When it comes to lucrative investments, the opportunities across all parts of Egypt’s digital economy are undeniable. The Ministry of Communication and Information Technology said on its website: “Objectives entail developing the ICT infrastructure; fostering digital inclusion; achieving the transition to a knowledge-based economy; building capacities and encouraging innovation; fighting corruption; ensuring cybersecurity; and promoting Egypt’s position at the regional and international levels.” An indispensable part of any digital economy is the ability to securely and conveniently process online payments. “Given the key role … digitization plays in the financial lives of more and more of the world’s population, electronic…
Author: Tamer Hafez
As commuters across the Greater Cairo Metropolitan Area (GCMA) would attest, two things stand out about Egypt’s capital, home to more than 22 million people. The first is that traffic is a nightmare. In a research note, the World Bank estimated that Cairo’s traffic jams cost 4% of the country’s GDP, making Egypt among the countries most affected by traffic congestion. In New York and Jakarta, for example, gridlocks cost less than 1% of their respective GDP. The bank’s 2014 paper said: “Traffic congestion is a serious problem in the GCMA with large and adverse effects on both the quality…
For Egypt, foreign currency inflows are critical to stabilizing the government’s finances as the country faces rising inflation and the pound’s devaluation to unprecedented levels against the dollar. In February, President Abdel Fattah El-Sisi said plugging the country’s foreign currency deficit would require FDI worth “no less than” $100 billion over the next five to seven years. To open the FDI “floodgates,” the government announced on Feb. 8 it would list up to a 25% stake in 30 state-owned and two military-owned enterprises on the stock exchange (EGX). They operate in 18 sectors, including banking, energy, insurance and petrochemicals. Those…
The global energy sector is staring down an inflection point. On the one hand, climate pledges to lower harmful greenhouse gas emissions are increasingly vital to avoid permanent changes to weather patterns and ecosystems, which invariably disrupts markets and companies, hurting GDPs. On the other, there are pressing short-term concerns over energy security. Sanctions by wealthy nations on energy-exporting Russia over Ukraine are causing uncertainty in global energy supplies. Meanwhile, frostier relations between China and developed economies will likely exacerbate the situation. Many governments have prioritized energy security over energy transition. Julien Bocobza, a partner at international law firm White…
More and more university graduates are looking to open businesses after finishing their education. Being one’s own boss is increasingly appealing to an increasingly rebellious, well-educated generation. A CT Corporate survey published in December 2021 found “a whopping 61% of recent college graduates want to start their own businesses … Forty-five percent think it’s very likely they will do so, and 20% have already started a business of their own while in college. Even the 30% of recent grads who admit it’s highly unlikely they’d ever start a business say they would like to.” That is good news, as the…
Egypt has secured IMF approval for a $3 billion, 46-month extended facility and the agency’s promise to work with “partners” to lend an additional $14 billion. In November, Finance Minister Mohamed Maait estimated Egypt’s external funding gap at $16 billion over the coming four years, so the total IMF and partners’ $17 billion commitment would cover the foreign currency deficit for only four years. More foreign currency inflows will be necessary in the short term. Aside from taking on more foreign-currency debt, such as Samurai bonds (yen-denominated) or Panda bonds (yuan-denominated), which the treasury is considering, the government can use…
By international standards, the Egyptian government tightly controls fossil fuel prices for consumers. Since July 2018, the state has reviewed oil and gas prices every three months, raising them a nominal EGP 0.25 per liter each time. The exception was in July when the increases ranged from EGP 0.5 to EGP 1 per liter. In 2023, oil and gas prices could change significantly. The weather, energy strategies and economic outlooks of oil producers and developed countries are likely to result in volatile demand and costs throughout the year. In its Dec. 6 “Short-Term Energy Outlook,” the U.S. Energy Information Administration…
Despite not having specific targets to lower emissions, the government is prioritizing eco-friendly and sustainable projects. On its official Facebook page, the government announced in November that 40% of its investments in fiscal year (FY) 2022/2023 have eco-friendly and sustainable elements. It published an infographic showing that transportation accounts for 63.1% of the budget allocated for green and sustainable projects. Sustainable sanitation accounts for 9.2%, while clean energy investment takes up 6.1%. The rest is divided among sustainable clean water projects, environmental improvement and sustainable agriculture. In 2023, Egypt should find it easier to attract eco-friendly FDI. The pound’s ongoing…
Egypt is constantly under pressure to secure essential food commodities, such as wheat, edible oils and maize, to feed its people. The U.S. Development Authority estimates the country imports “more than 50% of its food and agriculture product needs.” Egypt also is the world’s largest wheat importer, meaning the cost of food is significantly affected by the pound’s foreign exchange rate, international prices and supply. In 2022, the news was worrying. CAPMAS reported food inflation reached 30.9% in November, up from 8.4% a year earlier. That outpaces headline inflation rates, which went from 5.9% (2.5 percentage points less than food…
Egypt enters 2023 with an economy riddled by challenges that will likely surpass those arising from the 2016 float of the pound. That was when the pound lost half of its value against the dollar, causing inflation to exceed 30% for the first time in Egypt’s recorded history. In 2023, domestic factors haunting Egypt’s economy include the pound losing nearly 56% of its value against the dollar in the official market, record high foreign debt and inflation more than doubling in 2022 despite rising interest rates. Those higher rates stifle the economy further, threatening GDP growth. The Central Bank’s (CBE)…