Back to the complete issue
Monday, 7 December 2020

You’ll be back to pre-covid profit levels by 2022, an HSBC survey says

Egyptian businesses are starting to see through the covid gloom: Almost nine in 10 (89%) Egyptian businesses forecast revenue growth in 2021 and 83% expect their bottom lines to return to pre-covid levels by the end of 2022, according to the results of an HSBC poll. The bank’s 2020 Navigator survey, which polled 209 firms across various sectors of the economy in September and October, suggest that the mood among Egypt’s private sector is beginning to improve after a tough year marred by the impact of the pandemic.

Tap / click here (pdf) for the full report.

A sense of “cautious optimism”: Despite the challenging conditions, more than three-quarters (76%) of respondents believe the outlook for their businesses will either improve or remain the same in the coming months, falling slightly from 88% in last year’s survey but higher than the global average of 67%.

Finally, that long-awaited return of capex spending? The vast majority of businesses (87%) plan to increase investment in 2021, 20 points higher than the global average and above the 83% of firms in the Middle East, North Africa, and Turkey (MENAT) that said the same. In Egypt, nearly 50% of businesses plan to increase investments by 5-20% and a quarter by more than 20%.

Where do you want to invest? The top priority areas are product innovation, marketing, and geographic expansion, respondents said.

Trade worries persist, but only in the short term: Half of firms say they believe the pandemic will continue to cast a shadow on global trade as we head into the new year, and around two-thirds feel that trading across borders has become harder over the last 12 months. Despite that, only 12% of the businesses said they have a negative view of the next 1-2 years.

Key growth drivers, risks: Businesses expect tech-enabled efficiencies, product innovation, and the ability to attract investment and access to funding as the top three growth drivers moving forward. Meanwhile, exogenous factors such as the resurgence of covid-19 or political uncertainty were cited as the primary obstacles to recovery.

Reshaping supply chains: Egyptian firms were more worried about supply chains than the global average, with 50% (compared to 39% worldwide) saying that an increase in cost is the main problem, followed by a lack of agile suppliers. However, more businesses have broadened rather than limited their overseas suppliers, with 38% anticipating that reshaping their supply chain will be key to improved future access to more markets abroad.

Egyptian companies are paying attention to sustainability: Almost all of the respondents (98%) think a focus on sustainability will generate sales growth and more than 80% have begun or have plans to set targets for ESG issues, higher than the global average.

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.