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Egypt is the most industrialized country in Africa after South Africa. However, outside the metropolitan areas agriculture continues to plays a significant role. A large part of the services sector also absorbs a significant portion of the labour force. Nevertheless, unemployment remains at about 13 percent, with a very high percentage of unemployed youth. Egypt pursues a targeted foreign direct investment economic policy. The structural current account deficit is tempered by significant revenue from transit fees for passage through the Suez Canal, remittances from Egyptians working abroad as well as by income from tourism. The former main source of income, the export of fossil fuels (oil and gas), has come to a standstill due to the excess demand in the domestic market. State-owned enterprises as well as the Egyptian military play a strong role in the economy. Some significant families dominate a sizeable chunk of the private sector.
Every third Egyptians is employed in agriculture. The main crops are cotton, rice, sugarcane, wheat, vegetables and fruits. The agricultural area extends mainly along the Nile and in the Nile Delta, but accounts for only 2.9 percent of the country's total GDP. Due to the strong parcelling of land, many farmers operate purely on a subsistence economy. The only significant growth potential is provided by the proposed optimization of irrigation. Due to lack of adequate irrigation during hot summer months, Egypt operates seasonally with fruits and vegetables, and in turn it is extensively dependent upon wheat imports.
Declining oil and gas production in the local market has made Egypt’s fossil fuel power sector buckle to the increased electricity demand. However, in recent years, the Egyptian government is looking to foray into nuclear and wind power to bridge the growing demand and supply gap.
Given a rapidly growing population (+ 2.6 percent pa), there is considerable demand for infrastructure projects and the construction of housing. Therefore, the construction sector is one of the most important sectors of the Egyptian economy. The same is true for the manufacturing sector, which is primarily customized for the local market. Nevertheless, Egyptian manufacturers have become very successful in some niches and some are even involved in supply chains in Europe.
The service sector absorbs a significant part of the workforce and generates a large part of the gross domestic product. Financial services, and whole sale and retail trade are significant employers.
A significant and very important industry for the welfare of the country is, without doubt, the tourism sector. As a year-round destination Egypt has had a firm place in world tourism for years. The industry, however, has suffered particularly strongly since the revolution. With tourist numbers dropping from a steady 14.7 million in 2010 to 10.1 million in 2014.
Why invest in Egypt?
- The Suez Canal, which handles about 8 percent of the shipping world trade, is located in Egypt. Additionally, since August 2015, the canal has become bi-directional which allows for an increased passage of traffic and curtailment of delays.
- Egypt is the most industrialized country in the content of Africa after South Africa. A significant portion of the country’s population is employed in the industries sector and thus the country has adequate universities and technical institutions to cater for the demand for skilled labour.
- Egypt’s economy is diversified in both conventional and unconventional ways. This allows it to be resilient and better able to absorb shocks.
- Egypt’s central bank, the CBE, is known to take drastic fiscal policy shifts to ensure the country’s competitively amid changing macroeconomic conditions. For instance in the financial year, 2013/14, CBE progressively devalued the Egyptian Pound to hold true to the market fundamentals.