According to economic sources, Egypt needs approximately $3 to $5 billion yearly in foreign investments to maintain a six to seven percent rate of growth. Currently, direct foreign investments stand at only one billion Egyptian pounds ($253 million), reports Al-Musawwar magazine.
Several factors, including protracted instability in the region, have deterred prospective investors.
In addition, investors find it difficult to trust the credibility of feasibility studies, since Egypt lacks a clear policy regarding the exchange rate. This, in turn, results in inconsistent costs of the U.S. dollar, while also hindering a steady flow of dollars into the country.
Furthermore, increased consumption of luxury items has offset the rise in wages of the middle class over the past few years, resulting in a decline in domestic savings. Today, domestic savings account for only 15 percent of the country’s Gross Domestic Product (GDP).
Moreover, interest rates amounting to approximately 14 percent also deter the influx of foreign capital.
Another important reason attributed to the lack of foreign investment is that investors have no clear picture of the Egyptian market and its domestic needs, resulting, at times, in market saturation of certain products.
Consequently, nearly 750,000 skilled workers annually cannot find employment following graduation despite the nation’s stable level of savings. –(MENA Report)
© 2001 Mena Report (www.menareport.com)
