Egypt: “Open for Business”
With the political instability that followed the Arab-Spring, it is understandable that Australian investors would be deterred from investing in Egypt. The removal of Hosni Mubarak from his presidency saw a turbulent period follow in Egypt, with the subsequently elected president Mohammed Morsi also being removed from power in 2013 by a popular people-inspired uprising.
However, since the election of Abdel Fatteh Al-Sisi as president in June 2014, a normality has returned to Egypt, which has driven renewed economic growth. This bodes well for potential investors who are looking to fill gaps in the Egyptian market.
In Arabic, Egypt is often referred to as ‘Oum el Dounia’, which loosely translates to ‘the Mother of Civilisations’ in English. With the Pyramids of Giza and the storied history of the Nile River, it is easy to see why Egypt has assumed this title. Egyptians are proud of their ancient history and will often welcome visitors with the refrain ‘Welcome to Egypt’ which expresses a warmth and hospitality which they are famous for in the MENA region.
The current population of Egypt is roughly 87 million people and is continuing to grow rapidly, with estimates forecasting that the population will hit 100 million by the year 2020. The official language of the state is Arabic, with this linguistic homogeneity making it easier to do business within different regions of Egypt. However, Egyptians are becoming increasingly fluent in English, especially amongst the under-25 demographic who are continually consuming Western culture trends.
The Food and Agriculture Organisation of the UN estimates that only 3.5% of Egypt’s territory consists of arable land, with the vast majority of Egypt comprising desert. With a rapidly growing population, Egypt like much of the rest of the MENA region faces a sharp food-security challenge which it cannot address through its own domestic agricultural programs alone.
So where does Australia fit into this?
In 2014 Australian exports to Egypt represented AUD$480 million worth of trade, yet this only ranked Australia as 33rd on Egypt’s list of partner countries from whom it imports; this indicates that Australian companies are ignoring Egypt despite tremendous demand for agricultural products. For instance, in 2014 vegetable products represented Australia’s biggest export to Egypt with a value of AUD$136 million, which only makes up a fraction of Egypt’s total vegetable imports.
Egypt’s harsh geography also means that it is the world’s biggest importer of wheat, an opportunity which Australian companies have yet to fully exploit. In 2014 Australian wheat exports to Egypt were valued at AUD$89 million, which is a minuscule figure compared to exports to other countries. For example, wheat exports to Yemen were valued at more than AUD$265 million, despite security concerns making it increasingly harder for exports to pass through Yemeni ports. With security challenges and civil strife encumbering Yemen's growth prospects, Egypt represents a growing market which Australian wheat exporters can diversity into.
In 2013 the Egyptian Ambassador to Australia, Hassan El-Laithy, met with the Western Australian Pastoralists and Graziers Association (PGA) and expressed Egypt’s desire to import better quality wheat than what it is currently available from Black Sea markets. However, Australia’s relatively low wheat export figures to Egypt indicate that Australian companies have yet to jump on this opportunity.
The ambassador’s precise words were "I am impressed to see that 92 percent of Australia's wheat production is for export, while in Egypt almost 50 percent of our needs are imported. So you can see relevance here that we need to have a type of partnership between one credible supplier and one real importer." Clearly the Egyptian demand for Australia’s high-quality wheat is there.
Though traditionally Australia’s livestock trade has been centred on Asian markets, Egypt represents a growing market, which is ripe for Australian exporters to explore. The ban on Australian livestock to Egypt was lifted in 2014, with the Australian Livestock Exporters Council noting that this brings with it opportunities for exporters to diversify their export markets. With estimates putting the Islamic population of Egypt around the 90% mark, the renewed possibility of exporting livestock to Egypt during the busy period of Ramadan is a potential goldmine for Australian cattle-exporters.
As the security situation in Egypt continues to improve and with the local population continuing to grow and consume, Australian companies can become key players in filling vital gaps in the Egyptian market. At the Egyptian Economic Development Conference, which attracted 1700 investors, Egypt expressed its commitment to global markets and declared that Egypt is “open for business.” Australian companies must pounce on this opportunity before it is too late.