While 2012 showed signs of recovery, 2013 is in fact marked by a decline in FDI intentions annoucements, both in terms of amount and number of projects. This can partly be explained by the climate of political instability created by the dismissal of the Islamist President Mohamed Morsi, the return to power of the military and the anticipated referendum on the new Constitution, finally adopted in January 2014.
Unsurprisingly, the energy sector attracts most of the attention and records twenty or so announcements for an annualised total of €3.2 billion: oil and gas exploration-production projects involving groups from the UAE, Britain, France, the U.S. and other countries. The telecom and banking sectors remain unusually quiet. In contrast, basic sectors responding to the needs of the population demonstrate encouraging momentum: distribution, real estate, construction, and drugs saw the return of investors from the Near and Middle East. Boosted by the growing consumption of confectionery by the Egyptians, in this respect the agrifood industry also attracts Saudi groups as well as British (increase by the Actis fund of its stake in Edita Food Industries), American (creation by the Mars group of a production line for Twix) and Swiss businesses (extension by Nestlé of its ice-cream production plant).
Overall, the Gulf countries remain the largest investors in the country. While the Qataris were very active under Mohamed Morsi's regime, they have made way for other historical support for the Egyptian economy: the United Arab Emirates, Saudi Arabia and Kuwait. American and British investors have also made a return to the Egyptian scene, while the French, Italians and Germans have remained more cautious.
With regard to types of projects announced, licences and PPP record a strong increase, due to investment procedures in the hydrocarbons sector. Greenfield investments, which were the majority before 2011, continue to fall, while expansions remain stable. International partnerships are contracting sharply. In accordance with the trend over the past ten years, chain stores, shops and franchises remain the preferred partnership type.
In early 2013, Mohamed Morsi aroused the concern by announcing the suspension of the privatisation programme. This decision was made following forty or so court proceedings to cancel the privatisation of enterprises launched under the Mubarak regime. Investors faced with the return of their company into the bosom of the State then turned to international arbitration to redress the situation.
To win back international confidence, the new government adopted a series of decrees from the end of 2013 aiming to facilitate the settlement of disputes and to improve information transparency. A committee chaired by the Prime Minister was set up to resolve disputes between investors and the government and actions have been put in place to facilitate arbitration. Measures in favour of adopting international accounting and auditing standards have also been taken. Finally, in mid-2014, Egypt signed up to the Arab Anti-Corruption Convention.
The new government also defined priority sectors: infrastructure, energy, including renewable, education and health. In order to stimulate private investment in these sectors, reforms were adopted and major projects launched: the development of the Suez Canal, the governorates of Upper Egypt (including the creation of the 'Qena-Safaga -Quseir' mining triangle) and the green city of El Alamein.