The Egyptian government is looking forward to capitalizing on the growing financial power of the Egyptian diaspora.
A new initiative by the Ministry of Immigration is seducing Egyptian immigrants and citizens living and working abroad to invest in the Egyptian market. Unlike former programs, in that regard, the new government plan offers unprecedented incentives to Egyptian investors abroad, whether they decide to invest in state-owned national projects or private sector enterprises.
In their meeting last week, the Minister of Immigration and the President of Investment Authority discussed putting this ambitious plan into action. The two officials agreed to establish a shareholding company for Egyptians abroad to practice myriad economic activities, extending from initiating startup companies to purchasing stocks in national projects.
Meanwhile, a specialized unit at the Investment Authority is dedicated to working with potential Egyptian investors abroad. It will inform them about the various lucrative opportunities in the domestic market and accelerate the required bureaucratic procedures, such as issuing governmental licenses and doing bank transactions.
Moreover, the specialized unit at the Investment Authority shall facilitate the contributions of Egyptians abroad, whether in the form of investments or donations, to national projects. In the past few years, Egyptians abroad made financial contributions to the Egyptian sovereign fund to support the state-led comprehensive development plan.
The size of Egyptians living and working worldwide is roughly estimated at 14 million people. Yet, only 9.5 million are recorded by the Egyptian Central Authority of Mobilization and Statistics. The Arab Gulf countries host at least one-third of the Egyptian workers abroad, while North America and South America host the majority of Egyptian immigrants. A large portion of the Egyptians living in Europe, estimated at 12% of the total number of Egyptian immigrants, had entered Europe through illegal immigration via the Mediterranean Sea in the late 1990s and early 2000s.
Most Egyptian immigrants, especially those who live in western countries, support the current political leadership of President El-Sisi. Between 2014 and 2016, they played a tremendous role, using their political advocacy advantage as citizens of these countries, in refuting the distortion campaign led by the Muslim Brotherhood against El-Sisi’s administration.
In addition to their political muscle, the Egyptian diaspora has the financial ability to make a real difference in the future of the Egyptian economy. In August, the Central Bank of Egypt (CBE) highlighted a record increase of 1.6% in the remittance inflow by Egyptians abroad, reaching 31.9 billion dollars for the first time. A large portion of these transmittals has been invested in purchasing EGP certificate deposits with high-interest rates, which the government offered earlier this year to counter the spiking exchange rate of the U.S. dollar.
In that sense, the Egyptian government's initiative to utilize the financial capacities of the Egyptian diaspora is a clever move that will mutually benefit the Egyptian state and the potential Egyptian investors abroad, especially during the current depreciation of the Egyptian pound. If appropriately implemented, this plan could boost the Egyptian economy, which has been struggling, for months, under the pressure of the Russian invasion of Ukraine.
Also, it could push forward the macroeconomic reform plan that the Egyptian Prime Minister announced a few months ago. The government set a goal to attract ten billion dollars in foreign investment per year for the coming four years. That amount is less than one-third of the remittances annually transferred by the Egyptians abroad.
Nevertheless, a long list of bureaucratic obstacles needs to be addressed first. That is not only to encourage local investments by the Egyptians abroad but, most importantly, to attract more general foreign investments to the Egyptian economy.