Back to the complete issue
Wednesday, 15 June 2022

Egypt’s FDI might outdo much of the world in 2022

Egypt saw foreign direct investment inflows fall 12% in 2021 but remained the second-largest recipient of FDI in Africa after South Africa, according to the UN. Figures in the 2022 World Investment Report (pdf) show that the country received USD 5.12 bn of FDI last year, down from USD 5.9 bn in 2020. Accounting for the USD 367 mn in outflows, Egypt received net FDI of USD 4.8 bn during the year, down from USD 5.5 bn in 2021.

FDI had been on an upwards trend until the pandemic hit, rising from USD 4.3 bn in 2013 to USD 9 bn in 2019.

Signs are looking more promising this year, with USD 22 bn in Gulf money expected to enter the country in what the report says “may boost FDI going forward.” The UAE, Saudi Arabia and Qatar pledged to provide bns of USD in investments and central bank deposits earlier this year to provide emergency liquidity and economic support to mitigate the fallout from Russia’s war in Ukraine.

Greenfield projects have begun to recover: The value of greenfield projects more than tripled to USD 5.6 bn last year, but remained far below the USD 13.7 bn pre-pandemic in 2019. Sixty-five new greenfield projects were announced during the year, up from 52 the year before but below the 140 seen in 2019 before the pandemic. The report name-checks Abu Dhabi-based Reportage Properties’ USD 1.5 bn real estate project with Al Ahly Sabbour as one of the major greenfield investments announced last year.

The Madbouly government has also been on a drive for fresh FDI, with officials meeting with foreign and Arab investors in the past few weeks under efforts to promote the country as an investment-friendly destination as the state doubles down on its privatization push.

This could see us buck a global FDI decline in 2022: Global greenfield project numbers have already fallen 21% in 1Q and the trend looks set to continue as the war in Ukraine, rising interest rates, and increasing fears of recession in the US and Europe weigh on the global economy. “The fallout of the war in Ukraine with the triple food, fuel and finance crises, along with the ongoing covid-19 pandemic and climate disruption, are adding stresses, particularly in developing countries,” the report wrote. Investor uncertainty and risk aversion could also put “significant downward pressure” on global FDI this year, it adds.

But until then, flows into Africa more than doubled to USD 83 bn in 2021 though much of this was due to a single transaction, without which FDI growth would have been more moderate. European investors remain the largest holders of foreign assets in Africa, with the UK leading the pack with USD 65 bn in investments, and France coming in second with USD 60 bn.

Most areas of the world saw a recovery of FDI inflows in 2021 following exceptionally low levels the previous year. Global flows rose 64% to USD 1.58 tn on the back of booming M&A and international project finance thanks to loose financial conditions and huge infrastructure stimulus packages.

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 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; Etisalat Misr (tax ID: 235-071-579), the leading telecoms provider in Egypt; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.