EGYPT REVOLUTION GOOD FOR BUSINESS
The Tutankhamun image on T-shirts has been replaced with slogans celebrating Egypt’s democratic revolution, but has it been good for business?
According to The Economist, Egypt has millions of previously uncounted entrepreneurs that over time will enter the regulated system. At the moment the effect on this informal economy is hard to work out but it is clear that Egypt’s famous tourism industry took a hit at the beginning of the year.
The Economist has stated this will not last forever. In fact, recovery is now on its way and tourists are coming back to the country for its cheap sunshine and its 5,000 years of history.
Budget-conscious Europeans will always be lured back for these two reasons. They do after all account for two-thirds of visitors.
What is good news for Egypt is that foreign firms have not pulled out of Egypt. Instead companies have seen an opportunity to invest in a country that is on its way to full recovery and they don’t want to lose their foothold in the popular Middle Eastern country.
Egypt has an advantage that its location acts as a crossroad between Europe, the Middle East and Africa. The country also has one of the world’s most diverse economies and this is what has kept investors attracted to the country.
Banks want democracy to succeed in Egypt and are helping companies by investing in them. The World Bank’s private-financing arm, the International Finance Corporation, has agreed to invest $50 million in Orascom Construction Industries (OCI), which is Egypt’s largest listed company. The bank has also agreed to lend $200 million to OCI’s fertiliser company.
The investments businesses are receiving has put confidence back into Egypt’s economy. Egypt’s largest venture-capital firm, Citadel Capital, has received $21 million from European development banks for an Egyptian river-transport firm. The company stated after Mr Mubarak was ousted that democracy would be good for business.
The support businesses are receiving has helped investors continue to invest in the country and Egypt property is still a popular choice to buy a second home.
The revolution is set to make Egypt more prosperous. If it leads to stronger institutions and less corruption, the country will certainly be a more motivated population. By looking at the recent investments the country and its businesses have received, Egypt is back on track.
Source: The Economist