Country Risk: Egypt

Official Name: Arab Republic of Egypt

Internet Domain: .eg
International Dialing Code: +20

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Location and Size

The Arab Republic of Egypt is located in Northern Africa. It is bordered by the Mediterranean Sea to the North, the Red Sea and the Gaza Strip to the East, Sudan to the South, and Libya to the West. Its land area extends into the Asian Sinai Peninsula. With a total land area of 1,001,450 sq. km., it is about the combined size of Texas and California.

Government

Egypt is a Republic.

Executive Branch: Chief of State: President Abdelfattah ELSISI, and Head of Government: Prime Minister Mostafa MADBOULY and Prime Minister Sherif ISMAIL

Legislative Branch: House of Representative” 596 seats of which 448 members are elected by popular vote; additional seats are appointed by President.

Judicial Branch: Supreme Constitutional Court

Legal System

Egypt has a mixed legal system based on Napoleonic civil law and Islamic Shariah religious law. It has accepted compulsory International Court of Justice (ICJ) jurisdiction with reservations.

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10 Interesting Facts About Egypt

1. A large number of household objects were invented or used by the ancient Egyptians including: locks and keys, combs, scissors, wigs, makeup, deodorants, toothbrushes and toothpaste. Egyptians believed cosmetics had healing power and were initially used by both men and women ” not to enhance beauty ” but to protect the skin from sunlight.
2. Egyptians were among the first people to invent writing, along with ink and paper.
3. The pyramids of Egypt are the last remaining ancient wonder of the world. They have been given ‘honorary status’ in the list of the new ‘Wonders of the World.’
4. Cairo is home to Africa’s only subway.
5. Egypt has produced four Nobel laureates, awarded prizes for peace, chemistry and literature.
6. Egyptians were the first to have a year consisting of 365 days divided into 12 months. They also invented clocks.
7. To commemorate the role Facebook played in the 2011 Egyptian revolution, an Egyptian father named his newborn daughter “Facebook”. Her full name is Facebook Jamal Ibrahim.
8. On average, only an inch of rain per year falls in Egypt.
9. The Sahara Desert was at one time lush grassland. Overgrazing and/or climate change in 8000 B.C. began to change the area to desert. Now it is the world’s largest “hot desert”, roughly the size of the United States of America. (Antarctica is considered the largest desert of any type.)
10. If the Great Pyramids were chopped into 12-inch cubes, there would be enough cubes to circle the moon almost three times.

Economy

With the support of the International Monetary Fund, Egypt embarked on an ambitious economic reform in 2017. Among the significant measures, the liberalization of the Egyptian pound on the foreign exchange market was accompanied by a depreciation of 50% against the US dollar, and led to an increase in foreign exchange reserves of 80% during the year, mainly due to the influx of capital. The depreciation of the currency has increased the competitiveness of exports while the rise in the price of imports has raised inflation to more than 30% in 2017. Inflation should gradually decrease in 2018 as the exchange rate impact is absorbed, but rising prices for intermediate goods are services will continue to cripple the purchasing power of average households.

Leading Markets (2017): US 7.6%, Italy 7.3%, India 6.1%, Spain 5.4%, Saudi Arabia 5.4%, France 4.7%, Libya 4%

Leading Exports – Commodities: crude oil and petroleum products, cotton, textiles, metal products, chemicals, processed food

Leading Suppliers (2017): US 11.8%, China 10.4%, Germany 6.5%, Italy 6.4%, Saudi Arabia 4.1%

Leading Imports – Commodities: machinery and equipment, foodstuffs, chemicals, wood products, fuels

Top Industries: Textiles, food processing, tourism, chemicals, pharmaceuticals, hydrocarbons, construction, cement, metals, light manufactures

Top Agricultural Products: Cotton, rice, corn, wheat, beans, fruits, vegetables, cattle, water buffalo, sheep, goats

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Comparative Economic Indicators ” 2018

*July 2017 estimate
Economic Data from CIA World Factbook

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Credit and Collections

Dispute Resolution

The Egyptian judicial system functions extremely slowly, and cases can remain in the system for several years. The U.S. Embassy recommends that U.S. companies include clauses specifying binding international arbitration of disputes in their commercial agreements.

Arbitral awards are made in the original currency of the transaction, via the competent court in Egypt, usually the Cairo Court of Appeals. A special order is required to challenge an arbitration award in an Egyptian court. To enforce judgments of foreign courts in Egypt, the party seeking to enforce the judgment must obtain an exequatur. To apply for an exequatur, the normal procedures for initiating a lawsuit in Egypt must be satisfied. Moreover, several other conditions must be satisfied, including ensuring reciprocity between the Egyptian and foreign country’s courts and verifying the competence of the court rendering the judgment.

Risk Assessment

Coface Country Rating: B – Uncertain economic and financial outlook. Political context could suffer strong tensions. Business climate can present potential shortcomings.
Coface Business Climate Rating: B ” To boost investment in the sector, the government is preparing a new contract model based on a more attractive compensation package for oil companies. Growth in the hydrocarbon sector is expected to benefit the manufacturing sector, which showed signs of improvement in 2018. Consumption is likely to rise further but at a more moderate pace, hampered by higher energy prices and the phase-out of fuel and electricity subsidies in 2019.

Political and economic uncertainties and an occasionally difficult business environment can affect corporate payment behavior. Corporate default probability is appreciable.

Business Climate

Economic Freedom: Egypt’s economic freedom score is 52.6, making its economy the 144 freest in the 2017 Index of Economic Freedom. Egypt is ranked 12th out of 14 countries in the Middle East/North Africa region, and its overall score is just below the world and regional averages.

Market Access: Egypt’s trade regulations impose distinct barriers on foreigners. Foreigners may function as commercial agents, but are prohibited from acting as importers for trading purposes. A foreign company wishing to import for trading purpose must do so through an Egyptian importer.

A number of non-tariff barriers or bans continue in force to protect local producers. Mandatory quality-control standards make importing certain products into the Egyptian market difficult. Over 130 categories of imports are still subject to mandatory quality-control inspections, including foodstuffs, appliances, electrical products, and auto parts.

Regulatory System: The Egyptian government has made considerable effort to improve the transparency of government policy. The process has proven difficult and has faced strong resistance from entrenched bureaucratic interests. Significant obstacles continue to hinder private sector investment, including the often-arbitrary imposition of bureaucratic impediments and the length of time needed to resolve them.

Exchange Control: Egyptian law allows individuals and businesses to conduct all normal foreign exchange transactions, including establishing foreign exchange accounts and transferring foreign exchange in and out of Egypt. Authorized banks may provide the full range of foreign exchange transactions, including accepting deposits, executing transfers, and opening letters of credit. Foreign currency is available at banks and foreign exchange bureaus.

Business Protocol in Egypt

Islam is practiced by the majority of Egyptians and governs their personal, political, economic and legal lives.

Egyptians prefer to do business with those they know and respect, therefore expect to spend time cultivating a personal relationship before business is conducted. Who you know is more important than what you know, so it is important to network and develop a number of contacts.

Expect to be offered coffee or tea whenever you meet someone, as this demonstrates hospitality. Even if you do not take a sip, always accept the beverage. Declining the offer is viewed as rejecting the person.

You should demonstrate deference to the most senior person in the group, who will also be their spokesperson. This is a country where hierarchy and rank are very important.

More information on Business Protocol: Kwintessential

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Sources for further information on doing business in Egypt

American Chamber of Commerce in Egypt

Egypt: Economic and Political Outline

US Arab Chamber of Commerce 

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Egypt. For further information, contact [email protected].

This report represents a compilation of information from a wide variety of reputable sources.

Comparative Economic Indicators: CIA World Factbook

Risk Assessment information: Coface Country Rating

Exchange Rates: OANDA.com The Currency Site.