Launching a campaign in the Egyptian media to promote Egypt’s new Foreign Direct Investment (FDI) law is sufficient proof that the Egyptian government still doesn’t know what is required to stimulate foreign investors to expand their businesses into Egypt. Domestically propagandizing our country as a good investment destination won’t bring new foreign investors. To anticipate what foreign investors truly need, or miss, in our mechanism, the government simply needs to place itself in their position.
The Egyptian state believes that FDI is a one-way inflow of funds; thus, it exerts no efforts to prompt FDIs. As a result, when attempting to take their money out of the country, foreign investors find themselves facing a path fraught with difficulties and uncertainties. The promotional campaign for FDI in Egypt reached its zenith two years ago at the Sharm El Sheikh Economic Development Conference. The government presented plenty of good business opportunities to hundreds of serious foreign investors who came to the city and eventually disappeared – discarding their investment pledges. This turn of events should have inspired us to realize that FDI is not only about good publicity.
Capitalists often consider investing in new countries because they offer good returns on their money through a clear and transparent process. Investors know when they will be able to make returns on their investments and that a sound legal system is in place to secure their capital in case of discord. Egypt has plenty of very good business opportunities that could yield excellent returns on investments (ROI); however, any investors wishing to seize these opportunities must go down a dark narrow path, not knowing when or how they will reap their benefits. Our policy of highlighting investment opportunities while neglecting to mend the process is our true failure.
Foreign investors who already have a footprint in Egypt are confronted by one surprise after another. Our tendency to change the laws during the investment process not only negatively affect their returns, but also their appetites for prolonging their investments in Egypt – and it obviously discourages new investors from coming to Egypt. Investors don’t only want to realize profits at the end of the investment tunnel; they also need to be assured that their returns will be valuable and realizable in due course.
The lack of understanding of investors’ needs and outlooks doesn’t only exist at the government end; it is shared by Egyptian capitalists! Foreign investors always want to invest in existing projects to avoid the complicated process of greenfield investments and to cut down on ROI time. However, in an attempt to maximize their wealth, the Egyptian partners often tend to exaggerate their shares’ prices. Moreover, most Egyptian companies are not interested in merging with a larger entity or opening international branches, thus, they often decline international partnerships.
Egypt’s urgent socioeconomic need is to create new jobs for its millions of unemployed youth. Since we can’t rely on domestic investment to do this, we are in desperate need of FDI. The Egyptian government needs to accord equal or higher importance to the issue of investors’ returns than to polishing up available business opportunities. Offering true incentives and advancing the Egyptian investment process should be a non-negotiable duty. Egypt is a promising investment destination, but it lacks dynamism. When it comes to FDI, what really matters is the inflow and outflow of capital through equally smooth two-way channels.
The Egyptian government habitually resorts to neighboring Arab Gulf countries, requesting them to invest in Egypt. We encourage people who adore our country to expand their businesses in it; I trust that we have drained this avenue dry. True FDI depends on successfully attracting mean business people who only want to maximize their profits. Amending our business and legal structures to attract this category of foreign investors will lead them to allocate their capital in Egypt of their own accord, without the need for organizing publicity campaigns. The true measure of success of investment in Egypt is substantial FDI growth – not domestic propaganda.