This country profile was published in November 2010 in our annual 'Africa in 2011' issue. The next edition, 'Africa in 2012' will be on sale in November 2011.

contents :

> Country Profile

> Top Egyptian Companies

> Top Egyptian Banks

Next man on the throne

After nearly 30 years with President Hosni Mubarak in power, there is a growing sense that political change is on the cards. Doubts about the health of the long-time leader persist and many question the party line that he will stand again for elections in late 2011, when he will be 83. This uncertainty could have a detrimental effect on the economy although the overall outlook remains strong, largely thanks to rising consumption and foreign direct investment. Still, the benefits of sustained growth over more than five years have not trickled down to the lower echelons of society, a fact that poses a continuing challenge to policy makers. In the year ahead, the government will continue to wrestle with high youth unemployment, inadequate standards of education, weak infrastructure and energy shortages.?

The official line of the ruling National Democratic Party (NDP) is that an announcement about its candidate will be made shortly before the presidential vote next year. The party’s head of media said in late October that Mubarak was expected to stand for a sixth six-year term. This is unlikely to stop speculation about who will succeed him. His son Gamal, a former banker and head of the NDP’s powerful policy committee, denies that he has presidential ambitions. However, he has not stopped publicity campaigns, presented as private initiatives by local businessmen, calling on him to run. Some analysts also talk about a possible presidential bid by the intelligence chief, General Omar Suleiman.?

A series of constitutional amendments stand in the way of Suleiman or other prominent opposition leaders becoming candidates. These stipulate that a contender must have held a senior position in a registered political party for at least a year or, if running as an independent, be endorsed by 250 members of elected assemblies and municipalities, all of which are dominated by the NDP.

?Since returning to Egypt last February, Mohamed ElBaradei, a Nobel laureate and former director of the International Atomic Energy Agency, has been petitioning for a change to electoral laws that would increase judicial oversight of the proceedings and allow him and others to enter the presidential race. ElBaradei has galvanised the opposition with the formation of the coalition National Association for Change (NAC), but has also exposed its weakness and divisions.

?Despite an official ban, the Muslim Brotherhood (MB) has long been the strongest and most organised opposition movement in Egypt. The NAC collected over a million signatures for its reform campaign thanks mainly to the Brotherhood’s involvement. The MB has ruled out putting forward a presidential candidate to run as an independent in 2011, but after an announcement that it would field candidates for parliamentary elections in November 2010, police arrested more than 250 supporters in a two-week period, citing a ban on religion-based campaigning.

The emergency law in place throughout Mubarak’s time in office allows arbitrary arrests and prolonged detention without trial. Opposition activists complain that it leads to the systematic abuse of human rights. Civil society groups also express concern that freedom of expression is being curtailed after several years in which access to the internet and independent media has expanded (see graph). At the end of the year, the authorities were introducing new restrictions as they braced themselves for a challenging period. ? 

The financial crisis has taken its toll on the economy, hitting the main sources of foreign revenue: Suez Canal receipts, tourism, remittances from workers living abroad and foreign investment. Although these sectors have started to recover, analysts expect investor interest to be stunted by political concerns. Exploitation of oil and gas reserves and increased construction to satisfy housing and infrastructure demands should remain among the strongest areas. In July, the government signed a groundbreaking $9bn gas deal with BP and RWE Dea which should allow for production of 1bn cubic feet of gas per day from 2014.

?The IMF predicts that GDP will continue to be strong, rising from 5.3% in 2010 to 5.5% in 2011. While this would outpace most Gulf nations, economists point out that Egypt needs to maintain at least this level of growth to create jobs and help reduce poverty. Up to 700,000 workers enter the market annually in this country of more than 80 million people.?

Despite progress in trade, there has been little positive impact on poor Egyptians. The government insists that high poverty levels and the income gap are the result of a period of economic transition. With fears that high food prices could lead to civil unrest, there are plans to keep expensive subsidy programmes for basic foods including bread, although the government will reform the subsidies in 2011. The government also promises to improve social services, particularly education and health, which need large-scale investment, as well as infrastructure and energy provision, following a series of power outages that led to protests during the month of Ramadan.

?Mubarak’s government announced a big infrastructure drive in 2010. It plans to build four nuclear power plants with capacity of up to 4,000MW by 2025. The first tender, for the site at Dabaa, is due in December 2010. ?This followed an increase in the government’s stimulus package, which was focused on roads and water projects, to $10bn in January 2010. Another project targeted is the building of a tunnel under the Suez Canal at Port Said. In an attempt to mirror Chinese-style growth trajectories, the government launched a programme in October to set up eight dedicated new trade zones.

After a period of protecting the local cement, steel and rice industries, the government has pledged to reduce trade barriers. New free-trade agreements have been signed with countries in South America and are under discussion with Russia and Asia. Tensions remain high with countries through which the Nile River passes, as population growth and rising electricity demands lead to more calls for water-sharing arrangements.

?Egypt’s relationship with the US remains key to its foreign policy. Since becoming the first Arab country to sign a peace treaty with Israel in 1979, it has received large sums of US aid. For the year ahead, the US Congress has already granted $250m in economic assistance. Washington values the moderate, mainly Sunni, Muslim state as a strategic ally and sees Egypt as a bulwark against Iran’s increasing influence in the Middle East. It has also been an important mediator in the peace process between Israel and Palestine. Egyptian officials led by General Suleiman also persuaded Palestinian factions to form a unity government and helped negotiate a prisoner exchange between Israel and the Islamist group Hamas, which controls Gaza. While the US gently presses for democratic reforms and improved human rights, President Barack Obama’s government appears to have calculated that maintaining stability takes priority.

 

Real-estate boom

There has been a property boom in the past five years as developers rush to meet demand at the high end of the market. Young executives and successful investors were happy to leave cramped conditions in the city centre and snap up new luxury homes on the eastern and western outskirts of Cairo.?

While the global recession took a slight toll on real estate in 2009, growth in this sector is up again. Credit Suisse says that Egyptian companies will have outperformed those elsewhere in the region in 2010. It concluded that off-plan sales and continuing reliance on cash rather than mortgages offered “a stable outlook for pricing”. Egypt’s largest property developer, Talaat Moustafa Group, announced that sales were up 135% year-on-year for the first half of 2010. Another leading firm, Sodic, looked on course to have its best year ever.?

Although the greatest demand has so far been for low-income housing, this has proved the least profitable sector for real-estate companies. Officials from the National Housing Project announced in August that construction was on target to complete 500,000 planned housing units across the country by the same time next year. However, that still falls short of the estimated demand for 360,000 new houses per year. Experts predict the next phase of growth will be middle-income housing and commercial property as well as shopping malls.

 

 

Egypt's Top Companies

 

 

 

Taken from the Top 500 Companies

 

Egypt's Top Banks

 

Taken from the Top 200 Banks

 

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