12 mars 2018 ~ 0 Commentaire

Egyptian Economy and Investment Climate

Egyptian Economy and Investment Climate 10-egyptian-pounds-banknote-farao-statue-reverse-1

The Egyptian equity market is among the most developed in the region with over 633 listed companies. Market capitalization on the market doubled in 2005 from الجنيه المصري مقابل الدولار الامريكي 47.2 billion to USD 93.5 billion in 2006, peaking at USD 139 billion in 2007. Subsequently, it has dropped to USD 58 billion in 2012, with turnover surging from USD 1.16 billion in January 2005 to USD 6 billion in January 2006.

Private equity hasn’t been widely used in Egypt in the past as a source of funding for companies. The government, however, has instituted a number of policy changes and reforms specifically meant to develop internal private equity capital and to attract private equity financing from international sources.

The significant industries include textiles, hydrocarbon and chemical production, and generic pharmaceutical production. Unemployment is high at about 10.5%.

Until 2003, the Egyptian market suffered from shortages in foreign currency and too elevated interest prices. A series of budget reforms were conducted in order to redress weaknesses in Egypt’s financial environment and also to boost private sector participation and confidence in the market.

Major fiscal reforms were introduced in 2005 so as to tackle the informal sector which based on quotes signifies somewhere between 30% to 60% of GDP. Tax cuts for corporations were introduced for the very first time in Egyptian history. The new revenue tax Law No 91 for 2005 decreased the tax rate from 40% to 20%. According to government figures, tax filing by individuals and corporations increased by 100 percent.

Lots of changes were made to cut trade tariffs. Among the legislators’ goals were tackling the black economy, reducing bureaucracy and pushing trade liberalization steps. Amendments to Investment and business legislation were introduced so as to attract foreign investors. For instance, the amount of days needed for establishing a business was dramatically reduced.

Substantial improvement to the national financial environment improved shareholders’ confidence in Egypt. The Cairo & Alexandria Stock Exchange is regarded one of the greatest ten emerging markets on earth. The alterations to the coverage also attracted increased amounts of foreign direct investment in Egypt. According to the UN Conference on Trade and Development’s World Investment Report, Egypt was rated the 2nd biggest nation in attracting foreign investment in Africa.

Given the high number of amendments to legislation and regulations, Egypt has succeeded to a certain extent in adapting to international standards. Very recently the Cairo & Alexandria Stock Exchange (CASE) was welcomed with complete membership to the World Federation of Exchanges (WFE)–the first Arab country to be invited.

Enforcement of these recently adopted regulatory frameworks remain, sometime problematic. Issues like corruption hamper economic growth in Egypt. Many scandals involving bribery were reported during the past decades. « In 2002 alone, as many as 48 high-profile officials–including former cabinet ministers, provincial governors and MPs were convicted of influence peddling, profiteering and embezzlement. Maintaining good relations with politicians is sometimes a key to business success in Egypt. According to the 2006 Corruption Perception Index developed by Transparency International (in which the higher the rank the larger the level of corruption), Egypt ranked 70 out of 163. On a scale from 0 to 10 (with 0 being highly corrupt), Egypt scored a 3.3 .

According to a research by the International Organization for Migration, 20% of Egyptian remittance-receiving families interviewed channeled the remittances towards various kinds of investment, while the huge majority (80 percent) was more concerned about utilizing remittances for meeting the everyday needs of the families such as spending on health care and education. One of the 20% of families that chose to invest, 39% spent in real estate, 22% invested in tiny businesses employing fewer than five people and also the tiniest percentages of investors (6 percent) invested in medium private business using no more than 20 people. According to Egypt’s Human Development Report 2008, even though representing approximately 5% of GDP, remittances given the initial capital for just 1.4% of recently established small and medium enterprises in Egypt in 2003-2004.

The stock market capitalisation of listed Firms in Egypt was valued at الجنيه المصري مقابل الدولار الامريكي 79.672 billion in 2005 from the World Bank Falling to $58 billion in 2012

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