Egyptian Business Council for International Cooperation (ECIC)

"Investment Opportunities in Egypt Between Aspirations and Challenges"

Cairo, 14 March 2023

Remarks by

Ambassador Christian Berger,

Head of the EU Delegation to Egypt

Excellencies, Ladies and Gentlemen, distinguished guests,

Thank you very much for the invitation to today’s event, which could not be more topical.

Investment is of course not a new area in our bilateral relationship. It is an important component of EU-Egypt relations in our bilateral Association Agreement which specifically refers to the identification of investment opportunities in Egypt. This is exactly what we are called to discuss tonight.

Let me start with a couple of numbers.  European FDI amounts to €39 billion in terms of stocks and is about 38% of all investments.  Biggest in Africa, second largest in the Mediterranean. 

Unfortunately, in 2020 & 21 investment was affected by Covid and the FDI stock was reduced to €18 billion.  I am sure, however, that in the aftermath of this contraction largely due to Covid, and despite the new context of the Russia’s war of aggression against Ukraine, EU FDI to Egypt will surge again.

Egypt has many advantages as an investment destination: geo-strategic location, land availability, solar and wind power capacity, skilled human capital, as well as a big domestic market. It can easily serve as a manufacturing hub for Africa and the MENA region.

These are the tangible assets. Investors also need to be reassured about the intangible assets, particularly investment facilitation.

Investment facilitation policies have become an increasingly important aspect of a sound and sustainable investment climate.  Investors tell us what they need to see are common sense policies and regulations. In other words, investors need:

-   predictability and transparency;

-   streamlined authorisation procedures ensuring the swift processing of applications;

• focal points (one stop-shops) to facilitate the interaction between investors and the administration;
• legal certainty about the investment regime including on taxes and incentives.

Moreover, this must be coupled with solid intellectual property protection and a fair and quick dispute resolution mechanism.

Egypt has been making important steps in this direction.  At the Economic Conference of last October, the Prime Minister affirmed that improving the investment climate remains one of the hardest challenges facing Egypt and that the government would be making considerable efforts to attract investment through regulatory changes and through upgrading infrastructure – a good example of the latter is of course with the development of the Suez Canal Economic Zone.

The agreement with the IMF and the recently announced economic reforms and policy initiatives, such as the state ownership policy, the competitive neutrality principle, the forthcoming new industrial and hydrogen policies point towards a new investment framework in Egypt.

We will continue to accompany Egypt with the planned reforms, as this will send a very positive signal to European investors.  A stable business and legal environment and a level playing field between the private and the public sector are necessary conditions for attracting new investments in Egypt.  And we should remember that investment opportunities are important to EU economic operators not only for exports to the EU but also to Africa and the MENA region.  This would be clearly a win-win situation.

Any new policy initiative should have at its core the objective of attracting sustainable investment. Investment is no longer an exercise only measured in monetary terms (how much the investor brings in). The “sustainability” angle of investment is also of paramount importance. Investment needs to be good for the host country in terms of improving social rights, health and safety conditions and be conducive to good environmental practices. In other words, Egypt needs investment to promote sustainable development through diversification (moving up the value chain), regional integration, and better equipping the Egyptian economy for the challenges of digitalisation and the transition to a net zero economy.

The EU responds positively to such policies. The global development (Covid, war in Ukraine, climate change), have led the EU to review its trade and investment strategy and focus more on the need to “nearshore” supply chains and to secure new sources of supply for energy with an emphasis on renewable energies and low carbon fuels (e.g., green hydrogen).

In parallel to this, the Joint Communication on a Renewed Partnership with the Southern Neighbourhood outlines an ambitious and innovative New Agenda for the Mediterranean and proposes a range of actions focusing on the investment climate and the business environment including on investment facilitation and sustainable development.

Yet, provisions under the current international investment legal framework – including in Free Trade Agreements such as the Euro-Mediterranean Association Agreements, or in earlier generation bilateral investment treaties concluded with Southern Neighbourhood countries – do not suitably address investment facilitation, nor sustainable investment.  Therefore, the European Commission has outlined its plan to propose a new, modernised sustainable investment initiative through sustainable investment agreements to interested partners.

Lastly, Egypt’s plans to become a green energy hub in the region could be the linchpin for a strengthened trade relationship in the energy sector. We only very recently – during COP27 - signed the MoU on green hydrogen. Cooperation in renewables may provide plenty of trade and investment opportunities between European companies and their Egyptian counterparts.

In the next few years, the economic shape of the net-zero age will be firmly set. New markets will have been created, breakthrough clean technologies will have been innovated, developed, and brought to market, and our energy systems transformed. Therefore, those who invest first and faster today will secure their place in this new economy and create jobs for a newly skilled workforce, rejuvenate industrial manufacturing, lower costs for people and businesses and be in a prime position to support other parts of the world to decarbonise their own economies. We must make sure the EU and Egypt are part of this paradigm shift.

We remain available to help Egypt streamline its investment framework and jointly take advantage of shared opportunities through strengthened cooperation.

Thank you