Egypt is known for the Nile River and its fascinating ancient civilization, but its modern reputation is dominated by tourism and the revolution of 2011. The Arab Republic of Egypt, though, is so much more than what is shown through the media lens, and its economy is on the rise after those tumultuous times in the last decade. With plans to try to reduce its imports and increase its exports, it’s an interesting time to look at where Egypt stands today — and where it hopes to be tomorrow.
Raw crude and finished fuel products top the list for both imports and exports of Egypt. But exciting times are ahead in this hot, emerging economy as the government has a plan to boost manufacturing and exports.
Known as an African country, Egypt is actually in both Northeast Africa and Southwest Asia, thanks to a land bridge on the Sinai Peninsula. Its northern edge is home to the Nile River Delta, as the world’s longest river finishes its northward 4,700-mile trek through 11 countries to drain into the Mediterranean Sea. The Nile defines how Egyptians regard the nation, with “Upper Egypt” in the south and “Lower Egypt” in the north, thanks to the river flowing north and the landmasses it cuts through.
There are low mountains in the south and fertile delta valleys in the north, with plenty of desert abounding. In fact, Egypt is 90% desert and it’s only the Nile that provides fertile land in this area where an average of one inch of rain falls a year — a maximum of 8 inches on the Mediterranean coast (in the Nile Delta) but zero traceable rain south of Cairo.
The gateway to the Middle East, Egypt is the 12th-largest nation in Africa for land mass with 390,000 square miles, but has the third-largest population, estimated around 100 million according to the UN in 2019. The population is densest in the north, thanks to cities like Cairo and Alexandria, but also because of the Nile’s delta providing fertile land for crops and employment.
With a median age of 23.9, like many other countries in Africa, Egypt has one of the world’s youngest populations and their population is exploding. It has nearly tripled since 1970, when it was just 35 million people. With all that growth and a desert landscape, there is increasing strain on natural resources, especially water. The population is largely urban, thanks to all that desert, and Greater Cairo is just ahead of New York City in the world’s most populous cities, sitting at ninth in the top ten with 19 million residents.
The mood in capital city Cairo is cautiously optimistic — depending on who you ask — as the country heads into 2020 with a growing economy and forecasts of exports increasing. In fact, investors today, according to The Economist, call Egypt “the word’s hottest emerging market.” But all this comes after what was a terrible 2017, where the country saw a 32% drop in its GDP, thanks to a foreign exchange crisis and a huge drop in tourist visits. The country enjoyed 20% of its economy supported by tourism just a decade ago, but with tourist interest so fickle with politics and other happenstance, the government is hyping manufacturing and trying to boost exports.
With so much political turmoil in 2011 and the ensuing coup, Egypt has had a tough road in trying to convince investors to buy into brick-and-mortar opportunities. President Barack Obama oversaw $1 billion in debt forgiveness in 2011 and $1 billion in guaranteed loans for infrastructure, which helped buoy the country through tough times. That 32% drop in GDP per capita in 2017 had Egypt accepting a $12 billion bailout from the IMF.
Unfortunately, the conditions of the IMF bailout have helped the government, but poverty is still rampant and inflation has made things difficult for the average person. Past protests, like the Arab Spring, make the political and investor climate unstable, since people don't care too much about the GDP if they can't afford the price of bread, and the prices on basics have skyrocketed. More manufacturing would lead to more jobs and a higher GDP, but brick-and-mortar investors and stability are needed for that to happen.
The currency in Egypt is the Egyptian pound and its symbol is EGP. Between 2009 and 2019, the EGP lost nearly 70% of its value, from a high of 5.2 EGP per USD to a low of 19 EGP per USD, with its steepest decline occurring at the end of October 2017, when it lost 50% of its then-value nearly overnight.
Things are changing in Egypt, due to 2017 being a pivotal year and its GDP cratering that year, but 2017 is the most recent year with complete figures available. So, according to Egypt’s imports in 2017, it’s nearly a dead heat for their top imports: finished petroleum products, machinery and electronics. For mineral fuels and their like, it composed 17% of 2017’s imports, at a total of $11.52 billion. Machinery, which includes things like boilers and nuclear reactors, commanded 8.6% of the import market, while electronics and electrical products took 7.3%.
Cereals were fourth on the list of imports, with a 6.6% share, but likely not fourth for long, since the government decided in 2018 to begin importing rice (paddy, milled and cargo) to help meet the food demands in Egypt, so this category is on the rise. Iron and steel narrowly edged out plastics, at 4.9% and 4.8%, respectively. Vehicles (not including railway or tram cars) came in at 4.7% for seventh place in the top 10.
In eighth place is articles of iron and steel at 4.2% and followed by pharmaceuticals at 3.3% in ninth place. Rounding out the top 10 is meat and edible meat offal at 2.2% of the year’s imports. After that, it’s 13 different categories all between 2.1% down to 1.1% each of the national import list, including:
- Organic chemicals
- Animal, vegetable fats and oils, cleavage products
- Wood and articles of wood, wood charcoal
- Oilseed, oleagic fruits, grain, seed, fruits
- Paper and paperboard, articles of pulp, paper and board
- Miscellaneous chemical products
- Manmade filaments
- Optical, photo, technical, medical apparatus
- Ores slag and ash
- Residues, wastes of food industry, animal fodder
- Sugars and sugar confectionery
- Manmade staple fibers
One look at the top import product for Egypt compared to its top export product and it’s easy to understand why increasing manufacturing is so important to Egypt’s economic future — it’s raw crude topping the list of exports at 20.1%, but it’s finished petroleum and other mineral fuels making up 17% of their imports. The category of pearls, precious stones, metals, and coins ranks second on the exports list with 8.2% of the total, but most of this is from their sales of gold. Next up in third are the exports of electronics and electrical equipment. Plastics were fourth at 5.8%.
In fifth, at 4.9% of the country’s exports, are nuts, edible fruits, citrus peels and melons. Anyone who’s ever had the nut-based “dukkah” seasoning or eaten Egyptian dates knows just how popular this category is! Sixth and seventh is a tie between edible vegetables and certain roots and tubers, as well as fertilizers, each with a 4.1% share. Eighth place, with 3.5%, is articles of apparel — but only “not knit or crocheted” as “knit or crocheted” sits at 13th with 1.8% of the exports. In ninth place with 3.3% is iron and steel, followed by essential oils, perfumes, cosmetics, toiletries at 2.1%.
After the top 10 come the following, including one product that’s famous in the bedding world — Egyptian cotton:
- Articles of apparel, knit or crocheted
- Glass and glassware
- Vegetable, fruit, nut food preparations
- Salt, sulphur, earth, stone, plaster, lime and cement
- Sugars and sugar confectionery
- Inorganic chemicals, precious metal compound, isotope
- Furniture, lighting signs, prefabricated buildings
- Carpets and other textile floor coverings
- Soaps, lubricants, waxes, candles, modeling pastes
- Dairy products, eggs, honey, edible products
- Organic chemicals
- Oilseed, oleagic fruits, grain, seed, fruits
- Ceramic products
As a case study, Jordan is a terrific example of Egypt and its upward trajectory for exports, but also where it struggles with imports. In the first quarter of 2019, Egypt’s year-over-year exports skyrocketed by 126.9% over the same quarter in 2018, with $367.1 million in exports to its neighbor. But it also increased imports from Jordan by 22.7% in that period, bringing in $41.5 million in Jordanian supplies.
What did Egypt export to Jordan? According to the Egypt Daily News, the shopping list included oranges, cheese, TV sets, chicken stock and frozen french-fries. Meanwhile, Jordan sold Egypt natural potassium salts, veterinary vaccines, mineral fertilizers and medicines.
Egypt sells 47% of its exports to Asia, 34% to Europe and only 13% to Africa. The Americas combined buy just 6.6% of what Egypt’s selling.
- United Arab Emirates: 11%
- Italy: 8.6%
- Turkey: 7.3%
- Saudi Arabia: 6.1%
- United States: 5.2%
- United Kingdom: 4.2%
- India: 3.5%
- Spain: 3.1%
- China: 2.7%
- Lebanon: 2.6%
In 2017, Egypt imported the most from these countries:
- China: 12%
- Germany: 6.8%
- Italy: 6.3%
- Saudi Arabia: 6.3%
- United States: 5.9%
- Russia: 5.5%
- Brazil: 4.1%
- India: 3.5%
- Ukraine: 3.5%
- Turkey: 3.2%
While it’s great to see exports to countries like Jordan surge, it’s still not a secure future when it’s so climate-dependent as it is with exporting agriculture. Being a desert nation and receiving at most around eight inches of rain annually in the fertile Nile Delta, the financial calamity of drought always looms.
And petroleum may rule the world today, but its stores are limited, and its future is tumultuous as electric vehicles and other engines are increasingly being powered through alternative sources. By selling raw crude and importing finished fuels, Egypt's oil imports show the country is missing a key opportunity.
However, Egypt’s government has made it clear that they’re aware of this and they’re open for business. With an eye toward growing as a manufacturing base, thus increasing its export capacity, Egypt is mindful of how to grow its economy. The trouble is, it’s an unstable region with an impoverished population of people who are struggling to get by. Where instability exists, investors are cautious about buying properties or building operations and factories — and achieving that will take diplomacy and salesmanship from the Egyptian powers that be.
Back in 2015, Egypt set targets to increase non-oil exports by 10% annually, and it has been achieving those goals. Now it seeks to increase exports by 400% in the next 5 years. It plans to do so by focusing on neighbor nations, like 12 African nations reported by Egypt Today: Ethiopia, Rwanda, Uganda, Zambia, Tanzania, Nigeria, Senegal, Ivory Coast, Gabon, Ghana and Benin.
Egypt’s been using data to choose their target nations, including factors like the “ease of doing business” index, their economic growth, as well as existing economic and trade cooperation.
Sectors looking to be a part of this five-year boost in exports include pharmaceuticals, furniture manufacturing and handicrafts.