortouristscoming
toEgypt.
1

Action has been taken to attract more tourists to
Egypt by reducing pricesand promotinga number
of tourist offers and entertainments.
2
The tourism
sector has witnessed a gradual and notable im
provement in terms of the sector's growth,
whereby it has changed its position from a nega
tive growth (8.6 percent) during the first half of
FY2011/12toapositivegrowthrateof7.8percent
duringthefirsthalfofFY2012/13.
3

Tourist revenues increased by 12 percent during
thefirsthalfofFY2012/13comparedtothecorrespondingperiodofthepreviousfiscalyear.This
hascoincidedwithanacceleratedgrowthinthenumberofincomingtouristsintermsofthenum
ber of visitors and the number of nights by 10 percent and 8.5 percent, respectively during the
firsthalfofFY2012/13comparedtothecorrespondingperiodofthepreviousfiscalyear.
4
The following table indicates revenues, tourist nights and the number of tourists during
thefirsthalfofFY2012/13asfollows:
It is worthy of note that the current

Egyptian economic reform program in
cludes new procedures to support the
tourism sector such as the establish
ment of a tourism support fund, which
will provide the necessary subsidy dur
ing the period when the energy subsidy
will be lifted off the tourism sector in
ordertoalleviateitsrepercussions.
5
The
Ministry of Tourism targets to attract
some25milliontouristsby2010inspiteofthecurrentsituationinEgypt,whileattentionwillbe
paidtonicheclassesbythedevelopmentofretirementtourismandentertainmentactivities
.6

1
OxfordBusinessGroup,"TheReportEgypt2012".
2
3
MinistryOFPlanning.
4
MinistryOFPlanning.
5
CentralBankofEgypt.

6
Table(1):TourismSectorIndicators
Source:MinistryofPlanningandMinistryofFinance
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TourismSectorIndicators FirstHalfofFY2012/13
Tourismrevenues USD5.66billion
No.oftourismnights 77.4millionnights
No.oftourists 6.3milliontourists
"Egypt is a pivotal destination on the company's
map. The tourism sector currently needs to send
assurance messages to investors, highlighting
Egypt'spositionasasignificanttouristdestination
intheregion.Thisrequiresprovingtherestoration
ofsecurityandstability,whichtogethercontribute
into the recovery of activity and growth in all eco
nomic sectors, but not only the tourism sector".
Enan El Galaly, Chairman and Founder of Helnan
InternationalHotelGroup.


The construction and building sector is one the
mostaffectedsectorsbytheglobalcrises(suchas
the global financial crisis in 2008 and the Euro
pean crisis in 2011) and local crises following the
25
th
of January Revolution. Over the past two
months, the real estate sector has suffered from
political disturbances and judicial disputes on
landsobtainedbysomepropertycompanies,caus
ing the sector to suffer from risks related to the
implementation of projects, finance and sluggish
nessofsales.
1
Thegovernmentactstosupportthegrowthofthe
sectorbypayingattentiontothedesignandinno
vation services in order to cope with the require
ments of global markets, the development and
improvement of new exporters and increasing companies' productivity. This will be achieved by
supportingthequalitycontrolsystems,increasingproductiveefficiency,reducingenergyconsump
tionandpreservingtheenvironment.
2

As part of efforts to improve the sector, the Housing and Building National Research Center,
through its Construction Engineering and Construction Management Research Institute, contrib
utes to academic and applied research and provides technical advice in the field of construction
engineering,projectmanagementandoverallqualitysystemsinordertodeveloptheconstruction
andbuildingtechnology,increasetheefficiencyofprojectmanagementinadditiontoamendlegis
lation affecting the industry in collaboration with official bodies and regional organizations and
takingactiontointegratesuchlegislationregionally.
3

It is worthy of note that the chairman of Jones Lang Lasalle, a leading property investments and
consultations company, highlighted the positive outlook of the real estate market in Cairo on the
longruninspiteofchallengesofpoliticalinstability,accordingtothecompany'sreportof2012.
HeaddedthattherealestateactivityinCairowillremainsufferingfromrecessionontheshortrun
due to the postrevolution political instability. Nevertheless, despite those developments, the ba
sicsofthepropertymarketinCairoremainunchangedandprospectsseemtobepositivewiththe
increasing transparency, which would make Egypt more attractive to business on the long run
compared to the prerevolution period. The report explained that the local demand will remain a
momentousforthesectorgrowthoncesecurityandsafetyareregained.
Theconstructionandbuildingsectorhaswitnessedadevelopmentinthegrowthrate,achievinga
positive rateof 4.5 percent duringthe first halfofthisfiscal yearcompared toa negative rateof
1.6percentduringthecorrespondingperiodofFY2011/12.

Meanwhile, the sector revenues increased remarkably during the first half of FY 2012/13, having
contributed 8.6 percent into GDP, in spite of the recent economic and political repercussions in
Egypt.
6

ConstructionandBuildingSector
1
GeneralAuthorityforInvestmentandFreeZones(2012),"SnapshotoftheEgyptianEconomy,September2012".
2
IndustrialModernizationCenterwebsite,Buildingmaterialsandmineralindustries.
3
TheHousingandBuildingNationalResearchCenter,ConstructionEngineeringandConstructionResearchInstitute.
4
http://www.companiesandmarkets.com/MarketInsight/Construction/GlobalConstructionMarket/NI5936
5
6
MinistryofPlanning.
Generally,therearefourtypesofconstructionandbuilding:
4
1. Residentialbuildings;
2. Industrialbuildings'
3. Commercialcompounds;
4. Heavycivilestablishments.
Often in most of the developed or emerging countries,the residential construction and
building accountsforalmost half ofthetotal market.On theotherhand, buildingof in
frastructure and commercial establishments accounts for the same portion with some
25percentoftotalsectorforeach.
5

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Thefollowingtablepresentsthegrowthrateandthenumberofnewestablishmentsand
expansionsinthesectorduringthefirsthalfofFY2012/13:
AccordingtotheBusinessDoing Report2013issuedbytheWorldBankandtheInternationalFi
nanceCorporation,Egyptwasranked165
th
among185countriescoveredbythereportintermsof
issuingbuildinglicensesversusthe158
th
rankinthepastyear.
1
Therefore, main challenges facing the construction and building sector in Egypt include the ab
senceofaclearlegislativeandlegalframework,whichgovernstheproceduresoflandownership
and project finance, in addition to high prices of building materials and lack of trust between in
vestorsandthegovernment.
2

The communication and information technology sector is one of the four pillars for building the
knowledgeeconomybeingamajorcontributoroftheeconomicandsocialdevelopment.Thesec
toraccountedfor5.3percentoftheGDPduringthefirsthalf ofFY2012/13,whilethesectorreal
growthamountedto4.3percentduringthefirsthalfofFY2012/13.
3

Therefore,thedevelopmentoftheCITinfrastructurehasbecomethefocusofactivitiesalongwith
building a national industry, which is based on modern technology in order to prepare a young
generation, which is capable of acquiring knowledge and information and keeping abreast of the
informationrevolution.
TheMinistryofCommunicationandInformationTechnology'sITIDAadoptstheEducationDevel
opmentProgramforEgyptianUniversities,whichwaslaunchedinEgyptin2008forthedevelop
ment of the skills of a group of the university students from 13 Egyptian universities in the CIT
field.TheITIDAwasestablishedin2004todevelop
theITindustry,attractFDIandpreparetrainedand
skilledcalibers.
4
Egyptoccupiesanadvancedrankinthefieldofout
sourcing,havingbeenranked4
th
in2011,according
to the Global Service Location Index, issued by AT
Kearney, which measures the main elements for a
locationto be an attractive locationfor service pro
vision.
The 50 countries on the index have been selected
thisyearonthebasisofcompanies'inputs,services
tocurrentactivitiesandthegovernment'sinitiatives
to support the sector. Assessment has taken place
using 39 indices covering three main categories:
financial attractiveness, available skills and the
availabilityofbusinessenvironment.
5

1
TheWorldBankandIFC(2013),"DoingBusinessReport".
2
3
MinistryofCommunicationandInformationTechnology
4
OxfordBusinessGroup,"TheReportEgypt2012"
5
A.TKearneyGlobalServicesLocationIndex(2011),OffshoringOpportunitiesAimedEconomicTurbulence.
CommunicationandInformationTechnology(CIT)
Table(2):Constructionandbuildingsectorindicators
Source:GeneralAuthorityforInvestmentandFreeZones
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ConstructionandBuildingSector
Indicators
FirsthalfofFY2012/13
SectorGrowthrate % 4.5
Sectorshareineconomicgrowth % 8.6
No.ofnewestablishments companies 487
No.ofexpansions companies 67


MainindicatorsoftheCITSector
I.NumberofInternetusers
Thenumberofinternetusersamountedto32.67millionusersduringFebruary2013,growingby
11.24 percent per annum during the same period. The number of ASDL subscribers amounted to
2.29 million during February 2013, growing by 23.11 percent per annum. The mobile broadband
internet subscribers amounted to 10.78 million during the same period, growing by 3.59 percent
perannum.
ThefollowinggraphpresentstherelativedistributionoftheinternetusersduringFebru
ary2013:

II.Numberofmobileandlandlinephonesubscribers
The number of the landline phone amounted to 8.61 million subscribers during February 2013
while the number of mobile phone subscribers amounted to 94.47 million subscribers during the
sameperiod.Thegrowthofmobilephoneusersrecordedanannualgrowthof2.87percentduring
February 2013 while the mobile penetration reached 113.76 percent, growing annually by 1.02
percentduringFebruary2013asshowninthefollowinggraph:
III.InternationalinternetbandwidthpercapitalduringFebruary2013:
Theinternationalinternetbandwidthreached214.40GbpsduringFebruary2013,whilerecording
anannualgrowthof17.02percentduringthesameperiod.
TheMinistryofCommunicationandInformationTechnologytargetstoprovidethemobilemoney
transferwithinayearinadditiontotheGPSbasedtracingservicesin2013.
1

Fig(2):InternetUsersbyModeofAccess(Feb2013)
Source:MinistryofCommunicationandInformationTechnology
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Fig(3):MobileSubscription(Feb2012Feb2013)
Source:MinistryofCommunicationandInformationTechnology
1
MinistryofCommunicationandInformationTechnology


The manufacturing sector remains the heart of the Egyptian economy being based on strong and
concrete industries such as garments, food industries, consumer commodity and car assembly.
ThelargepopulationofEgypthascreatedanattractivemarket formanufacturedgoodsduetothe
purchasing power and increased demand for consumer goods. This would increase the pace of
macroeconomicgrowthandnationalincomepercapita.
1
During Q2 of FY 2012/13, the manufacturing industries sector has recorded a growth rate of 2
percent compared to 2.8 percent during Q1 of the same fiscal year. The first half of FY 2012/13
recordedanincreaseinthegrowthrate,havingamountedto2.4percentcomparedto3.1percent
duringthefirsthalfofFY2011/12.
2

Investments in the manufacturing industries sector accounted for 12.8 percent of total invest
mentsimplementedduringQ2ofFY2012/13comparedto11.8percentduringthesameperiodof
FY2011/12asexplainedinthefollowingtable.
3

The industrial policies are being implemented by a number of bodies including GAFI's Onestop
ShopinordertoserveinvestorsandpromoteinvestmentsaswellastheIndustrialModernization
Center,whichseekstodevelopandencouragebothpublicandprivatesectorsinordertodeepen
theEgyptiantiesatthelevelofglobaleconomy.
4
The sector faces a number of challenges including the closure of several factories following the
25
th
ofJanuaryRevolution."TheEgyptianDemocraticLabourCongress(EDLC)andtheSolidarity
Center" issued its annual report on the status of syndicate freedoms in Egypt during the second
year of the Revolution. The report has monitored initial indictors of the current economic situa
tion including the closure of more than 4,000 factories It emphasized figures related to the num
ber of closed factories, which is proved by Egypt's declined position on the project closure and
resolving insolvency index, having occupied the 131
st
rank globally out of 185 countries in 2013.
Thismeansthatinvestorssufferfromseveraldifficultiesinsafeexistfromthemarket,whichisa
barriertomakingadecisiontoinvestinEgypt.However,Egyptwasranked26
th
onthestartingof
abusinessindexaccordingtotheWorldBank.
Other challenges include the absence of skilled technical workers and the necessity of improving
thetechnicaleducation;theeducationexpertsinEgyptagreethatthetechnicalschoolsandinsti
tutesare of arather low level and need substantial improvements; trainers need to be trained in
modern teaching methodology; such technical schools provide no skills of communication and
critical thinking; technical schools lack tools and equipment and have congested workshops and
labs.
1
2
MinistryofPlanning
3
MinistryofPlanning
4
ManufacturingSector
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Table(3):ManufacturingSectorIndicators
Source:MinistryofPlanningandGeneralAuthorityforInvestmentandFreeZones
ManufacturingSectorIndicators FY2012/13
Q1 Q2 FirstHalf
Growthrateofthesector 2% 2.8% 2.4%
Sectorshareintotalinvestments
implemented(Q2)
12.8% 11.8% 12%
No.ofnewestablishments 444 622 1066
No.ofexpansions 109 141 250


Allthesefactorsmakeitdifficulttoprovidehighqualitytrainingforteachersorprovideopportuni
tiesforthedevelopmentofpracticalskills,whichmeettherequirementsoftheprivatesector.
Forthese challenges to be surmounted, attention should be paid to the technical education sector
in order to prepare a skilled workforce and cope with the need of the labor market. This will be
achievedthroughflexibilityindevelopmentandinnovation,creatingstandards,conductionregular
assessments to measure how far these schools comply with common standards and developing
training programs for all ages and professional levels so that personnel may find an appropriate
training for their needs and the market's needs.
1
Empirical studies have shown that welldesigned
programs for technical and vocational education and training play a major role in creating jobs,
enhancingsocialjusticeandsupportingtheglobalcompetitivenessofagivencountry.
2

Thebankingfinancialservicessectorisamajoreconomiconenotonlybecauseitaffectsandisaf
fected by other sectors but also because it has social impact, which touches different classes di
rectlyandindirectly.Thisistruethroughthetaskscarriedoutbyvariousfinancialbodiesandinsti
tutions, leading to economic and social results. Regulations, laws and procedures adopted seek to
enhance confidence into the Egyptian financial and banking system, enabling investors to have
complete access to services within a short time, given measures and legal restrictions, which en
sure direction of investments, especially foreign ones, into sectors targeted for diversification by
thestate'seconomicplan.
TheCentralBankhasimprovedtheEgyptianbankingsectorovertwophasesasfollows:

Thefirstphase,initiatedin2004andendedin2008,included suchmainpillarsastheprivati
zations and mergers in the banking sector and overcoming the banks' nonperforming loans.
TheCentralBankofEgyptdecidedtoexemptbanks,whichprovideloansandcreditfacilitiesto
differententerprises,fromthelegallydecidedreservelevel, dependingonloansandcreditfa
cilities granted by them. It also decided to implement the corporate governance principles in
Egyptian banks, restructure the public sector banks both financially and administratively and
ensure facilitation of the establishment and development of SMEs. Moreover, it pursued the
development of technical and professional development of the Supervision and Control De
partmentoftheCentralBankofEgypt.
3
ThesecondphasestartedinJanuary2009andendedinMarch2012;itsmainpillarsincluded
thedevelopmentandimplementationofacomprehensivefinancialandadministrativerestruc
turingofpublicbanksandregularfollowupoftheresultsofthefirstphaseoftherestructuring
program of the National Bank of Egypt, Misr Bank and Banque du Caire. This phase also cov
eredtheimplementationofBasel2standardsinEgyptianbankstosupporttheirriskmanage
ment capacity by adopting a twofold strategy: facilitation and consultation with banks to en
sureimplementationofthosestandardsbyallunitsofthebankingsectorandtakingactionto
review and issue corporate governance principles of banks and the Central Bank. The second
phase adopted an initiative to increase and improve access to finance and banking services
especiallyforSMEs.
4

As part of action to develop the sector and overcome the recent political and economic
conditions,theCentralBankhasadoptedthefollowingproceduresandresolutions:
The Cabinet has amendedthe Central BankLawonallowing travellers to "enterforeigncash"

providedthatitshouldbedisclosedifexceedingUSD10,000.Thisresolutionhashadapositive
impactontheFXmarket,helpingtomakeavailableforeigncurrencies,partiallyprovidingad
ditionalliquidityofmainforeigncurrencies,acquiringtheconfidenceofEgyptianstransferring
theirmoneyforinvestmentsorasexpensesandachievingmoreflexibilityinthemovementof
money.

1
Handousa,Heba(2010),"SituationAnalysis:KeyDevelopmentChallengesFacingEgypt".
2
USAIDEgypt.
3
CentralBankofEgypt,Basil&theEgyptianfinancialsectorOctober2012.
4
CentralBankofEgypt,"AnnualReport2011/12"
21
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FinancialServicesSector


The Central Bank has issued several initiatives including one to support the tourism sector
withanincentivepackagetosupportinvestorsinthetourismsector.Italsoincludedexemp
tionofdeferreddebtsfromdefaultpenalties,whileinterestswouldbemaintained.
TheCentralBankhasissuedtwoinitiativestosurmountobstablestoFDIinflowsintosecuri
tiesandtreasurynotes;asthedecisionoftherepatriationmechanismthathasbeentakento
reactivate the mechanism for repatriatingfundsof foreign investors andforeign investments
funds,whichwasimplementedin2000.Themechanismhasbeenexpandedtoincludetreas
urybillsandbondstogetherwithshares.
TheCentralBankofEgyptlaunchedanewmechanism,FXAuctions,asofDecember30,2012.
Themechanism,usedtoofferregularauctionsforbankstopurchaseorsellUSD,iseffectivein
several countries, which endeavour to maintain their monetary reserve and economize its
purchases.ItwillnotaffectbutrathercomplementandsupporttheUSInterbanksystem.
The following table presents main indicators of the banking sector, which reflect its po
tentialandcapacitytocopewithcrisesofthecountry:
The above table indicates that international reserves has remained at USD 15 to 15.5 billion
since February 2012, declining in March 2013 to USD 13.4 billion because the Central Bank has
paid some installments of international debts and intervened to prevent speculations. The USD
EGP exchange rate increased whereby the USD exchange rate grew by 1.7 percent duringthe pe
riodfromJulytoDecember2012.
As for the banks' financial soundness indicators, their capital adequacy ratio (capital/ risk
weighed assets)amountedto 15.7 percent by the end of June 2012 versus a minimum of 10 per
cent. Nonperforming loans amounted to9.9 percent of total gross loans bythe end of June 2012
comparedto11percentbytheendofJune2011whiletheloanprovisionsaccountedfor95.4per
centofnonperformingloanscomparedto93.6percentbytheendofJune2011.
TotalcreditfacilitiesbalanceamountedtoEGP516842million bytheendofDecember2012dis
tributedoverthegovernment(EGP35141million)andnongovernment(EGP481701million).
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Table(4):MainindicatorsoftheEgyptianbankingsector
Item Indicators
Netinternaonalreserves:endofFY2011/12
EndofMarch2013
USD15.5
billion
USD13.4
billion
USDexchangeratechange(JulyDecember2012) 1.7%
Banks'nancialsoundnessindicators(FY2011/12)including:
Capitaladequacyrao
Nonperformingloanstototalgrossloans
Loanprovisiontononperformingloans
15.7%
9.9%
95.4%
TotalcreditfaciliesbalancebytheendofDecember2012(EGPmillion):
Government
Nongovernment
516842
35141
481701
Developmentofinterestratesondepositsandloans(December2012):
Interestonloansforlessthanorequallingoneyear
Interestondepositsformorethansixmonthsandlessthanorequallingoneyear
Interestondepositsformorethanthreemonthsandlessthanorequallingsix
months
Interestondepositsformorethanonemonthandlessthanorequallingthree
months
12.2%
9%
7.9%
7.6%


As for the development of interest rates on deposits and loans, which reflect the sector per
formanceduringDecember2012,thetableindicatestheslightincreaseoftheinterestrateonloans
for less than or equaling one year up to 12.2 percent in the last week of December 2012. Interest
ratesondepositsformorethansixmonthsandlessthanorequalingoneyearupto9percentdur
ing the same period. The interest rate on deposits for more than three months and less than or
equaling six months did not change during November and December 2009, remaining at 7.9 per
cent.Theinterestrateondepositsformorethanonemonthandlessthanorequalingthreemonths
amountedto7.6percentduringthelastweekofDecember2012.

In spite of the efforts exerted by the government and the Central Bank to overcome the
negativeeffectsofthecurrentsituation,some challenges still hinder the Egyptian banking sec
torincludingthepoliticalandsecurityinstabilityinEgypt,thenegativeimpactontheinternational
reserve,whichwentdowntoUSD13.4billioninMarch2003,theemergenceofaparallelFXmar
ket, which overwhelmed the official market and the decline of Egypt's credit rating over the past
twoyearsaccordingtotheinternationalratingagenciesreports.However,thegovernoroftheCen
tral Bank said that the decline of credit rating has not affected much the Egyptian banks for they
arenotborrowersfromabroadwhilethemaineffecttakesplaceduringexternaltransactionsespe
ciallywhenopeningdocumentarycreditsandlettersofguarantee.

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a.MarketTotals
EGXhaswitnessedarelativelyhightradingrecordsin2012comparedto2011,registeringatrad
ingvalueofEGP185billionasopposedtoEGP148billionlastyear.Moreover,thevolumetraded
soaredtoreach34billionsecuritiesin2012comparedto18.5billionsecuritiesin2011.
Likewise, the number of transactions recorded 6 million transactions in 2012 versus 5.6 million
transactionsin2011.
ThevaluetradedofthemainmarketamountedtoEGP166.5billionin2012comparedtoEGP 131
billion in 2011. Worth mentioning that a deal was executed on Egyptian Company for Mobile Ser
vices(MobiNil)inMay2012,withavalueofEGP19billion.
Additionally,volumetradedofthe mainmarket reached 33 billionsecuritiesthis year as opposed

to17billionsecuritiesin2011.
Ontheotherhand,OvertheCounter(OTC)marketregisteredatradingvalueofEGP18billiondur
ingtheyearcomparedtoEGP17.5billionin2011.Meanwhile,theOTCtradingvolumeretreatedto
1.4billionsecuritiesin2012,downfrom1.6billionsecuritieslastyear.
Fromantherperspective,Nilexmarkettradingfiguressurgedin2012comparedtotheyearbefore,
recordingatradingvalueofEGP247millioncomparedtoEGP191millionin2011.
Moreover,thetradingvolumeamountedto81millionsecurities in2012asopposedto31million
securitieslastyear.
Themarketcapitalizationofthemainmarketlistedstockswitnesseda28%increasein2012,con
cludingtheyearatEGP376billionasopposedtoEGP294billionattheendof2011,representing
24%ofGDP.

MarketAggregates
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Table(1):SectorIndices,5MostActiveSectorsintermsofVolumeTradedin2012
Source:TheEgyptianExchange
Fig(2):SectoralIndicesPerformancein2012

The Egyptian Exchange grew by 51 percent during 2012; a level, which has not been achieved
since2007.Thestockmarketisalmostthesoleeconomicsector,whichmanagedtogrowassuch
amidst these events in spite of the remarkable fluctuations in the market during 2012. All in all,
the Egyptian Exchange has attained a record growth, with is the highest among all emerging and
developedexchanges(followingTurkey)in2012.

Attheleveloftradevolumesin2012,themarket'sperformanceimprovedcomparedtotheprevi
ous year, with the volume jumping to 34 billion securities; a figure, which has not been achieved
evenduringthepreRevolutionperiod.ThevalueoftradeamountedtoEGP185billioncompared
to EGP 148 billion in 2011. The number of transactions implemented went up to over six million
transactions compared to 5.6 million transactions in 2011. The market capitalization of shares
listedonthemanmarketsoared toEGP376billionbytheendof2012comparedtoEGP294bil
lionbytheendof2011.TheEgyptianExchangeisexpectingmoreeconomicandpoliticalstability
inordertorealizemoregrowthintheperiodtocome.
TheEgyptianmarketwitnessedanoutstandingperformanceduringtheyear2012,withallindices
realizing gains. EGX 30 index surged by 51% over the year. Likewise, EGX 70 & EGX 100indices
soaredby15%&24%,respectively.
TheEgyptianmarketstartedtheyearonapositivenote,followingtheparliamentaryelectionsand
thetransferoflegislativepowertotheparliament.Themarketcontinueditsgoodperformancetill
theendofFebruary&tookoffremarkablyduringthemonthofMarch.
The market, however, pulled down affected by the political unrest related to the constitutional
committee & the preparation for the presidential election. This lackluster performance lasted till
theendofthePresidentialelection'ssecondround.
With the beginning of the 2nd half of the year, the market showed an upward tend performance
tillthemonthofNovember,duringwhichpoliticaltensionstookplace,whichaffectedthemarket
negatively till the beginning of December. The market, however, rebounded again on the back of
the finalization of the constitutional referendum, which pushed the market up to continue rising
tilltheendoftheyeardespitebeingdisturbedbythecreditratingdowngrade.
All sectors traded on the Egyptian Exchange recorded an increase during the 2012 transactions,
with the basic supplies sector accounting for the bulk of increase by 146 percent, followed the
bankssectorwith82percentingrowth.
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Fig(1):MarketIndicesPerformancein2012
SectoralIndicators


b.EGXIndices'Constituents
EGX30 achieved EGP 81.3 billion in the value of tradeand 26.4 billionsecurities in the volumeof
trade during 2012. The value and volume of trades for EGX70 amounted to EGP 40.1 billion and
5.2billionsecuritiesrespectively.ThevalueoftradeonEGX70amountedtoEGP121.4billiondur
ing2012whilethevolumeoftradeonEGX70reached31.6billionsecurities.
Fig(3):MonthlyTradingValueandVolumeduring2012
Fig(4):Listedvs.TradedCompaniesintheMainMarket(20072012)
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Fig(5):TradingValue&Volume(20072012)


c. Activities of the most ten active companies in terms of the volume and value of trade on
themainmarket
Oracrom Telecom, Media and Technology was ranked first in terms of the volume of trade on the
main market during 2012, having recorded 10.9 billion securities in the volume of trade and EGP
9.5billioninthevalueoftrade.ItwasfollowedbyPalmHillsforDevelopmentwithEGP2.7billion
inthevolumeoftradeandEGP5.8billioninthevalueoftrade.Thefollowingtableshowsthemost
tenactivecompaniesintermsofthevolumeandvalueoftradeonthemainmarket:
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Fig(6):TradingValueandVolume&No.ofTradesin2012
Table(3):TheMostTenActiveCompaniesinTermsoftheVolumeandValueofTradeon
theMainMarketin2012
Table(2):TradingValueandVolume&No.ofTradesin2012

PerformanceoftheNileExchangelistedcompanies
The Nile Exchange recorded a relative increase in the volume of trade during 2012 compared to
2011, with the volume of trade more than doubling to 81 million securities, while the value of
tradeincreaseduptoEGP247millioncomparedtoEGP191millionduring2011.Thenumberof
theNileExchangelistedcompanieswas22bytheendof2012.

AIndividualsvs.Institutions
TheEgyptianmarketwasdominatedbyInstitutions,accountingfor50%ofthevaluetradeddur
ing 2012, as opposed to 59% during 2011. Likewise, individuals accounted for 50% of the value
tradedduring2012,asopposedto41%duringthepreviousyear.
Meanwhile,institutionsendedtheyear2012asnetsellers,recordingnetoutflowsofEGP1.5bil
lionversusEGP1billionnetoutflowsduring2011,afterexcludingdeals.
Table(4):NilexCompaniesPerformancein2012
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InvestorsTradingActivityintheEgyptianMarket
Fig(7):Individualsvs.InstitutionsinTermsofValueTradedin2012


BEgyptiansvs.Foreigners
Foreignersaccountedfor21%ofthetotalvaluetradedin2012,ofwhich6%wascapturedbyArab
investors, while the remaining 15% was captured by nonArab foreign investors, after excluding
deals.
ThenonArabforeigninvestors'tradingactivitywassignificantlyaffectedbythesuccessiveevents
Egyptwitnessedwhichledtoastateofpoliticalunrest.Asaresult,theygeneratednetoutflowsof
EGP3.6billioncomparedtonetoutflowsofEGP4.3billionin 2011.Meanwhile,Arabinvestorsre
corded net inflows of EGP 1.6 billion compared to EGP 188 million net inflows in 2011, after ex
cludingdeals.

Themarketcapitalizationofthelistedstocksonthemainmarketinchedupby28%during2012to
culminate at EGP 376 billion, recording an increase of more than EGP 82 billion and representing
24%oftheGDP,asdepictedinthetableandthefigurebelow.

Fig(8):Egyptiansvs.ForeignersinTermsofValueTradedin2012
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MarketCapitalization
Table(5):MarketCapitalizationIndicesin2012vs.2011
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The bond market's trading activity surged remarkably during 2012 as opposed to the previous
year.ThevaluetradedofbondsreachedEGP38billioncomparedtoEGP31billionin2011.Like
wise,thevolumetradedofbondsrecorded37.5millionbondsversus35millionbondsin2011.
TreasurybondsissuedthroughthePrimaryDealersSystemstillaccountforthelionsshareofthe
total bond's trading activity, making up 99.8% of the total bonds' trading value and 98% of the
totalbonds'tradingvolumeduringtheyear.
Meanwhile,corporatebondswitnessedadeclineintheirtradingactivityin2012,withtheirvalue
traded registering EGP 68 million, down from EGP 227 million last year. Similarly, corporate
bonds'tradingvolumereached760thousandbondsversus1.7millionbondsin2011.

Bonds
Table(6):TradingAggregatesforBondsin2012
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FDI flowsarea main source of external financeto developingcountries, being used to financethe
gap between investment and domestic savings. FDI has positive impact on the national economy,
beingabletotransferadvancedtechnologyandmarketingandadministrativeexpertiseaswellas
contributing into raising the productivity level and creating more jobs. As such, both developing
anddevelopedcountriesseekstoputinplacepolicies,whichhelpattractFDI.
DuringthefirsthalfofFY2012/13,FDInetinflowsamountedtoUSD301.4millionduetothede
clineofFDIinthepetroleumsector.Investmentsinnewestablishmentsorexpansionsachievednet
inflows of USD 979.6 million compared to USD 1.4 billion during the corresponding period of FY
2011/12. ThefollowinggraphpresentsFDIinflowssinceFY2003/04untilthefirsthalfofFY
2012/13:

DuringQ1ofFY2012/13,netFDIdeclinedby94percentofUSD1.75billiondowntoUSD108mil
lioncomparedtoUSD1.8billionduringthelastquarterofFY 2011/12.NetFDIrecordeditshigh
estlevelinEgyptinFY2007/08,havingreachedUSD13.2billion.Thefollowinggraphpresentsthe
sectoral distribution of net FDI flows during FY 2010/11 and 2011/12 and the first half of FY
2012/13:

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Fig(1):NetFDI(FY2003/04FirstHalfofFY2012/13)
Fig(2):FDIBreakdown(2010/11FirstHalfofFY2012/13)
2 .2
2 .1
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1 .7
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20 10/ 20 11 2 01 1/ 201 2 S em i An nu al
20 12 /2 01 3
Ne w es ta blis hmen ts & ex pa nsi on s Sa le of ass et st on on re sid en ts
In flo ws in th ep et rol eu ms ec tor Re al Sta te
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The table below shows the sectoral distribution of net FDI flows since FY 2005/06 until the first
halfofFY2012/13:

AlthoughthevolumeofFDIdeclinedduringthefirsthalfofFY2012/13inEgypt,theoverallinvest
ment climateis attractive and encouraging for investments. Recent efforts managedtoattractArab
and foreign capitals and investments by signing contracts or agreement with foreign companies to
establishprojectsinEgyptasfollows:
Samsung hasestablished its first plant in Egypt for investments of EGP 1.7 billion. The Headof
Samsung MENA said that his company is committed to supporting the Egyptian economy. He
added that Egypt was selected from among MENA countries to establish the first Samsung plant
fordigitalTVscreensforitssignificantlocationandoutstandingtechnicalandlogisticalpotential.
The new plant will be established in Abo Radi, Beni Suef over 370,000 square meters and for in
vestmentsofUSD1.7billion.
InJuly2012,theFrenchL'OralGroupforCosmeticsandEmerisforIndustrialMetaldecidedto
injectnewinvestmentsinEgypttotalingEuro45million.Theinvestmentcoverstheestablishment
ofaL'OralGroup'sfirstplantintheMiddleEastintheTenthofRamadanCitytoexportthecom
pany'sproductsworldwide.Emeriswillestablishaplantforproducingcomponentsoftheceram
icsindustryintheJordaniancompoundsintheTenthofRamadanCity.
ThefirststyreneandpolystyreneplaninEgyptinAfricawasestablishedinAlDekhelaPort,Al
exandria for an investment cost of USD 408 million, which is 100 percent Egyptian capitals with
inputsfromthepetroleumsector,MinistryofFinanceandNationalInvestmentBank.Thecapacity
oftheplantis200thousandtons/yearofthetwomaterials,whichareusedinseveralindustries
including the manufacturing of fridges, electric device structures, automotive complementary in
dustries, medical appliances and packaging materialsThe value of production is USD 400 million
including100thousandtonsforexport,achievingreturnsofUSD180million.Thenewplantwill
make available the polystyrene locally, which is equal to USD 220 million. Some 6,500 direct and
indirectjobswillbecreatedinfirstphase.
BritishGasdecidedtoinjectUSD3to5billionintodevelopmentprojectsinEgyptinadditionto
itscurrentinvestmentsofUSD10billioninexplorationandexcavation.Beingoneoftheexcellent
companiesinthefieldofexplorationonseasandwells,thecompany'sbusinessincludesdeepsea
spotsinAfricaandtheMiddleEast.
It was agreed that the Indian TATA, a major global company, will establish a new giant invest
mentprojectinEgypttomanufactureitsfamousbrandedcars.
The Ministry of Investment concluded successful negotiations with the Malaysian Petronas to
inject new investments into the Egyptian market, including a giant oil and grease product com
pany for investments of USD 100 million. The company will export its products to the Egyptian,
AfricanandMiddleEastmarkets.
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Table(1):sectoraldistributionofnetFDIflowssinceFY2005/06untilthefirsthalfofFY
2012/13:
USDBillion


Total investments implemented during the first half of FY 2012/13 amounted to EGP 111.3 billion,
the bulk of which was accounted for by the private sector with EGP 78.6 billion or 29.4 percent of
these investments. The public sector's share amounted to EGP 32.7 billion or 32.7 percent of these
investments.The following graphshowstotalpublic and private investments implemented since FY
2003/04untilthefirsthalfofFY2012/13:

DuringthefirsthalfofFY2012/13,atotalof4116newcompanieswereestablishedwithtotalissued
capitalofEGP5716million,comparedtosome3277newcompanieswithissuedcapitalofEGP5709
during the corresponding period of FY 2011/12. The following graph presents the development of
companyestablishmentsduringthefirsthalfofFY2004/05untilFY2012/13:
Theabovegraphindicatesanincreaseinthenewestablishmentsby20.4percentduringthefirsthalf
of FY 2012/13 compared to the corresponding period of FY 2011/12. The first half of FY 2012/13
recordedthehighestlevelofcompanyestablishmentcomparedtothecorrespondingperiodsinceFY
2004/05.

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1.TotalImplementedInvestments
Fig(1):PublicandprivateinvestmentssharesinthetotalimplementedinvestmentsinEGP
billion(FirsthalfofFY2002/2003FirsthalfofFY2012/2013)
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2.NewEstablishments
Fig(2): Newly established companies (First half of FY 2004/2005 First half of FY
2012/2013)
Source:GAFI
EGPBillion

Thefollowinggraphshowsthedevelopmentofissuedcapitalofcompaniesestablishedsince
FY2004/05untilthefirsthalfofFY2012/13:
TheabovegraphindicatesthatthefirsthalfofFY2006/07witnessedthelargestissuedcapitalcom
paredtothecorrespondingperiodsofthecomparisonyears.It alsoindicatesthat issuedcapitalin
creased slightly during the first half of FY 2012/13 compared to the corresponding period of FY
2011/12.ThefollowinggraphpresentsthenumberofcompaniesestablishedfromFY2004/05until
thefirsthalfofFY2012/13:
TheabovefigureindicatesthatFY2007/08,2009/10and2011/12haveachievedthehighestrates
ofestablishmentsandthattheestablishmentof4,116companiesduringthefirsthalfofFY2012/13
only,whilemaintainingthesamerateuntiltheendofthecurrentfiscal,signifiesahighrateofestab
lishmentofcompaniesbytheendofFY2012/13justlikethesaidpreviousyears.

Fig(4):Newlyestablishedcompanies(2004/2005FirsthalfofFY2012/2013)
Source:GAFI
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Fig(3): Issued capital for newly established companies (First half of FY 2004/2005First
halfofFY2011/2012)
Source:GAFI


The following graph presents capital issued in companies established from FY 2004/05 until
thefirsthalfofFY2012/13:
The above figure indicates that FY 2006/07 has recorded the largest issued capital, followed by FY
2007/08. Capital issued in companies established during the first half of FY 2012/13 amounted to
EGP5,716million.
TheservicesectoraccountedforthebulkofinvestmentsduringthefirsthalfofFY2012/13,having
attracted1761newcompanies,followedbythemanufacturingsectorwith1105newcompanies.The
graph belowpresents thesectoraldistributionof newcompanies establishedduringthe first half of
FY2012/13comparedtothefirsthalfofFY2011/12:

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Figure(5)IssuedCapitalinNewEstablishments(FY2004/05FirsthalfFY2012/13)
Source:GAFI
Sectoraldistributionofnewestablishments
Fig(6):SectoralDistributionofnewlyestablishedcompanies(FirsthalfofFY2011/2012
FirsthalfofFY2012/2013)
Source:GAFI

The manufacturing sector accounted for the bulk of capital issued during the first half of FY
2012/13,havingattractedEGP2421.3million,followedbytheconstructionandbuildingsectorwith
EGP 1340.8 million and the service sector with EGP 1170.9 million in issued capital. The following
graphpresentsissuedcapitalofcompaniesestablishedduringthefirsthalfofFY2012/13compared
tothecorrespondingperiodofFY2011/12:

Cairo attracted the largest number of new establishments during the first half of FY 2012/13, with
1958newcompaniesfollowedbyGizawith893newcompanies.Thefollowinggraphpresentsthe
geographical distribution of new companies and issued capital during the first half of FY
2012/13comparedtothefirsthalfofFY2011/12:

Fig(7):SectoraldistributionofIssuedcapitalfornewestablishments:
Source:GAFI
Fig(8): Geographical distribution of new establishments (First half of FY 2011/2012
FirsthalfofFY2012/2013)
Source:GAFI
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Geographicaldistributionofnewestablishments


Cairo accounted for the bulk of issued capital, having attracted EGP 2833.2 million, followed by Giza with
EGP 862.1 million in issued capital. The following figure indicates the geographical distribution of
companies established during the first half of FY 2012/13 compared to the corresponding period of
FY 2011/12:

NewcompaniesestablishedduringthefirsthalfofFY2012/13areestimatedtoprovide46993new
jobs for Egyptians as follows: 55 percent for males, 7 percent for females and 38 percent for either
males or females. The following graph presents the distribution of new jobs for Egyptians by
gendersinceFY2007/08untilthefirsthalfofFY2012/13:

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Fig(9):Issuedcapitalinnewestablishmentsbylocation:
Source:GAFI
EstimationofjobsforEgyptiansinnewestablishments
Fig(10): No. of job opportunities created for Egyptians by newly established companies
(FY2007/2008FirsthalfofFY2012/2013)
Source:GAFI


The following graph presents the sectoral distribution of job estimations in new companies
establishedduringthefirsthalfofFY2012/13:

The above graph indicates that the manufacturing sector has attracted the bulk of new jobs esti
matedduringthefirsthalfofFY2012/13,havingaccountedfor23378jobs,followedbytheservice
sector (12518 jobs), the construction and building sector (4567 jobs), the agriculture sector (3370
jobs),thetourismsector(1625jobs),theCITsector(1474jobs)andthefinancesector(61jobs).

DuringthefirsthalfofFY2012/13,some710companieswereexpanded,withissuedcapitalofEGP
35940 million compared to 852 companies expanded with issued capital of EGP 15882.7 million
during the corresponding period of FY 2011/12. Thefollowingtablepresentsthesectoraldistri
bution of expansions in existing companies during the first half of FY 2012/13 compared to
thecorrespondingperiodofFY2011/12:
Fig(11): Sectoral distribution of no. of job opportunities created for Egyptians by newly
establishedcompanies(FirsthalfofFY2012/2013)
Source:GAFI
3.Expansions
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Table (1): Sectoral Distribution of Expansions in Existing Companies (First half of FY

2011/12FirsthalfofFY2012/13)
Source:GAFI
Sector FirsthalfofFY2011/12 FirsthalfofFY2012/13
No.of
Companies
Value
(EGPmillion)
No.of
Companies
Value
(EGPmillion)
CIT 33 254.3 26 285.7
Construconandbuilding 102 1790.7 67 803.5
Finance 30 1361 23 1827.6
Services 255 3020.8 261 23202.2
Agriculture 23 1097.7 27 371.6
Tourism 149 1669.9 60 1922
Industry 260 6688.4 246 7527.3
Total 852 15882.7 710 35940


The above table indicates that the service sector accounted for the bulk of capital issued in expan
sions during the first half of FY 2012/13, having attracted EGP 23202.2 million, followed by the
manufacturing sector (EGP 7527.3 million), the tourism sector (EGP 1922 million) and the finance
sector (EGP 1827.6 million). Thefollowingtablepresentsthegeographicaldistributionofcapi
tal issued in expansions during the first half of FY 2012/13 compared to the corresponding
periodofFY2011/12:

TheabovetableindicatesthatCairoattractedthelargestnumberofexpansionsinexistingcompanies
during the first half of FY 2012/13, having attracted 255 companies with issued capital of EGP
24387.3 million, followed by Giza with 152 companies and EGP 2665.6 million in issued capital and
theLowerEgyptgovernorateswith137companiesandEGP2605.5millioninissuedcapital.

The Ministry of Investment and the General Authority for Investment and Free Zones en
deavor to create an investment conducive climate and attract and encourage domestic, Arab
and foreign investments. A set of procedures have been taken recently to surmount barriers
toinvestments,attractmoreinvestmentandcreatemorejobs.Thefollowingmainprocedures
havebeentakenduringthefirsthalfofFY2012/13:

1.TheGeneralAuthorityforInvestmentandFreeZonesadoptsaclearandintegratedvision,which
isbeingimplementedincooperationwithallrelevantministriesandbodies.Ittargetstoencour
agetheinformalsector'sprojectstojointheformalsector,increasingtheirlevelsandimproving
theirproductivity.Thevisionalsoincludesimprovementofstandardsoflivingofsome8million
workersintheseprojectsasfollows:

Taxexemptionfortheseprojects'activitiesbeforejoiningtheformalsector;
The possibility of obtaining a temporary licenses following finalization of procedures necessary
to perform an official business provided that a permanent licenses should be obtained within
threemonthsifproceduresareproper;
Allocating a window in all GAFI's one stop shops for a quicker finalization of procedures and a
betterservicedelivery;
Table(2):GeographicalDistributionofExpansionsinExistingCompanies(FirsthalfofFY
2011/12FirsthalfofFY2012/13)
Source:GAFI
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GeographicalDistribuon
ofGovernorates
FirsthalfFY2011/12 FirsthalfFY2012/13
No.of
Companies
Value
) EGPmillion)
No.of
Companies
Value
) EGPmillion)
SixthofOctober 26 655.8 20 1048.1
Alexandria 76 1940.8 52 1911.1
Giza 176 3038.8 152 2665.6
Cairo 323 5599.6 255 24387.3
Helwan 19 141.4 13 154
BorderGovernorates 33 872.8 24 772.5
CanalGovernorates 23 1248.8 18 1945.1
LowerEgyptGovernorates 132 1854.7 137 2605.5
UpperEgyptGovernorates 44 530.2 39 450.8
Total 852 15882.7 710 35940.0
4.ProcedurestoimprovetheinvestmentclimateinEgypt

GAFI's "Bedaya Center for SMEs and Entrepreneurship" provides all forms of technical and
trainingsupporttoprojectownerstobequalifiedtojointheformaleconomywiththenecessary
economicexperienceandknowledge;
2. The General Authority for Investment and Free Zones has prepared a promotional plan to at
tract investmentsto Egyptincluding such main pillars asprovidinganadequate support todo
mestic and foreign investors by offering integrated investment opportunities, with a view to
achievingtheobjectivesofboththestateandinvestors.Theplanincludesselectivefocusonspe
cificprojectsandcountriesintheexternalpromotionalcampaigns.Targetsectorsincludetrans
portandinfrastructure,logisticalservices,retail,touristdevelopmentandagriculture.

3.A ministerial committee hasbeen set up to examine andfollow up theenergy file. The sixminister
committee currently examines aspects and issues related to the provision of energy to investment
projects. It aims atfindingout successfuland quick mechanisms and solutions to maintain rights of
thestateandinvestors,helpimproveproductionandaddressinvestors'issues.
4.Thegovernmenthasadoptedseveralprocedurestosupportcompaniesduringthecurrenteconomic
conditionsincludingdecreelawNo.4for2012onthesetupofinvestmentdisputesettlementcom
mittees.
5.The government has approved nine investment dispute settlements presented by the Investment
Dispute Settlement Committee with different bodies including the Tax Authority, GAFI, Ministry of
Justice,municipalitiesandtheMinistryofHousing.
6.TheMinistryofInvestmentisexaminingthesettlementofcaseof17propertyinvestmentcompanies
tomaintaintherightsandinterestsofcompaniesandthestate.
7.AnofficewassetupintheMinistryofInvestment,whichincludesadvisorsandcompetentfiguresto
solveissuesofSaudiinvestors.TheRegionalOfficefortheArabFederationisestablishinganofficeto
finalizeinvestors'licensestoovercomebureaucracyindifferentministries.
8.The government will soon finalize settlement with some investors who have issues in accessing
lands. Recent amendments of the law allow for settlement with businessmen even in the case of
judgmentinabestenia.Thisispartofthegovernment'sactiontoencourageinvestments.
9.ApprovingtheestablishmentofaspecialsoftwarebuildinginNasrCityFreeZonetoserveasthefirst
IT free zone in order to develop this vital sector, which is well known as a large job provider for
youth.Moreover,thistargetstorestoreEgypt'sadvancedregionalandglobalpositioninthefieldof
outsourcingandsupportinitialstepstotransformintotheknowledge.
10.ApprovingtoextendthedeadlineforestablishingtheTechnologicalZoneinMaadiuntil2017within
GAFI'seffortsoffacilitationforseriousinvestorsandattractmoreITinvestments.
11.GAFI board of directors resolved to consider the establishment of a new investment zone in
Qalioyebiatoimplementagriculturalmanufacturingprojects.
12.GAFI has resolved to a provide a proposal to the Cabinet on the use of a number of lands for PPP
development in order to establish new urban communities without adding more burdens to the
state'sbudgets.

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AspartofeffortsexertedbythestateandtheMinistryofInvestmenttoprovideanumberofinvest
mentactivities,whichallowinvestorstohaveaccesstoprivilegesandfacilitiesbasedonthetypeof
business, sector and location, work is being developed in free zones, investment zones and the
NorthWestGulfofSuezSpecialEconomicZoneasfollows:

FreeZonesareaninvestmentsystembywhichthestateseekstoattractinvestmentstoestablishor
expandprojects,capableofaddingvaluetothenationaleconomy.Thesystemisbasedonfourstra
tegic objectives: creating genuine jobs; attracting necessary technology to advance national goods
and services;contributing into maximization of exports; providing free currencies tofinance stra
tegiccommodityimports.
Freedomtoselecttheinvestmentfield.
Freedomtorepatriateprofitsandcapital.
Freedomtoimportfromlocalorexternalmarkets.
Freedomtopriceproducts.
Freedomtoimportandexportwithoutbeinglistedintotheimportersandexportersregistry.
Norestrictiononthenationalityorlimitationofcapital.
A project's imports and exports are not subject to import and custom rules applicable in the
country.
Exemptingaproject'scapitalassetsandinputsfromtaxesandcustomduties.
Theimportsandexportsoffreezoneprojectsareexemptedfromtaxesandcustomduties.
Localcomponentsarefullyexemptedfromcustomdutiesinthecaseofsaletolocalmarkets.
Projectsarenotnationalizedorconfiscated.
GenerallitigationsarenotfiledagainstprojectswithoutobtainingGAFI'sapproval.
Foreigninvestorsaregrantedresidencefacilities.
Foreignstaffisgrantedresidencepermitsbasedonrequestsfromprojects.

Specialinvestmentzonesarethoselandsallocatedforestablishinginvestmentprojectsinorderto
provideandcarryoutadistinguishedadministrativeapproach,whichiseasyandflexiblebyhaving
governmentbodiesdealingwithprojectsinoneplacetomakerenderprocedureseasierforinves
tors.Privilegesofinvestmentinthespecialinvestmentzonesareasfollows:

Business homogeneousness in the single zone, offering competitive costs for operation and
marketingthankstoindustrialintegration.
Unique administration system that facilitate the application of all management procedures
throughdealingwithonesingleregulator.
Norestrictionsoverprojects'capitalandlegalform.
Projectsestablishedintheinvestmentzoneshavetherighttodealwiththelocalmarket..
Streamlinedcustomssystemforsmootherimportationandexportationfortheprojectsatthe
zone.
Availabilityofapackageoflogisticservicesforprojects.
Goods manufactured within investment zones enjoy the Egyptian origin feature as regards to
bilateralagreementswithArabandAfricancountries(COMESAEuropeanAssociation),
Projectsestablishedintheinvestmentzonesenjoytheincentivesthatarementionedinthe
investmentlaw.

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1.FreeZones
2.SpecialInvestmentZones


The NorthWest Gulf of Suez Special Economic Zone (SEZone) is the first investment zones to be
establishedinEgypt,servingasamodelforothereconomiczonesinthefuture.Oncethedevelop
ment works are finalized, the zone will increasingly attract giant investment projects, being a
promising destination of global investments. MainadvantagesofinvestmentinSEZoneareas
follows:
10percentincometax.
5percenttaxonbusinessgains.
100percentexemptionfromcustomdutiesandsaletaxesonthezone'simports.
Enjoyingprivilegesofinternationaltradeagreements.
Onestopshopprovidesallfacilitiestoinvestorswithinthezone.
IssuingEgyptiancertificatesoforigin.
Paymentofcustomdutiesonforeigncomponentsonlyinthecaseofimporttolocalmarkets.
Adistinguishedlocationforlogisticoperationsandaddedvalueindustries.
CompetitivepricesforshippingtomainEgyptianandforeignports.
Astrategiclocation,whichisacrosswayformorethan10percentofthevolumeoftrade.
1. Simplificationandfacilitationofinvestmentprocedures
The General Authority for Investment and Free Zones has taken several procedures to simplify
andfacilitatetheinvestmentproceduresinfreezonessothatprojectsworkingunderthissystem
canachievetheirstrategicobjectives.Theseproceduresareasfollows:
a. Streamlining dealing with projects by preparing a working paper on necessary amendments

tolawsandexecutiveregulations,whichgoverninvestmentsinfreezones.
b. Alleviatingprojects'burdensandrenewinglicensesofprojectsworkinginthefieldofstoring
uses cards for one year; then each case will be examined separately when applying for re
newal.
c. Reducing approvals and licenses for projects, which do not comply with the requirements of
approvalsbasedontherealaddedvalueachievedbytheseprojectstothenationaleconomy.
The objective of this is to achieve the optimum use of lands in their possession for new pro
jects in public free zones, with the occupation rate approaching 100 percent in public free
zones. The procedure also seeks to filter free zones from unserious projects, which do not
abidebytheregulationsoffreezonesorthoseviolatingthelawanditsexecutiveregulations.
d. Developing services rendered to projects whereby procedures taken to improve free zones
and working systems in administrative bodies have led to growth of services provided by
thesebodiesonfreezonestoprojectthereupon.
e. Supportingtheworkingsystemofprojectsandencouragingsuspendedprojectstocommitto
set off their activities after examining or directing each project to change its business to an
activity,whichachievesasaddedvaluetothenationaleconomyandprovidegenuinejobs.
2. Improvementoffreezones'performance
Totalareasofpublicfreezonesamountedto10.7millionsquaremetersbytheendofFY2011/12.
The General Authority for Investment and Free Zones is currently examining the economic feasi
bility of creating new public free zones. Areas ready to receive projects amounted to 6.9 million
square meters or 65 percent of total areas for public free zones, totaling 10.7 million square me
ters by the end of FY 2011/12. The number of projects established under the free zone system
amountedto1108projectsbytheendofFY2011/12,forcapitalofmorethanUSD9.1billionand
investment costs of USD 17.9 billion. These projects provide some 213.9 thousand jobs for esti
matedwagesofmorethanUSD264milliononaverageperyearandproduceexportsofsomeUSD
16.2billion.

3.NorthWestGulfofSuezSpecialEconomicZone(SEZone)
Maindevelopmentsinthethreezones:
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As part of the state's efforts to simplify and facilitate procedures for investors, Law. No. 19
for 2007 has been issued to amend some provisions of the Investment Guarantees and In
centives Law No. 8 for 1997, whichstipulates for establishing investment zones. Thevision
for establishing special investment zones includes the implementation of a simplified ad
ministrative approach to the investment procedures by having government bodies dealing
withprojectsinasingleplace.Maindevelopmentsintheinvestmentzonesareasfollows:

Approvingtheestablishmentoffiveinvestmentzonesfordifferentindustriesincludingfabrics
and ready made garments; engineering industries; building materials and food industries.
Thesezoneshavecommencedtheinfrastructureworksandstartedtoreceiveinvestors'appli
cations.Boardsofdirectorshaveapproved201projectstosetoffbusinessinthesezones.
Approving the establishing of four investment zones including three for high education and
academicresearchincooperationwiththreeEgyptianuniversities.
Establishing a technological investment zone in Maadi in cooperation with the Ministry of
Communication and Information Technology; five projects have been approved to operate
withinthezone.
Approving the establishment of two investment zones in MeetGhamr and ArdAlSaff for SMEs
andtheestablishmentofaninvestmentzoneinCairoAirportincooperationwiththeEgyptian
HoldingCompanyforAirportsandAirNavigationcomprising14projects.

Action is being taken to harness all efforts and support to give the priority of development to the
NorthWestGulfofSuezSpecialEconomicZone,transformingit intoamaineconomicsetoffloca
tionsintheperiodtocome,especiallywiththecommencementoftheSuezCanalAxisDevelopment
project.

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Table (1) The Situation of Investments in Free Zones in FY 2011/12 compared to FY

2010/11
Source:GeneralAuthorityforInvestmentandFreeZones
Situaonin EndofFY
2011/12
EndofFY
2010/11
Volumeof
change
Percentage
ofChange
(%)
No.projectsestablishedunderthe
freezonesystem
1108 1120 12 1.1
InvestedCapital(USDbillion) 9.1 9.3 0.2 2.2
Arabandforeigncontribuons(USD
billion)
1.9 1.9 0
Investmentcosts(USDbillion) 17.9 17.1 0.8 +4.7
Jobscreated(thousandworkers) 213.9 224.9 11 4.9
Targetedannualwages(USDmillion) 264 360 96 26.7
No.projectswhichstartedacvity 883 882 +1 +0.1
Volumeofbusinessforprojects
duringtheyear(USDbillion)
16.2 14.9 1.3 +8.7
II.InvestmentZones
III.NorthWestGulfofSuezSpecialEconomicZone(SEZone)


Proceduresarebeingtakentoannounceofferingofthelargestindustrialeconomiczonein
Egypt over GAFI's land (20 square kilometers). The offer will be made to domestic and in
ternational investors. The project will be offered to international investors under a fifty
year usufructory system and will be available for local and international developers. The
planincludesthedevelopmentofthezoneusingthefollowingprocedures:
Exerting more efforts to implement schemes for the zone to transform the SEZone into a
globaldestinationforindustriesandlogistics.
Maximizingbenefitfromtheuniquelocationandtheinvestmentandtaxsystemsofthespecial
economiczonesunderLawNo.83for2002,whichimposes10percenttaxoncompaniesand
5percenttaxonindividuals.
Creatingspecialcustomdepartmentsandprovidingseveralexportadvantageswithaviewto
laborintensiveactivitieswithahighaddedvaluetotheEgyptianeconomy.
Action not to use the highest price criteria only as a basis for competition over the develop
ment ofthe zone. Rather, priority will be given tothepaceof implementation and offersap
plyingforusufructoryinforeigncurrencies.
AttractinglocalandforeigninvestmentsofUSD10billion,allowing140to150thousandjobs
forEgyptiansfromtheSuezCanalarea.

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Smallandmediumsizedenterprises(SMEs)inEgyptfaceanumberofchallengesandobstaclesto
their expansion, growth and investment. These include multiplicity of bodies, which provide sup
port to SMEs, lackof coordinationamong them, lack ofan agreedupon definitionof SMEs, lackof
availabledataandabsenceofanaccuratelistofthenumberofSMEs.
To face these challenges, the General Authority for Investment and Free Zones has established
"Bedaya Center for Entrepreneurship and SMEs Development" in January 2010. The center facili
tatesSMEs'accesstononfinanceservicesintheformofdirectadviceandtechnicalsupportaswell
asthe directfinance services fromthe Investment Fund for SMEs Finance. Thecenteradoptsthe
followingprograms:

TheBusinessClinicsProgramwaslaunchedinJuly2011toprovidebusinessdevelopmentservices
or nonfinance services to ensure growth of SMEs so that technical support and economic advice
arerenderedtoenterprisesbycreatingalargedatabaseofadvisorsandvoluntaryexperts.

The program targets to upgrade youth's projects and SMEs to be the main driver of job creation
andeconomicdevelopment.Italsoaimstoprovideconduciveenvironmentforthedevelopmentof
entrepreneurship and innovation among the youth and provide skills and potential necessary to
creategenerationsofentrepreneurswhoareabletodeveloptheeconomy,achieveanaddedvalue
andcreatenewjobsby:
1. Coordinationandliaisingbetweengovernment,nongovernmentbodiesanddonorsaswellas
educationandresearchinstitutionsandtheprivatesectorinEgyptinordertocreateanenvi
ronment,whichisconducivetothedevelopmentofentrepreneurship.
2. Changing the young people's culture from job seekers to job generators by establishing the
entrepreneurship skills and principles such as searching for jobs, taking reasonable risks and
dealingwithmistakes.
3. Stimulating and enabling entrepreneurs to create and intellectually protect innovative oppor
tunitiesinordertorealizetherequiredgrowth.
4. Creatinganewgenerationofentrepreneursbyproperselectionandtrainingofagroupofen
trepreneurs, providing them with practical training and advice during the preparation period
and linking them to academic institutions and sources of finance during the implementation
period.

Access to finance is a basic pillar for the success of SMEs including traditional sources of finance
(banks and credit risk guarantors) and nontraditional sources (financial leasing, factoring and
venture capital funds). Although SMEs account for a large portion into total establishments, pro
videalargenumberofjobsandcontributeintotheGNP,theyhaveaccesstoveryfewcreditfacili
ties. These enterprises are mostly rejected by traditional donors due to the absence of sufficient
financialguaranteesandhighLevelsofrisks.BedayaCenterhaslaunchedthefollowinginitiatives:
A. Facilitatingaccesstofinancefromfinancialinstitutions

Bedaya Center has signed a protocol of cooperation with the credit risk guarantee company to
achievethefollowingobjectives:
Providing guarantees for financial institutions in order to cover the risks of credit granted to
SMEsinordertosupporttheirsustainability.
Action to target more SMEs to deal with different financial institutions. Transactions shall be
guaranteedbythesecondpartyinordertostrikebalanceandachieveeconomicgrowth.

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1.BusinessClinicsProgram
2.EntrepreneurshipsandInnovaonProgram
3.Accesstonance


B.Bedaya1FundforDirectInvestment

Bedaya1FundforDirectInvestmenthasbeenlaunchedandlicensedforatotalcapitalofEGP134
million. The fund invests directly by purchasing stakesin existingcompanies or partnering in es
tablishingnewones.Securitiesofthesefundsshallbeofferedonaspecialplacementwhilemoney
will be invested in listedand nonlistedsecurities, commercial notesand other movables accord
ingtotheregulationssetbytheCapitalMarketAuthority.
ThedirectorofthefundwasselectedtobeanalliancebetweenAhlyforDevelopmentandInvest
ment (ADI)and CairoFinancialHolding(CFH)to manage Bedaya 1Fund inorder to increasethe
addedvalueandmaximizebenefitfromexperienceandachievementsofthosedirectors.

Thefundtargetstorealizeatleast20percentreturnoninvestments.
Investment in companies established by virtue of Egyptian laws, provided that the value of
theircapitalornetassetsisnotmorethanEGP50millionandnotlessthanEGP2million.
Atleast2percentandatmost 15percentoftheinvestmentportfoliowillbeallocatedforin
vestmentinnewcompanies.
The fund's investments in a single sector will not exceed 25 percent of the volume of the
fund'sinvestmentportfolio.

InvestmentinSMEslocatedinGreaterCairo(Cairo,Giza,SixthofOctober,HelwanandShobra
ElKheima)willnotexceed40percentoftheinvestmentportfolio.
The fund's investments will cover different sectors with the exception of property develop
ment,tobacco,alcohol,gamblingandexclusivelyexportingcompanies.
ThefundwillexitSMEsafterthreetofiveyearsbytheNileExchange,resaletootherinvestors
(localorforeigners)orbytheprojectowner'sacquisitionorpurchaseofthefund'sshares.
C.Initiativetolegalizetheinformalsector

It is an initiative by the General Authority for Investment and Free Zones to commence a pilot
model to legalize the situation of workers in the projects of waste recycle to leave the informal
sectorfortheformalsectorbyregisteringandlicensingtheseenterprisescommerciallyandindus
trially.
A series of meeting and negotiations have been held with different bodies (Cairo Governorate,
GAFI's Tax Authority, Civil Protection Department, NGOs and the Ministry of Environment) in an
attempt to overcome administrative bureaucracies and restore confidence between project own
ers and government bodies. A draft law on tax incentives and exemptions has been prepared to
encourageinformalactivitiestojointheformalsector.

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InvestmentPolicyoftheFund
Geographicaldistribuonofinvestments
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Investment is one of the main pillars for economic development, increasing investments and em
ployment and achieving high growth rates within the state's economic development plan (2012
2022). Therefore, action is being taken to stimulate the economic activity, inject investments of
EGP276billionbytheendofFY2012/13,wheretheprivatesectorcontributesEGP170billionand
supportmegaprojectsandPPPs.
Incoordinationwithrelevantministriesandgovernorates,theMinistryofInvestmenthasgathered
all available investment opportunities into an investment map of Egypt covering 336 projects as
follows:243projectsfromministries,77projectsfromgovernorates,4megaprojectsand16PPPs.

1. NationalInvestmentMap(336projects):
The Ministry of Investment has gathered all investment opportunities available at ministries,
theiraffiliatesandgovernoratestocreateaninvestmentmapofEgypt.
These investment opportunities and projects are updated biannually in order to locate eco
nomic industries and activities at the level of all governorates in competitive sectors. This re
flects the state's vision of sectoral and local development, with a view to sustainable and bal
anceddevelopment.Theprojectsfulfillthefollowingcriteria:
Compliance with the state's development plan and available and necessary potential to carry
out projects and analyze their economic feasibility.
Identifying landsavailableforinvestmenttogetherwiththeirlocation,maps,coordinates,type
ofbusinessandthebodyinchargeofgrantingtheland.
Availability of utilities in these lands; relevant ministries should support serious investors in
accessingnecessarylicensestoestablishprojectsontheselands.
2. Follow up the implementation of projects agreed upon during previous governorate

conferences,whichtheMinistryofInvestmentusedtoorganizeannuallywithregardsto
portandairportdevelopmentandfacilitationofimportofmachinesandequipment.
3. ExtendingGAFI'sservicescountrywide.
4. Providing investment incentives according to the sectoral and geographical
distribution.
5. Marketinglargedevelopmentprojects,which open up new horizons for urban, agricultural,
industrialandtouristexpansion.Theseprojectsshouldreceivenationalconsensustocreatean
effective popular participation into the efforts of development. Moreover, citizens should feel
that the improvement of the investment climate is into their direct interest.Actionisbeing
takentoimplementanddevelopmegaeconomicprojects,mostnotably:
SuezCanalDevelopmentAxis(eastPortSaid,NorthWestSuezGulf)
DevelopmentofSinaiPeninsula
DevelopmentoftheNorthWestcoast
DevelopmentalongtheUpperEgyptRedSeaRoad(Sohag/Safaga)
6. Completing the establishment of special investment zones, being a main factor for at
tractinginvestments.
7. Encouraging the establishment of special economic zones for their tax and customs
privileges.
1

8. As part of the government's efforts to implement a number of development projects in
differentgovernorates,theCabinetapprovedthefollowing:
2

Reallocationofanareaof 3908.93 acres forthe Ministry of Industryand Foreign Tradeto es
tablishanindustrialzoneinAboZenima,SouthSinai.
Reallocation of an area of 261.32 acres of the state's land in AlZarabi,JabalWadiSerga,Assiut
infavoroftheMinistryofIndustryandForeignTradetoestablishagreycementplant.

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1
NationalInitiativeforEconomicTakeoff,InvestmentandEmploymentAxis,January2013
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EgyptianCabinet'swebsite

9. Actionisbeingtakentoofferanumberofinvestmentprojectsduringthecomingmonths
toenhancetheEgyptianmarketandeconomyasfollows:
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Establishingthreeelectricitystations(BOTsystem).
TheprojectofestablishingALAlaminTouristCenter.
PursuingastrongpromotionalcampaignonthehousingprojectofEgyptiansabroad.
Offeringtheairportcityproject.
Globalexhibitionlandproject.
Offeringthedevelopmentofthe9
th
districtofSixthofOctobertoagroupofgiantcompanies.
Theprojectofestablishingthe5
th
basininElSokhnaPort.
TheminingprojectintheEasternDesert.
Thepetrochemicalproject(Ethylene).
ThedevelopmentprojectofareasalongtheUpperEgyptRedSeaRoadandofferingtenthou
sandacresofagriculturallandinQena.
The project of offering 300 thousand acres in Al Qattara Depression for land reclamation for
largeinvestmentcompanieswhiletheremainingspotswillbedistributedtotheyouth.
Offering11licensestoestablishcementplants(withaviewtotheapproachtosavingenergy
first).
TheprojectofmovingtanneriestoAlRobikicity.
The project of allocating 34 million square meters in West Suez Gulf to an industrial devel
oper.
Using the Turkish loan in introducing utilities in some industrial zones, developing the spin
ningandweavingsectorandpurchasing500buses.
TheprojectofestablishingtheSuezCanaltunnel.
TheprojectofestablishinganindustrialareaandalogisticalzoneEastPortSaid.
OfferingtheprojectofelectronicindustriestotheChineseside.
TheprojectofsaltextractioninQaronLakeinFayoum.
TheprojectofobtainingadevelopmentandagricultureconcessionoftwomillionacresinSu
danalongthelandroadbetweenEgyptandSudan.
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EgyptianCabinet'swebsite
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The Central Unit for Partnership with the Private Sector of the Ministry of Finance seeks to make
available a new source of finance to necessary infrastructure projects and reduce the state's bor
rowing. This would alleviate the burdens on the state's public budget by disseminating partner
ships with the private sector, gaining the support of local and international experts, coordination
with relevant ministries and the private sector to develop the PPP program and develop a clear
actionplanfortheprogram.TheCentralUnitismainlyassignedtothefollowingtasks:
1

Examining projects presented by administrative bodies to offer them under the PPP system,
studyingtheirfeasibilityandreportingitsrecommendationstotheHigherCommittee.
DesigningstandardandtechnicalcriteriaforimplementingPPPprojects.
Examiningthefeasibilityofprojectsintermsofapplicabilitythroughthepartnershipwiththe
privatesectorprogram.
StructuringguaranteesprovidedbytheMinistryofFinance.
Examiningthefinancemechanismsofthemarket.
Identifyingtheriskmatrixofprojects.
Supportingfinanceataffordableprices.
Supportingaccesstofinanceatreasonableprices.
2

TheUnit'srolehasbecomeprominentduetothefactthatEgyptiancompaniescannotbeinvolved
into partnerships in projects offered by the government because they suffer from restrictions,
whichrenderthemunabletopayinstallmentstothebanksespeciallyafterthegovernmentbodies
no longer pay their dues to these companies. Moreover, current conditions and issues of the local
economy discourage investors to partnership with the government. Although some investors are
risktakers,thisaffectsthefinalcostandthevolumeofexpectedreturnfromtheseprojects.Addi
tionally,investorsspecifyincontractstoresorttointernationalarbitrationcentersonceadispute
arisesastotheenforcementoftheitemsofcontract.
MainprocedurestakenbytheUnittosupportPPPprojects:
Developing a national standardized policy for the private sector's participation so that its ob
jectivesandmechanismsareunderstoodbyministries,governmentagencies,donors,contrac
tors,pressandthepublic.
Proposing and developing new legislation and regulations on the implementation of the pri
vatesector'sparticipationthatshouldbeconsideredbyministries,whichprovideproposalson
suchprojects.
AttractingexperiencefromothercountriesandtailoringaseriesofguidelinesforEgypt.
Assisting in devising a finance structure, securities packages and a system on the private sec
tor'sparticipationsuchastheSukuksystem.
Coordinating the national program for the private sector's participation between different
ministries,theprivatesectoranddonors.
ManagingPPPsandprovidingtechnicalandadvisoryexperience.

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MinistryofFinance
2
MinistryofFinance
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The PPP Unit will offerinvestment projects of a cost ofmore than EGP 17 billion.TheUnit
has received more than 454 applicants from global companies willing to invest in Egypt.
MainprojectscoordinatedandpreparedbytheUnitrecentlyareasfollows:
These projects are long term service contracts implemented by the private sector; the value of
theseservicesispaidbythegovernmentintheformofpartialpaymentsthroughoutthecontract
term.Theserviceissoldtoconsumersandsupervisedbythegovernmentratherthantheprivate
sector. PPPs are exposed to serious risks including the change of exchange rates, depreciation of
theEgyptianpound,highcostofborrowingandlaborissues.
Investorsaskthegovernmenttobearpartofrisks,giventhefactthatthegovernmentiseventually
entitled to own part of the project. Moreover, offering national investments projects for private
participationmeansthatthegovernmenthasregaineditsconfidenceintotheprivatesector.This
trendshouldbehighlightedinordertoachievereconciliationwithbusinessmenafterrecentaccu
sationsandconfiscationoftheirmoney.Partnershipshouldnotmeanexaggerationoffinalcostsof
products i.e. prices of services should be compatible with global prices while such harmful prac
ticesasmonopolyshouldbeavoided.
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Table(1)MainPublicPrivatePartnershipProjectsRecently
Source:MinistryofFinance
Project Sector Status
WasteWaterTreatmentStationinAboRawash Sanitation Underoffer
RailwayLinefromAinShamstoTenthofRamadan
City
Railwayandmetro Understudyand
preparationforoffer
ZagazigUniversityHospital HigherEducation Nearfuture
CardiologySurgeryAcademy
AinShamsUniversity
HigherEducation Nearfuture
AlYousrStationforSeawaterdesalinationHurghada Wateranddesalination Understudyand
preparationforoffer
AlMowasahUniversityHospital HigherEducation Signed
WasteWaterTreatmentStationinNewCairo Sanitation Signed
NewChildrenHospital,AinShamsUniversity HigherEducation Nearfuture
SolidWasteRecycleforelectricityandotherproducts SolidWasteRecycleandHigh Understudyand
preparationforoffer
RiverBus MinistryofTransport Understudyand
preparationforoffer
Rivertransportprojects MinistryofTransport Nearfuture
SafagaIndustrialPort Seaports Understudyand
preparationforoffer
SeawaterDesalinationStationinSharmElSheikh Wateranddesalination Understudyand
preparationforoffer
ShobraBanhaRoad Roadsandaxes Understudyand
preparationforoffer
SomohaUniversityHospital, HigherEducation Signed
SpecializedCenter(neurologyandroadaccidents) Health Nearfuture
SuezCanalUniversitySpecializedHospital HigherEducation Understudyand
preparationforoffer


GlaxoSmithKilne announced that it would invest USD 84.7 million in the health care sector in
EgyptoverfiveyearsinordertoincreaseitsproductsintheEgyptianmarket.
AlFatimGroupwillinvestUSD300millionin2012tocontinuebuildingofCairoFestivalCity.
In April 2011, the Kuwaiti Investment Authority (KIA) established a company for a capital of
USDonebilliontobeinvestedintheEgyptianExchange.
The Swedish Electrolux has acquired 52 percent of Olympic Group's shares for USD 350 mil
lion.
The Turkish KCG announced that it would increase its investments in Egypt by establishing
three projects for investments totaling USD 400 million in the field of textiles, electricity gen
erationandmininginSinai.
The Indonesian Multistrada announced that it would establish a tire plan in cooperation with
anEgyptiancompanyforatotalcostofUSD320million.
In April 2011, the Chinese Development Bank signed an MOU with the Commercial Interna
tionalBankandtheCommercialInternationalCompanyforInvestmentinEgypttobuildinfra
structureandlendSMEs.
In July 2011, the EHC for petroleumandnatural gas was established with an issued capitalof
USD 150 million. It is the first private industrial project to be implemented in Egypt at global
priceswithnosubsidy.TotalinvestmentsoftheprojectamountedtoUSD454million.Further
expansionsintothecompanyareexpectedintheyearstocome.
InJune2011, CiscoannouncedaninvestmentofUSD10milliontocreateasustainablemodel
for job creation and economic development in Egypt. The project targets small enterprises
withhighpotential,whichprovideinnovativeservicesandproducts.
TheTurkishLimakGroupintendstoimplementaprojecttoincreasethecapacityofterminal3
ofCairoInternationalAirportforinvestmentsofUSD387million.
TheIndianDhunseriGroupforPetrochemicalshasestablisheda companyforUSD160million
inElSharkeyatoproduceplastics,providing500jobs.
The Malaysian AMANI for Islamic Finance announced the establishment of USD 500 million
fund.
CocaColaannouncedaninvestmentofUSDonebullioninAfricancountries,includingEgypt,to
expanditsinvestmentsintheyearstocome.
TheChineseJushiintendstoestablishthelargestChineseprojectforopticalfibersandrelated
electronicindustriesforinvestmentsandUSD300million,creating450jobs.
TheIndianSinmarforChemicalsannouncedthatitwouldinvest USD200millioninPortSaid
toproducePVCtomeettheincreasingdemandsoftheEgyptianmarket.
Samsung intendsto establishan electricdevices project in Egyptfor total investments of USD

270million,creating1200jobs.
LG announced an investment of USD 265 million to establish a household devices compound,

creating1000newjobs.

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Publishedby
GeneralAuthorityforInvestmentandFreeZones(GAFI)
ArabRepublicofEgypt
Preparedby:
Dr.MonaFaridBadran
AmrAbulElEla
MonaEmad
OlaMamdouh
AhmedIsmail
AsmaaAnes
Translatedby:
TarekFawzy

www.gafinet.org

DistributedintheArabRepublicofEgyptandabroadtoindividualsandinstitutionsconcernedwithmonitor
ingtheperformanceofinvestmentinEgypt.
Theinformationinthispublicationmaybefreelyreusedandreproducedprovidedappropriatecreditisgiven
tothesource.


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