Why Egypt?
Egypt, with a GDP of $389 billion and an annual GDP growth of 2.9% in 2023, is the second-largest economy in Africa and a major emerging market. Despite the challenging economic situation, Egypt's GDP growth is expected to remain positive, averaging an annual growth rate of 3.4%. The economy is driven by a strong tourism industry, drawing millions to its historic sites and scenic locations, and a vital food and agriculture sector, supported by fertile lands. In 2023, Egypt's population reached 112.7 million, with an annual growth rate of 1.5%. This significant and growing population presents a substantial potential market, making Egypt an attractive destination for expanding businesses.
Recent reforms and improvements in collaboration with the International Monetary Fund (IMF), along with significant investments from the United Arab Emirates (UAE) in Ras El-Hekma, are expected to boost economic growth, stabilize the economy, and reduce inflation in Egypt. However, regional geopolitical tensions in Gaza and the Red Sea may slow this progress, affecting key revenue sources such as tourism and the Suez Canal. In response, Egypt is taking an active diplomatic role to help stabilize these conflicts. Furthermore, Egypt has established a strategic partnership with the European Union (EU), receiving investment to address international obligations, particularly those related to the EU.
Egypt is centrally located and well connected to the European, Middle Eastern, Asian and African markets resulting in 12 % of the world trade passes through the Suez Canal. This strategic positioning is complemented by Egypt's enhanced international relations. By joining the intergovernmental organization BRICS and elevating its relationship with the EU to a strategic and comprehensive partnership, Egypt has implemented the Free Trade Area under the Association Agreement. Additionally, Egypt is a member of the Arab Free Trade Area, which includes 19 countries in the Middle East and Northern Africa, and it has several other multilateral trade agreements with African countries.
The Egyptian Government is also committed to achieve the Sustainable Development Goals (SDGs). These are reflected in the framework of Egypt’s national strategy “Sustainable Development Strategy (SDS): Egypt Vision 2030’’. The focus are three dimensions: The Social Dimension (Health, Education and Culture), The Environmental Dimension (Environment Urban Development) and The Economic Dimension (Energy, Knowledge and Economic development). There is a potential for green transition overall.
Egypt is among the largest energy producers and suppliers in Africa. During COP27, hosted by Egypt in Sharm el-Sheik, important initiatives, as the NWFE-program (Nexus of Water, Food and Energy), was signed in order to advance the green transition within the country. The local government and industry is aware of the climate related challenges the country is facing, and their initiatives during the COP showed their willingness to secure a more sustainable future for Egypt.
Below are
highlights from four very promising sectors:
Energy
With a
plan to become a regional energy hub, Egypt is building wind farms, solar
power plants and increasing its hydroelectric capacity, aiming to increase the
share of renewable energy to 42% of the total electricity generated by 2035. In
addition, energy efficiency and green transition is more and more in focus.
Some of Egypt’s mega projects includes the world largest solar park, Benban Solar Park, located in Upper Egypt and the Zafarana Wind Farm, which is the first large-scale wind farm in one of the windiest sites, in this part of the world.
Denmark has
been through a similar transition and is keen to share know-how with Egypt
through the Energy Section at the Embassy. Egypt is the fifth largest oil
producer in Africa and the third largest natural gas producer on the continent.
In addition, 9% of the world’s LNG trade passes through the Suez Canal.
Water
and environment
The Nile River is the backbone of Egypt’s industrial and agricultural sector and the primary source for drinking water. However, there is a growing need for innovative water resource management in order to satisfy the national demands. Noticeable progress has already been made with ongoing infrastructure project, including the development of mega projects such as the new Suez Canal, new urban communities, and recent initiatives in underground water exploration and desalination plant establishment. To support and enhance investments in new water and wastewater technologies, WATREX EXPO organizes an annual conference week in Egypt, to bringing together stakeholders from both governmental and private sectors in the MEA region. This event provides a platform to share experiences and connect with decision-makers of the water and wastewater projects.
Food
and agriculture
With a young population, representing one third of the country, Egypt is the largest and potentially most dynamic and fast-moving consumer goods market in the Middle East. The revenue of the Egyptian food market amounts to US$ 183bn in 2023. The market is expected to grow annually by 7.32% (CAGR 2023-2027). The Egyptians continue to show rising demands for Food & Beverages, and with a growing population of 2.5% per year who spend over 30% of their income on food, the Egyptian market offers fruitful opportunities for potential investors.
Within its Vision 2030, Egypt aims to increase the volume and productivity of both the land and water units, raising the degree of food security of strategic commodities, increasing the competitiveness of agricultural products in local and international markets and improving the climate for agricultural and aqua-cultural investments. All of these factors boost the need for Danish high valued products.
Textile
The spinning and textile sector is one of Egypt's most vital export industries. In 2023, Egypt's cotton export reached an impressive 522.96 USD million, according to the United Nations COMTRADE database. Textiles, particularly cotton, represent 10.5% of Egypt's total exports, showcasing the significant role this industry plays in the nation's economy. Egypt's global reputation for producing high-quality raw cotton gives it a strong comparative advantage in the international market.
Health
The Health sector in Egypt is interesting with a growing market, primarily due to the demand from the constantly increasing population combined with strong commitment from government. For example, Egypt aims to adopt inclusive healthcare coverage, improve the quality of healthcare and develop the pharmaceutical sector through Egypt Vision 2030. This presents great opportunities for Danish companies, especially in non-communicable diseases including diabetes and obesity, digitalization, blood safety and family planning.