Part.1 Country Background:
- Neighbouring Countries: Gaza, Israel, Libya, Sudan,
- Territorial Size of the Country: 1,002, 450 square kilometres
- Size of the Population: 86,000,000 (2014 estimate)
- Type of Political System: Democratic System, multi-party system
- Who is the Prime Minister, President?
Acting Prime Minister: Ibrahim Mahlab
Acting President: Adly Mansour
- What Political Party is in power? Democratic Alliance of Egypt
- Derivation of the form of law: common, civil, other: The country has mixed legal system which is based on Napoleonic civic law and Islamic religious law.
- How would you classify its economic system? Egyptian economy is diversified and has undergone several changes. It is an open economy, primarily dependent on agriculture, tourism, oil, petrochemical industries and revenues of Suez Canal.
- What are the GNI and the GNI per capita PPP?
GDP: $519 billion
GDP per capita: $6,500
- Major Natural Resources: Petroleum, natural gas, iron ore, phosphates, manganese, limestone, gypsum, talc, asbestos, lead, rare earth elements, and zinc.
- What major products are exported and to which countries?
Export Commodities: Crude oil and petroleum products, cotton, textiles, chemicals, metal products, and processed food to Italy, India, Germany, America, and Saudi Arab.
- What are the major imports and to which countries?
Refined petroleum, petroleum gas, wheat, and gold from Saudi Arab, Italy, Turkey, Kuwait and Brazil
- Member of what economic integration organizations:
Egypt id part of the following International Organisations: African Development Bank Group (AfDB), African Union (AU), Arab Bank for Economic Development in Africa (ABEDA), Council of Arab Economic Unity (CAEU), G-15, G-24, International Chamber of Commerce (ICC), OAPEC, WTO.
- Is it freely exchanged? Yes
Part II. BUSINESS PROPOSITION
“EGYPT is an emerging offshoring location”
Any industry whether in developed or less developed countries, that functions in today’s dynamic environment due to the effect of globalisation, is vulnerable. This study would provide a brief overview of how globalisation had affected Egypt and it became an emerging offshoring location to the world. As globalisation has started showing its impact since early 90’s, and have affected every single aspect of international prospect . Three aspects are clearly visible due to globalisation that is, a shift from industrial to information era, opening up of economies, and standardisation of all aspects of human life .
Growth Potential in Egypt
The population in Egypt is increasing at a rate of 2.5% annually, of which 70% of the population is under the age of 35years, as per the 2006 census. And by the year 2025, the urban population is expected to increase by 83%, as a result of migration and increasing population . Egypt is emerging as a distinctive offshoring location, at provides unique advantages for IT and business process outsourcing . The commercial real estate sector in Egypt is in great demand as a result of globalisation, as Western MNCs are increasing their presence in Egypt, and thus need more official space, and various regional companies are relocating their sites from, Dubai and Lebanon to Egypt . The supply is also good due to development of new cities in Egypt.
The advantages of having Egypt as an offshoring location are:
Rich in Talent supply: The country has unique multilingual talent supply; it has abundant talent supply in short and medium term, and large number of pupil graduating annually .
Low Cost of operations: Comparatively cost of operations is lower in Egypt, and it has sustainable cost competitiveness and is expected to improve in future .
Quality Infrastructure: Egypt has world class infrastructural facilities which include real estate development, connectivity, transportation and telecom. Various new offshoring locations are emerging.
Government Support: Egypt has strong government organizations involved in driving industrial growth. There are multiple organisations and initiatives are launched to increase talent supply .
Favourable business environment: The country has good quality of living, and strategically geographic location.
Financial capital: There is availability of public and private funding in Egypt .
Egypt is being ranked as one of the top five outsourcing locations by worldwide rankings .
Competitive strengths of Egypt
As per Ministry of Economics and Foreign Trade, the economic framework of Egypt has changed a lot. Egypt’s rich natural resources, integrated manufacturing facilities, flourishing tourism and agriculture sector and skilful labour force provide it with immense scope of sustainable development . The Egyptian industrial sectors is divided in two sub sectors, private and public and the country has limited range of industries which includes, textile, mining and petroleum, alcohol and tobacco, engineering, chemical, leather, wood, food, paper, plastics and printing. The major portion of the country’s GDP comes from commodity sector, along with mining and agriculture .
It has been observed that like various other developing countries, the industrial sector in Egypt is being confronted with many obstacles such as economic, technical and organisational problems , but its real estate market is flourishing, as many MNCs are offshoring to Egypt, which had created requirement for commercial and residential space. The capital market of Egypt that is Cairo & Alexandria Stock Exchanges (CASE), is ranked fifth in the world. In 1991, the Egyptian government started an economic reform program in order to move towards a free-market economy and therefore privatisation and deregulation has encouraged the stock market . Globalisation had shown its impact on capital markets to a greater extent, markets got deregulated, and restrictions on the purchase of domestic securities by foreign investors got relaxed, technological advancements speed up the communication process. Egyptian market provides a good opportunity for equity investments . In Egypt, state-of-the-art telecom and networking infrastructure is being installed which provides more coverage and trading accessibility A support office is also being established in Cairo to service the exchange in Egypt .
Part III: Evidence
In this section the evidences are being outlined to prove that Egypt is an emerging offshoring destination, from periodicals in Egypt. As per the sources the outsourcing industry in Egypt has attained its goal of $1.1 billion in ICT export revenue . It has been observed that various new investments have been made by multinationals in the past two years in Egypt. In the words of Ahmed Reda, the head of PR at ITIDA, “Egypt enjoys several advantages, given our location”.
The news published in PRNewswire and Daily News Egypt (DNE), English dailies in Egypt to prove, that Egypt is an emerging offshoring destination. As per the articles Egypt is strengthening its position amongst the top offshoring destinations, globally. The articles prove that it is a good idea to select Egypt as an offshoring destination, as many MNCs recently have invested here to outsource . The articles are attached in a separate file.
Part IV Conclusions:
This section concludes with a statement that, “Egypt is strongly emerging as new offshoring destination for MNCs”. To prove this, two articles published in English newspapers in Egypt are being sited. Egypt with its unique advantages which are being discussed in this report, serves as a good out sourcing location. From this report it is quite clear that investing in outsourcing in Egypt is a good option, as it has good quality infrastructure, government support, favourable business environment, multilingual work force, and healthy cultural environment.
Abdel-Ahim, Taha. “Economic Globalisation in Egypt.” Al-Ahram 14 July 2005. http://weekly.ahram.org.eg/2005/751/ec3.htm.
DN Egypt. “Egypt’s outsourcing sector still going strong.” Daily News Egypt 22 December 2011. http://www.dailynewsegypt.com/2011/12/22/egypts-outsourcing-sector-still-going-strong/.
ITIDA. Destination Egypt: Value Proposition. Analysis. Cairo, Egypt: Information Technology Industry Development Agency, 2009. Pdf.
—. Destination Egyptl ITO-BPO Value Proposition. Analysis. Cairo, Egypt: Inforamtion Technology Industry Development Agency, 2009. PDF.
LaSalle, Jones Lang. Opportunity Egypt. Real Estate Report. Egypt: (GAFI) General Authority for Investment and Free Zones, 2010. Document.
Reda, Ahmed. “Egypt Strengthens Position as a Top Global Offshoring Destination.” PRNewswire 27 October 2013. http://www.prnewswire.com/news-releases/egypt-strengthens-position-as-a-top-global-offshoring-destination-66357727.html.
Salaheldin, Salaheldin Ismail. “The impact of globalisation on operations management activities in Egyptian manufacturing firms: An exploratory study.” The Journal of Business in Developing Nations (2002): 28-55. Document.
Shahid, Dr. Shahira Abdel. The impact of globalization on capital markets: the Egyptian case. Case Study. Egypt, 2002. Document.