The UNCTAD annual World Investment report released last week selected Egypt as the first country in Africa to attract investment. Mona El-Fiqi
The World Investment report 2007 released on 18 October by the United Nations Conference on Trade and Development (UNCTAD) under the title Transnational Corporations, Extractive Industries and Development ranked Egypt as the first in Africa and the second among the Arab countries in attracting Foreign Direct Investments (FDI) in 2006.
"The Egyptian economy succeeded to attract 30 per cent of FDI directed to Africa and 43 per cent of FDI flows to the North Africa region," said Mahmoud Mohieldin, minister of investment at a press conference held last week.
Mohieldin asserted that the government is committed to continue encouraging investors and to provide a sound business environment particularly in south Egypt governorates.
The UNCTAD World Investment report praises the improvement of investment climate in Egypt and procedures of the economic reform programme that provides new investment opportunities. "The total value of FDI flows to Egypt was estimated at $10 billion from January to December 2006 compared to $5.4 billion during the same period in 2005," says the report.
Moreover, the UNCTAD report which covers 180 countries, explained that the FDI structure in Egypt was changed since non oil investments raised to represent 70 per cent of total investments while in the past 80 per cent of the investments were used to be directed to only agriculture and industry sectors. But these $10 billion investments were mainly new projects as well as expansions in already established projects in different sectors such as industry, tourism, services, IT and construction.
Assem Ragab, chairman of the General Authority for Investment and Free Zones said the outcome of the World Investment report 2007 comes in line with the evaluation of other international institutions to the investment climate in Egypt.
Ragab added that in September 2007, Egypt was ranked top reformer worldwide in the Doing Business report, an annual series issued by the World Bank and the International Finance Corporation (IFC). Doing Business noted that Egypt outpaced other reformers worldwide and in the Middle East and North Africa in making it easier to do business with the improvements in five of the 10 areas studied by the report.
Moreover, Ragab said that Egypt was chosen by the World Economic Forum among the best seven countries worldwide that achieved an improvement in the investment climate.
Ragab added that, according to figures of the General Authority for Investment and Free Zones, the accumulated figure of investments in Egypt from 1970 to 2007 showed that Egyptians own 72 per cent of total investments in Egypt through this period while 13 per cent are for Arab investors and 15 per cent are left to foreigners. Moreover, Ragab said that the growth of private investments reached 40 per cent while public investment was reduced to 14 per cent.
Going through the UNCTAD World Investment report, it says the international FDI flows reached $1.306 trillion in 2006 achieving a 38 per cent increase compared to last year. This figure, according to the report, reflects a healthy economic performance worldwide.
As for Africa , the report says FDI flows to Africa were doubled between 2004 and 2006 to reach unprecedented figure estimated at $36 billion. The report noted that the investment in Africa was directed to raw materials and high profits within an improved business climate.
UNCTAD's report said that investments to developing countries, which are going through a transitional stage in their economics sectors, witnessed a very high level estimated at $379 billion.
For the first time the World Investment report selected seven companies from developing countries to be among the largest transnational corporations in the world.
According to the report, the foreign direct investment flows to developed countries grew to reach $857 billion in 2006. The UNCTAD report notes that in contrast to the last significant increase in FDI to industrialised nations which occurred at the end of the past decade the current jump covered all developed regions and economic sectors. "The surge was mainly driven by cross border mergers and acquisitions with the increasing involvement of private equity funds and reflected higher stock market valuations rising corporate profits and favourable financing conditions in 2006," says the report.
The report expects that international FDI flows will continue to rise in 2007 but in less rates than 2006.