What Are The Private Sector’s Needs Amid Egypt’s Economic Struggles?

February 21, 2024


Amid Egypt’s economic challenges over the past two years and the repercussions of the Middle East conflict, industry leaders stress the crucial role of the private sector in driving growth and job creation, as discussed during a workshop organized by the Egyptian Centre for Strategic Studies (ECSS) in February.

During two sessions, key figures in leading sectors in Egypt addressed some challenges facing both the Egyptian economy and the industrial sector, offering real-time solutions to navigate the complex situation.

Here are the workshop’s main takeaways:

Slow implementation

Mohamed El Sewedy, Head of the Federation of the Egyptian Industries (FEI), highlighted challenges faced by the private sector, such as the shortage of US dollars and high interest rates on borrowing. He attributed these challenges to the slow implementation and regulation of incentives approved by Egypt’s President Abdel Fattah Al Sisi over the past decade. These incentives include offering lands for the sector in the Purchase Order Text (POT) system, granting a golden license for serious investors, and tax-related incentives.

El Sewedy specifically addressed the issuance of “golden licenses” to facilitate project implementation for investors. He noted that while these licenses were granted in select cases, the stringent requirements make them difficult to obtain.

Last year, Egypt introduced the Golden License for investors as part of efforts to attract more investments and improve the business climate. This license enables investors to acquire or lease land and operate enterprises without needing additional approvals from relevant authorities.

In November, Egypt’s General Authority for Investments and Free Zone (GAFI) launched the first phase of the single-window approval “Golden License” online portal, enabling investors to register and obtain the license.

El Sewedy also highlighted several other challenges faced by the industrial sector, including elevated prices of end products and fluctuating exchange rates in the local market. These factors complicate investment, cost, and salary planning for business owners, he emphasized.

El Sewedy concluded by urging the government to empower the private sector to play a more significant role in the country’s economy, suggesting that the government should focus primarily on supervisory and regulatory roles.

Real estate concerns

Hassan Allam, CEO of Hassan Allam Holding, Egypt’s largest infrastructure company, underscored the sector’s substantial growth propelled by national mega projects since 2014.

Nevertheless, he pointed out the delays in disbursing dues (receivables) to his company and other companies involved in project implementation.

With 6 million workers and engineers in Egypt’s infrastructure sector, delays in dues payments pose a crisis for firms. Allam urged the government to compensate companies for US dollar exchange rate differences. Projects were assigned when the dollar rate was lower, creating discrepancies, he said.

“These delays pose a significant challenge for us and other companies in terms of paying salaries to workers and covering operational costs. Additionally, the disparity in the US dollar exchange rate presents another obstacle we are facing. When we initially signed the contracts for these projects several years ago, the US dollar rate was much lower than the current rate. Therefore, the government should establish a mechanism to compensate the companies,” Allam emphasized.

Allam further underscored the limited implementation of partnership types outlined in the State Ownership Policy, such as Public Private Partnerships (PPP) and POT, urging executive bodies to promptly address challenges faced by the private sector.

“Despite the policy outlining various types of partnerships with the private sector, only a few cases have benefited from them on the ground,” he remarked.


At the workshop, Tarek Kamel, Chairman and CEO of Nestlé Egypt and Sudan, further addressed the persistent US dollar shortage, which significantly affects the F&B sector, heavily dependent on imports for raw materials.

He revealed that in 2023, the F&B sector incurred expenses totaling EGP 3 trillion, with exports reaching $4 billion, marking a 30% annual growth despite price hikes. The sector’s growth rate stands at 15% year-on-year, contributing 24% to Egypt’s GDP.

Kamel emphasized the sector’s vital role in the country’s economy and the urgent need to address manufacturers’ and businesspersons’ challenges, he stated.

He further stressed the government’s role in supporting the sector’s growth to boost exports, which he believes is crucial for addressing the US dollar liquidity shortage and navigating the fluctuating exchange rate. One of the major actions the government has taken to support the sector is the launch of an initiative in 2019 that aims to repay the exporters’ arrears from the Export Development Fund to support the sector amid the economic challenges and also to encourage it to raise the exports to the external markets. Under this initiative, the government repaid over EGP 50 billion to exporters.

Exporters challenges

Exporters are also facing significant pressure, according to Bahaa Dimitri, the Rapporteur of the Industry Committee at the National Dialogue.

Dimitri underlined a range of challenges confronting the industry sector, including the shortage of US dollar liquidity, high-interest rates, elevated taxes, and the fluctuating exchange rates of the US dollar in the local market. He also noted that exporters have not received their overdue payments under the government’s Exporters’ Arrears Disbursement Program as of June 2022, exacerbating pressure on exporters.

“The government’s pace in translating the incentives approved by the president into actionable bylaws and resolutions for implementation is excessively slow. This, coupled with the high taxes imposed on the industrial sector, elevated interest rates, and the scarcity of the dollar, alongside the depreciation of the local currency, presents significant challenges. These pressures heavily burden the sectors and their key players, subsequently affecting the local market and end consumers,” Dimitri remarked.

Dimitri revealed that despite the approval of 22 decisions by the Supreme Council for Investment in May 2023 to encourage both foreign and local investors, these decisions have not yet been implemented. He criticized the slow pace of the executive body in addressing these crucial matters.

Bolstering FDI

The Supreme Council for Investment approved 22 decisions on May 22 to encourage foreign direct investments and private investments in Egypt.

These decisions address several issues, including the approval of a draft decree to amend certain articles of the Executive Regulations of the Investment Law, aimed at easing restrictions on company incorporation. Additionally, a draft decree was approved to amend article (34) of the Investment Law, allowing for the licensing of natural gas-based industries projects within the Free Zones Framework.

To expedite the approval process, the council endorsed a decree to be circulated among relevant bodies, setting a specific time limit of 10 business days for all necessary approvals for incorporation. This move aims to enhance confidence in Egypt’s investment climate by reducing bureaucratic delays.

Concerning land allocation, the Ministry of Justice was tasked with preparing legislative amendments to overcome restrictions related to land ownership and facilitate real estate ownership for foreigners.