Egypt

Competitiveness and Ease of Doing Business

Egypt’s competitiveness

Egypt performed poorly in terms of international competitiveness, ranking 115th out of 138 countries in the Global Competitiveness Report 2016–2017.[40] It ranked well below South Africa (47), Morocco (70) and Algeria (87) but just ahead of Tanzania (116) and Nigeria (127). Egypt's ranking has shown a slight improvement, climbing one place in the rankings from 116th in 2015–2016 to 115th in 2016–2017.

Egypt ranked best for its market size, at 25th out of 138 countries, down one place since 2015–2016. Egypt performs poorly on all other indicators, falling in the bottom third of the ranking for most of these. The country scored better on its institutions (87th), health and primary education (89th) and business sophistication (85th). It ranks worst for labour market efficiency (135th) and its macroeconomic environment (134th), it has climbed by 2 and 3 places respectively in the ranking by these indicators since 2015–2016. From 2015–2016 to 2016–2017, the country’s rankings in all indicators except ‘market size’ have shown some improvement, with ‘financial market development’ and ‘health and primary education’ indicators showing the best improvement, climbing 8 and 7 places respectively.

Table 2.6: The Global Competitiveness position of Egypt, the top three and selected African countries (2016–2017)

Country GCI 2015-2016 GCI 2016-2017
Rank/140 Score (1-7) Rank/138 Score (1-7)
Switzerland 1 5.76 1 5.81
Singapore 2 5.68 2 5.72
United States 3 5.61 3 5.70
Mauritius 46 4.43 45 4.49
South Africa 49 4.39 47 4.47
Rwanda 58 4.29 52 4.41
Botswana 71 4.19 64 4.29
Morocco 72 4.16 70 4.20
Algeria 87 3.97 87 3.98
Kenya 99 3.85 96 3.90
Ghana 119 3.58 114 3.68
Egypt 116 3.66 115 3.67
Tanzania 120 3.57 116 3.67
Nigeria 124 3.46 127 3.39

Source: World Economic Forum, 2016[41]
Note: Values are on a 1-to-7 scale

Economic freedom and opportunity

The 2017 Index of Economic Freedom deemed Egypt’s business environment to be “mostly unfree”. However, Egypt’s overall score has shown a slight improvement between 2000 and 2017, from a score of 51.7 to 52.6 (out of 100)[42], which is slightly lower than the Middle East and North African average score of 61.9 in 2017.[43] Egypt scores the best on tax freedom (86.1 out of 100) and trade freedom (70.2). The country scores abysmally on fiscal health (4.6), and also scores poorly on government integrity (32.7), as corruption is pervasive at all levels of government, and property rights (35.4)[44], which are likely two areas of great concern for investors.

The country’s score for the tax burden showed a major improvement, the score for this indicator increasing from 65.3 to 86.1. Trade freedom also improved substantially between 2000 and 2017, the country’s score climbing from 55 to 70.2. This indicates that tariff rates and non-tariff barriers have been adjusted to facilitate trade.

Since 2000, the property rights have deteriorated, from 50 to 35.4 in 2017, as extensive corruption and expropriation have weakened the protection of privately owned property. The country’s score on monetary freedom has also deteriorated, from to 76.8 to 69.6, indicating that inflation rate and price controls have further distorted market activity. Labour freedom has declined since 2005, from 59.7 to 51.3, indicating that Egypt’s labour market has deteriorated in terms of its legal and regulatory framework (see chapter 5).

Table 2.7: Economic growth, opportunity and Freedom (2000–2017)

  Indicator 2000 2005 2010 2016 2017
Economic Freedom Score 51.7 55.8 59.0 56.0 52.6
Rule of law Property rights 50.0 50 40.0 20.0 35.4
Judicial effectiveness ... ... ... ... 56.3
Government integrity 29.0 33.0 28.0 37.0 32.7
Government size Tax burden 65.3 66.1 89.7 85.6 86.1
Government spending 54.4 78.6 73.4 65.9 63.0
Fiscal health ... ... ... ... 4.6
Regulatory efficiency Business freedom 55.0 55.0 65.0 68.3 66.8
Labour freedom ... 59.7 55.6 51.4 51.3
Monetary freedom 76.8 77.6 64.2 65.8 69.6
Open markets Trade freedom 55.0 58.2 74.0 70.6 70.2
Investment freedom 50.0 50.0 50.0 55.0 55.0
Financial freedom 30.0 30.0 50.0 40.0 40.0

Source: Index of Economic Freedom, 2017[45]

Egypt ranked 144th out of 180 countries in 2017 Index of Economic Freedom, which is well below South Africa’s (81st), Morocco’s (86th), and Nigeria’s, Tunisia’s and Kenya’s (115th, 123rd, and 135th respectively), but ahead of Algeria’s (172nd).

Table 2.8: Regional Comparison – Index of Economic Freedom (2017)

Country Region Overall score World ranking Regional ranking 
South Africa Sub-Saharan Africa 62.3 81 6
Morocco Middle East and North Africa 61.5 86 9
Nigeria Sub-Saharan Africa 57.1 115 16
Tunisia Middle East and North Africa 55.7 123 10
Kenya Sub-Saharan Africa 53.5 135 27
Egypt Middle East and North Africa 52.6 144 12
Algeria Middle East and North Africa 46.5 172 14

Source: Index of Economic Freedom, 2017[46]

Ease of doing business

A high ranking on the Ease of Doing Business Index means that the regulatory environment is relatively conducive to starting and operating a local business. In the World Bank’s Doing Business 2017 Report, Egypt ranked 122nd out of 190 economies in the world and 11th in Middle East and North Africa region.[47]

Egypt is ranked 73 places far behind Mauritius, the top performing African country. Egypt is also far behind Morocco (68th), South Africa (74th,/sup>), and Tunisia (77th), but ranks better than Algeria (156th), Nigeria (169th) and well ahead of Libya by 66 places.[48] Though the country’s ranking climbed by four places between 2016 and 2017, Egypt’s ranking has deteriorated substantially since 2010, when it ranked 106th.[49]

Table 2.9: Ease of Doing Business Index of Egypt and selected African countries (2017)

African Country Region World ranking Regional ranking
2016 2017 2017
Mauritius Sub-Saharan Africa 42 49 1
Morocco Middle East and North Africa 68 68 4
South Africa Sub-Saharan Africa 72 74 4
Tunisia Middle East and North Africa 75 77 5
Egypt Middle East and North Africa 126 122 11
Algeria Middle East and North Africa 163 156 15
Nigeria Sub-Saharan Africa 170 169 37
Libya Middle East and North Africa 188 188 20

Source: World Bank, 2016[50]

The Global Competitiveness Report indicates that policy instability, government instability and access to financing are major barriers businesses face in Egypt.[51] Foreign currency regulations and corruption are also high on the list of concerns for doing business in the country. All of these problems need to be urgently addressed in order to make it easier to do business, facilitate economic growth and attract investment.

  • Country Profile
  • Introduction
  • Broad Economic Indicators
  • Currency and Exchange Rate
  • Competitiveness and Ease of Doing Business
  • Foreign Investment and Largest Companies
  • Foreign Aid
  • Country Strategic Framework
  • Summary of Economic Conditions
  • Implications, Challenges and Recommendations
  • Population
  • Living Standards and Poverty Levels
  • Healthcare
  • Implications, Challenges and Recommendations
  • Qualifications Profile of the Population and Workforce
  • Levels of Schooling and Basic Education
  • Technical and Vocational Education and Training
  • Tertiary Education
  • Innovation in Egypt
  • Implications, Challenges and Recommendations
  • Labour Force
  • Employment by Sector
  • Employment by Skill Level
  • Employment by Occupation
  • Labour Productivity
  • Unemployment and Job Creation
  • Expatriates, Immigrants and the Egyptian Diaspora
  • Wage and Salary Trends and Social Insurance
  • Industrial Relations Framework
  • Labour Market Efficiency
  • The Fourth Industrial Revolution
  • Implications, Challenges and Recommendations

Economy

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