Egypt has become, after South Africa, the largest market for foreign direct investment (FDI) on the African continent. Though the total capital inflow may be low by global standards, it is on the rise and the trend is tipped to continue for the foreseeable future. From a mere $700 million in the 2000/01 financial year, FDI rose to $6.1 billion for the year ending June 30, representing just under 5.8% of GDP. With a further $8 billion expected to enter the Egyptian market from overseas in the current financial year, South Africa could see itself relegated to second place as the continent’s premier FDI destination. While at least some of the sharp rise in FDI can be put down to the increasing pace of the government’s privatization program, a well that will one day dry up, this is not the only factor in Egypt becoming a favored destination for investors.
