Current economic situation
In 2015 official data showed that 28 per cent of Egyptians live below the poverty line, with a high poverty rate (60 per cent) in Upper Egypt. The unemployment rate of around 12.5 per cent, in addition to an increase in population, puts immense pressure on the country’s infrastructure and services, which are in need of economic reform in order to generate growth. Egypt ranks number 73 of 189 economies on the ease of starting a business, while, it stands at 126 of 189 countries on the ease of doing business (Source: The World Bank).
The government is challenged with economic growth slow down and high consolidated public spending, therefore, the proposed reform plans focus on reducing government subsidies, particularly on petrol, controlling public employees’ salary increase and managing public spending (Source: United Nation, Economic Division for Africa).
In addition, due to the Egyptian credit profile a number of international suppliers complained about payment collection difficulties which is related to the country’s economy’s fall back and the shortage of hard currency (Source: Reuters).
Individuals should take sensible precautions, dress and behave conservatively, strictly observe Islamic customs and ensure that travel documentation, including passports and any necessary visas, for themselves and their dependents are valid and up-to-date.
Business people in Egypt are generally friendly, open and personal relationships are an important factor in business success.
It is recommended that appointments be made for any meetings, which will usually go much later than planned and it is considered rude to try and hurry a meeting.
For business occasions, it is customary to wear suits and ties in the major cities. Lighter clothing is acceptable for business purposes in other cities. Jackets and ties are also recommended when dining at the better hotels and restaurants. Women should be modestly dressed at any occasion.
It is worth noting that in Egypt the written contract is not generally considered to be the end of the deal. Egyptians will often want to continue to negotiate better terms throughout the business relationship. Provided you are comfortable with bartering and allow for this in the original deal, this process can significantly enhance your chances of an ongoing business.
Setting up in market
The main forms of establishing business in Egypt are joint stock company, limited liability company, representative office and a branch office. The most common form for foreign investors is the limited liability company.
The Egyptian investment law offers a group of incentives for foreign investors in Egypt. The recent amendment, published in March 2015, introduced reduction of sales tax, ease of licencing process and land disposition and dispute settlement.
Australian companies are advised to spend time investigating the market, obtain professional advice where appropriate and thoroughly investigate the issues in entering the market and establishing business relationships.
Australian firms wishing to operate in this country should commit to the highest level of corporate behaviour and familiarise themselves with Australia's law and penalties pertaining to bribery of foreign officials.
Banking and finance
The Egyptian Government is facing a double-digit fiscal deficit and is applying for a US$12 billion loan from the International Monetary Fund (IMF). The Egyptian banks are facing funding crunch, due to expected weak supply of deposits and the difficulty to raise funds in the FY 2016-2017. A number of Egyptian banks had their credit rating downgraded due to their exposure to the Egyptian Government’s bonds (Source: EY country report/banking).
Links and resources
Government, business and trade
Australia Arab Chamber of Commerce & Industry
Central Agency for Public Mobilization and Statistics
Egypt State Information Services
Egyptian Exporters Association
Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.