Sisi says military economy is 1.5% of Egypt’s GDP, but how accurate is this?

The economic activities of Egypt’s Armed Forces is a topic that has been widely discussed in recent months, with analysts speculating as to how much the military economy constitutes of the nation’s Gross Domestic Product (GDP). Estimates generally range from 5 to 40 percent.

At a youth conference in Sharm el-Sheikh last week, President Abdel Fattah al-Sisi said the economic activities of the Armed Forces constitute between 1 and 1.5 percent of GDP. In the first nine months of the 2015-16 Financial Year, Egypt’s GDP was LE2 trillion, according to the Planning Ministry. Using Sisi’s calculations, this would put their activities at between LE20 and LE30 billion.

The official allocation for defense and national security is LE47 billion in the 2016-2017 national budget, but Sisi acknowledged at the youth conference that the Armed Forces purchases weapons and equipment from their own budget reserves.

There are four bodies affiliated with Egypt’s ministries of defense and military production: The National Services Projects Organization, the Arab Organization for Industrialization, the National Organization for Military Production and the Armed Forces Engineering Authority.

The Armed Forces has been expanding its economic activities over the last couple of years into healthcare, roads, education, electricity, energy, fish farming, and other sectors, as Mada Masr showed in a report published last September.