In 2016, the Egyptian government announced its intentions to implement a sustainable development strategy, named “Egypt vision 2030”. Composed of a framework built on concepts as inclusive development and social justice, the plan supposedly aims at improving the quality of life by focusing on the economic, social and environmental dimensions. Following the announcement, the government actively worked on publicizing the plan, and even utilized it as a tool of persuasion to convince more investors, mainly foreigners, to come and invest in Egypt. Meanwhile, it tried to build a domestic momentum around the plan by promising more job opportunities and a higher level of per-capita income. So, for instance, on investing in Egypt, the General Authority for Investments and Free Zones states:
Keeping in mind the growing interest that the government shows towards accommodating investors and the propagation of ‘mega-nationalist’ projects’ discourse, it is not hard to detect the attention that investments receive in the agendas of Egyptian policy makers. Surely, such attention was affected by the covid-19 pandemic. Nonetheless, it would be a grave mistake to assume that the spread of the pandemic affected the intentions of the government, or that it swayed it from pursuing its plans to encourage further investment into the economy. This is reflected in the official rhetoric that maintained the government’s consideration of the impact of the crisis on investors and its efforts to plan with investors for the post-crisis period. More specifically, support was given to private sector investors through a 20 billion EGP to the stock market; decreasing energy prices for industrial facilities; and lowering bank interest rates by 3% among other decisions. However, steps to support ordinary citizens were restricted mainly to the L.E 500 monthly grant for irregular workers. However, the main focus was still directed towards restoring ‘the cycle of production’ and economic growth.
Interesting here, is that the 2030 plan targeted achieving certain strategic targets by 2020, which included lowering the poverty rates to 23% of the population, and the population below the extreme poverty lines to just 2.5% of the population, while maintaining that both will decrease further by 2030 to 23% and 0% respectively. Likewise, it targeted decreasing unemployment to 10% by 2020 which is to be reduced further to 5% only by 2030. Yet, as it stands, none of these were achieved. In fact, as the official figures reveal that percentage of those living on and below the poverty line increased between 2015 – 2018q from 27.8% to reach 32.5% of the population, and that 6.2% of the population live below the extreme poverty line from 5.3% in 2015. The same applies to rates of unemployment, as rates of employment have been declining over the last few years, making the prospects of fighting unemployment debatable, mainly for female workers. In fact, there has been a substantial increase in informal wage employment, which increased from 18% in 2012 to 23% in 2018 from the total employment. Likewise, women’s broad market unemployment has increased from 25.8% in 2012 to 27.8%
While it can be said that these are the results of the economic reform and the rapid neoliberalization process that ensued around 2015, the failure to achieve these targets signifies the inability to uphold and implement concepts such as social justice and inclusive development under neoliberalism. More important, is that it makes one wonder whether the other outcomes that the strategy targets, which include increasing the ratio of private sector contribution to the GDP and a higher inflow of net foreign direct investment, are actually attainable or not? And if so, at what cost? This is especially so given the working conditions in Egypt, where the private sector dominates, along with a prevailing informality.
By the same token, how are we to understand other outcomes targeted such as increasing high- technology exports and manufacturing value added as well as increasing the total trade share of the GDP at a time where the existing trade agreements encourage “Investing in development or developing investments”? Moreover, how can we expect the Egyptian technological exports while Egypt lags behind in technological education and production?
In this light, this report aims primarily to explore some of the pre-covid19 legal developments and structural changes concerning the investment arena, in order to present an overview of the main dynamics expected to constitute the general investment framework in post-covid19 neoliberal Egypt. An essential part of this attempt will be to comment on the expected ramifications of these changes and developments, and what realistically should be expected in terms of outcomes as a result.
In doing so, the report will be divided into 2 main parts. The first part will be presenting an overview of investments in Egypt. Mainly, it covers the distribution of investments between public and private players, foreign direct investments, top fields of investment, exports-imports movement and the performance of free-zones. As for the second part, it will be focusing on the most recent pre-covid19 legal and structural developments, such as 2017’s investment law, the new public sector’s law, the initiative to promote local private industrial activities, among others.
Read the Report