Inversió estrangera directa (IED) a Egipte

FDI in Figures

 According to UNCTAD's World Investment Report 2024, Egypt saw FDI inflows decrease to USD 9.8 billion in 2023, from the record level of 11.4 billion reached the previous year. At the end of the same period, the total stock of inward FDI stood at USD 158.6 billion. Egypt stands out as a key investment destination in North Africa, attracting automotive MNEs like BMW and Robert Bosch (Germany) and Nissan (Japan), as well as pharmaceutical companies such as GlaxoSmithKline (United Kingdom) and electronics producers like Samsung Electronics (Republic of Korea). Moreover, the Suez Canal Economic Zone secured agreements for green ammonia and green hydrogen projects in Egypt, valued at USD 10.8 billion, as the country introduced an investment tax credit and other fiscal incentives aimed at promoting green hydrogen (data UNCTAD). Figures from the Central Bank show that in the fiscal year 2023/24, FDI inflows came chiefly from the UAE (68.7%), the U.S. (5.3%), the UK (5.2%), and Italy (3.7%). According to the Minister of Investment and Foreign Trade, announced that Egypt's FDI hit an impressive USD 46.1 billion in 2024, marking a substantial increase from USD 9.8 billion in 2023. This remarkable growth was primarily driven by the USD 35 billion Ras El Hekma deal, which significantly boosted the country's investment prospects: in February 2024, the Egyptian government finalized a monumental USD 35 billion investment agreement with Abu Dhabi's sovereign wealth fund, ADQ, to develop the stretch of Mediterranean coastline in northern Egypt.

The dynamic growth of the Egyptian economy, its strategic geographical position, low labour costs, skilled workforce, unique tourist potential, substantial energy reserves, large domestic market and the success of the reforms undertaken by the authorities (including many privatisations) contributed to driving up FDIs. Egypt recently adopted an Investment Law that includes performance requirements for certain investment incentives, including labour-intensive projects and geographical location. The government has also set up special economic zones with business-friendly regulations: more liberal, more efficient administration, tax incentives, facilitation of registration and customs procedures, better infrastructure, etc. In January 2024, President El-Sisi enacted the Green Hydrogen Law (Law No. 2 of 2024), offering incentives for green hydrogen projects, including desalination and manufacturing for hydrogen facilities. Projects must be completed within five years of agreement signing and start operations within five years to qualify. Expansions can also benefit if completed within seven years of the original project. To be eligible, projects must secure 70% of financing from external sources (FDI), use at least 20% local inputs, and contribute to local development. Incentives include a cash investment deduction of 33-55% on income tax, VAT exemptions on exports, equipment, and raw materials, along with property tax reductions and a golden license for approved projects. Nevertheless, investors encounter challenges such as extensive bureaucracy, a lack of transparency, inconsistent enforcement of laws and regulations, obstacles in accessing foreign currency for profit repatriation or importing goods, a scarcity of skilled labour, intricate customs procedures, corruption, and concerns related to intellectual property. The country ranks 86th among the 133 economies on the Global Innovation Index 2024 and 146th out of 184 on the latest Index of Economic Freedom.

What to consider if you invest in Egypt

Strong Points

Advantages for FDI in Egypt:

• Strategic geographic location
• Low-cost and relatively qualified labour force
• Growing population (more than 100 million inhabitants) that makes Egypt a strategic market in the region
• High tourism potential
• Important energy resources, notably natural gas
• Public works policy, which offers many investment opportunities to foreign companies
• A sufficiently diversified economy (energy, tourism, Suez Canal revenues, industrial base, etc.)
• Government policy that aims at improving the business climate

Weak Points

Disadvantages for FDI in Egypt:

• Political situation that remains tense and arouses uncertainty for foreign investors
• Degraded regional security situation
• Fragile banking sector
• High poverty rate and persistent unemployment 
• Infrastructure that remains insufficient
• Omnipresent public sector and excessive bureaucracy 
• Shortage of skilled labour
• Cumbersome customs procedures and non-tariff trade barriers

Government Measures to Motivate or Restrict FDI

Since September 2004, the General Authority for Investment and Free Zones (GAFI) has established an economic program to attract foreign investors, together with an average reduction of 35% customs duties and tariff simplification. Furthermore, Egypt enjoys the support of the FMI to put into place economic reforms (new VAT rate, reduction of subsidies on fuel and electricity, etc.). It shows the government's willingness to improve the business climate, which remains complex. Thus, after the Revolution, Egypt put into place restrictions on capital transfer. Investors are claiming that the approval of transfers may take several weeks.  

Several "megaprojects" may attract foreign investors in the coming years. Siemens already developed the largest gas power generation plant in the world, Egypt also plans to develop a large logistic and industrial platform around the Suez Canal, a new administrative capital city and large agrarian and mining projects.

In most sectors, foreigners benefit from the same treatment as nationals. A joint venture is needed to operate in certain sectors, namely hydrocarbons and real estate. The Law on Imports and Exports was amended to allow enterprises to be 51% Egyptian-owned to import (before, the enterprises had to be 100% Egyptian owned). The country implemented a number of regulatory reforms, namely a new investment law in 2017; a new companies law and a bankruptcy law in 2018; and a new customs law in 2020 (if the establishment is under the provisions of the new investment law, it will benefit from a 2% unified custom tax over all imported machinery, equipment, and devices required for the set-up of the company).
More information on governmental measures to attract FDI in Egypt is available on the website of the General Authority for Investment, which developed a special desk for investors. 

Bilateral investment conventions signed by Egypt

Egypt has signed bilateral agreements with more than a hundred countries, including most of the European Union countries, the United States and several African countries, the Middle-East and Asia. On the Mediterranean Basin, Egypt has signed bilateral conventions with Algeria, Spain, France, Greece, Italy, Libya, Lebanon, Malta, Morocco, Portugal, Tunisia and Turkey. An agreement with the Mercosur bloc of Latin American nations is also into force.
These conventions can be referred to on UNCTAD's Investment Policy Hub.