Egypt’s business climate improving, challenges remain

Egypt’s business climate is on track to revive after years of turmoil, as the Arab world’s most populous country and the biggest economy in North Africa paved the way to attract more foreign direct investment through passing a new investment law, the London-based consultancy Capital Economics said in a research note.

“The new Investment Law is a positive step towards improving the dire business environment. But greater efforts, particularly in raising domestic savings, are needed if investment is to reach the levels that historically have supported strong and sustained growth in other emerging markets.”

In a bid to improve the business environment and encourage investment, earlier this month the Egyptian parliament passed a long-awaited new investment law.

Once approved by President Abdel Fattah Al-Sisi, the legislation will replace the previous 1997 law, to which widely criticised amendments were made in 2015.

But Capital Economics doesn’t think that the new investment law will go far enough.

“The establishment of certification offices merely masks the bloated bureaucracy, which investors are still likely to come up against. Meanwhile, the right to repatriate profits and establish private free zones merely reverses previous policy decisions that prevented these. And there are also concerns that the new law could foster corruption,” the research note explained.