International review: Arab Republic of Egypt

5 April 2024

In the new material of International Review series, we will talk about one of the oldest states in the world, which age exceeds 50 centuries. It is strategically located at the crossroads of Africa and Asia, and is one of the most significant states on the African continent and in the Arab world. We introduce the Arab Republic of Egypt.

Official Language: Arabic. Area: 1 001 450 sq. km (land: 995 450 sq. km, water: 6,000 sq. km). Capital: Cairo. Population: 109.5 million (data for 2023). Currency: Egyptian pound. Political system: a semi-presidential republic. Administrative division: 27 governorates (muhafazat), which are subdivided into regions (markazes), regions – into districts (nahias). The Arab Republic of Egypt (Egypt) is a transcontinental nation on the northeast of Africa and southwest corner of Asia via the Sinai Peninsula. The Republic borders the Mediterranean Sea to the north, the Gaza Strip of Palestine and Israel to the northeast, the Red Sea to the east, Sudan to the south, and Libya to the west. The Gulf of Aqaba in the northeast separates Egypt from Jordan and Saudi Arabia. Egypt is the 15th most populous country globally and the third in Africa, behind Nigeria and Ethiopia. Egypt is a founding member of the United Nations, the Non-Aligned Movement, the Arab League, the African Union, the Organisation of Islamic Cooperation and the World Youth Forum.

Interesting fact: Egypt is one of the first centres of civilization in the history of mankind. Ancient Egyptian civilization emerged on the banks of the Nile River around 3100 BC.

The Egyptian Constitution declares the Arab Republic of Egypt to be a democratic state with Islam as the state religion and Arabic as the national language. The President of the Republic is the head of state and, together with the Egyptian Cabinet, forms the executive branch of government. Term of the president office is six years and can be extended for one more six year term. The current president of Egypt Abdel Fattah el-Sisi has been in office since 2014. About 43% of Egypt's inhabitants live in the country's urban areas, with the majority located in the densely populated centres of Cairo, Alexandria and other major cities in the Nile Delta.

Interesting fact: Egypt is the most densely-populated country in the Middle East, despite the fact that almost 95% of the country's area is uninhabitable desert. The entire population of the country lives in an area of about 5.5% along the Nile River.

The official date of Egypt's adoption of Christianity is 451 BC. Before the Arab invasion in 641, Egypt was a Christian country, but in 500 years most Egyptians converted to Islam. According to official data, 90% of Egyptians are Muslims and less than 10% are Coptic Christians now.

Cairo. Cairo is one of the largest cities in Africa, located on the eastern bank of the Nile River. Today Cairo is a combination of ancient and new, East and West, and represents a place of geographical contrasts. Along the well-irrigated shoreline, lush vegetation shares the landscape with tall skyscrapers.

Cairo's population is 10.2 million as of July 2023. Gender distribution: 48% (4.9 million) are women, 52% (5.2 million) are men.

Interesting fact: Egypt is one of only three countries in the world to build a new capital city (Indonesia and Equatorial Guinea are also building new capital cities).

EGYPT'S NEW CAPITAL

Egypt's new capital is being built 45 km southeast of Cairo on the road leading to Suez. The name for the capital is under discussion. Among the variants are Masr (means Egypt in Arabic), Kemet (means Black Land, the ancient name of Egypt), Al Mustaqbal (means Future), Al Salam (means Peace). The project cost will reach around $45 billion. Plot area for the city is 700 sq. km on a previously undeveloped desert area.

The factor for the construction of a new capital was the problems with population density and building in Cairo, traffic collapse, and environmental problems. In recent years, Cairo has grown and turned into a giant urban agglomeration with 20 million people.

Nowadays, 100 thousand flats and houses have already been built in the new city, as well as the highest 70-storey skyscraper in Africa – Iconic Tower (396 metres), a sports town, an Olympic centre with a stadium, the Great Mosque of Egypt and the Coptic Orthodox Cathedral, the presidential palace. The Green River, a park stretching 10 km along the Suez Canal, is also being built; it is planned that the Nile River will be the primary source of water in this park.

Interesting fact: The Octagon, a military complex which is 7 times larger than the American Pentagon, was built on the outskirts of the city.

Several tens of thousands of the first residents – mostly Egyptian authorities and their families – have already moved into Egypt's new capital now. In coming months, the most crucial banks and enterprises operating in Egypt, as well as the Supreme Administrative Court, are expected to move their headquarters to the new capital. It will be Egypt's most significant cultural and business centre.

NATURAL RESOURCES

One of the key areas of economic development in Egypt is the production and export of energy resources. The country has large oil and gas fields in the regions of the Sinai Peninsula and the Mediterranean Sea. It provides a stable revenue stream to the state budget and contributes to economic growth.

In addition, Egypt is a major producer of phosphates, which are essential for fertiliser production. Phosphate deposits are located in various parts of the country, including the Western and Eastern deserts.

ECONOMY

Egypt has a mixed economy, with various forms of ownership and economic activity. Agriculture has historically been a significant sector, but in recent years there has been an increasing focus on industrialisation and the service sector. Energy, tourism and information technology play a crucial role in Egypt's economy.

Gross Domestic Product (GDP) has grown to $2.1 trillion for 2023, surpassing the target of $1.9 trillion. GDP growth is attributed to the development of tourism, revenues from Suez Canal crossing fees and oil exports in 2022-2023. Inflation in 2023 averaged around 24.8% and unemployment rate fell to 7% in 2023, compared to 9.6% in 2020.

WHAT IS PRODUCED IN EGYPT

Agriculture. Only about 5% of Egypt's land is devoted to agricultural activities, as more than 90% of the country's land areas is desert. The entire country's agriculture depends on one single Nile River. Egypt's agricultural production includes a wide range of crops such as cotton, rice, maize, wheat, sugar cane, fruits and vegetables. The cultivation of high-quality cotton has long been a hallmark of Egyptian agriculture, contributing to the development of the country's textile industry.

Interesting fact: Egypt is among the world’s largest wheat producers, as well as the world’s largest wheat importer due to its high consumption.

In 2022, the share of agriculture in Egypt's GDP was 11%. Egypt's agricultural exports increased by $239.2 million in 2023. The leading export commodity was mangoes, with total sales of $96.8 million in 2023 ($69.8 million in 2022). The next export commodity was beans. Bean exports reached $56.8 million in 2023 ($13.5 million in 2022). Egypt's main trading partners are countries in Europe, the Middle East and Africa.

Industry. Egypt's leading industries are oil and gas production, production of nitrogen and phosphate fertilisers, acids, metallurgical industry, engineering (shipbuilding and repair, automotive and technical equipment production), light industry (textiles, cotton, silk, wool, clothing and footwear), food industry (flour milling, sugar, tobacco, canning), pharmaceutical industry, construction industry (cement, granite).

Interesting fact: Egypt is one of the oldest oil producing countries in the world. It launched its commercial production of oil in 1910.

Oil and gas production and refining. Oil production averaged 570 thousand barrels per day in 2023. Production is mainly concentrated in the Western Desert (56%) and the Gulf of Suez shelf (23%), as well as to a lesser extent in the Eastern Desert (12%) and the Sinai Peninsula (9%). The total number of companies engaged in exploration and development projects in Egypt's petroleum industry amounted to 43 by the early 2020s. In August 2023, the Egyptian Ministry of Petroleum announced the discovery of a new field with an initial production volume of more than 2,500 barrels per day.

Egypt is Africa's 2nd largest producer (after Algeria), a major consumer and exporter of natural gas, and is on Africa’s top 3 with over 2,100 billion cubic meters of proven natural gas reserves. The main reserves are concentrated in shelf and deep-water fields in the Egyptian economic zone of the Mediterranean Sea (62%), the Nile Delta (19%) and the Western Desert (18%). The largest Mediterranean natural gas field is the Zohr field.

HOW TOURISM IS DEVELOPING IN EGYPT

The tourism sector in Egypt represents an important part of the country's economy. Egypt has a rich 50-century historical and cultural heritage and is home to some of the world's most famous archaeological wonders, including the iconic pyramids of Giza, the Great Sphinx and the ancient temples of Luxor and Karnak. These historic sites attract millions of visitors each year. Cities like Cairo boast world-class museums such as the Egyptian Museum, which houses a vast collection of ancient artefacts, including the golden mask of King Tutankhamun. This cultural treasure serves as a magnet for history lovers and scholars from around the world.

Despite this fact, tourism is not the country's main income. The tourism sector employs about 12% of the population. The main part of the income comes from the toll for crossing the Suez Canal, as well as oil production and exports.

Interesting fact: Egypt welcomed a record 14.9 million tourists in 2023, surpassing the previous record of 14.7 million in 2010.

One of the 2023 achievements in the country's hospitality sector is the increase in the number of hotel rooms by 10%, the total number of which reaches 220 thousand.

The main directions for the development of Egypt's tourism sector include increasing the number of flights, improving the investment environment for tourism, as well as the quality of tourism services.

WHAT IS THE ROLE OF EGYPT'S TRANSIT ROUTES IN GLOBAL LOGISTICS

Egypt plays a strategically important role in international energy markets as well as in global logistics due to the operation of two transit points through the Suez Canal and the Suez-Mediterranean Sea pipeline (SUMED).

The Suez Canal is a lock-free shipping canal in Egypt connecting the Mediterranean Sea and the Red Sea. The canal officially opened for navigation in November 1869 and is about 160 kilometers long. The Suez Canal was expanded in 2015 and now is an important transit route for oil and liquefied natural gas shipments from North Africa and along the Mediterranean Sea to Asia. The Suez Canal is an important source of foreign exchange income for Egypt, which amounted to $10.25bn in 2023.

Interesting fact: The Egyptian authorities have announced a new ambitious and large-scale infrastructure project – increasing the capacity of the Suez Canal. For this purpose, the single-lane sections of the canal, 50 kilometers long in the northern and 30 kilometers long in the southern parts of the canal, will be made two-lane.

The Suez-Mediterranean Sea Pipeline (SUMED) is the only alternative option for shipping oil from the Red Sea to the Mediterranean Sea. Crude oil is transported through two parallel pipelines. The pipeline is mainly used to transport crude oil from Saudi Arabia to Europe.

HOW FREE ECONOMIC ZONES ARE DEVELOPING IN EGYPT

There are several types of zones in Egypt: public or private free zones, investment zones, special economic zones, industrial zones, technological zones.

Egypt's free zones are subject to special regulations on taxation, customs and finance. Residents benefit from income tax exemptions, sales tax, import and export tolls. The main strategic sectors of the economy to attract investment are renewable energy, information technology, automotive and logistics.

Investment zones were created on the basis of the business clusters concept to accelerate economic development and attract foreign direct investment. Technology zones were created to attract investments in communications and information technology. Industrial zones are focused on production.

The Suez Canal Economic Zone is the only special economic zone in Egypt. It is strategically located on the main trade route between Europe and Asia, which comprises more than 8% of world trade annually. The Suez Canal Economic Zone covers an area of 461 sq. kilometers, which is almost 2/3 of the Singapore area, and consists of two integrated areas, two development zones and four ports.

Interesting fact: The Suez Canal Economic Zone is the first innovative commercial, industrial and logistics cluster in Egypt along the Suez Canal.

COOPERATION BETWEEN EGYPT AND BELARUS

Diplomatic relations between the Republic of Belarus and the Arab Republic of Egypt were established on 1 February 1992. The Embassy of Belarus has been operating in Cairo since August 1997.

Despite its geographical remoteness, Egypt is one of the most prospective economic partners for Belarus, given its market capacity due to its large population, favorable geographical location, historical ties between our countries and the positive image of Belarusian products in Egypt.

Belarus exports tractors, trucks, road and construction machinery, forklifts, engines, tyres, machine tools, metal products, milk powder, pumps, X-ray equipment, chemical products and wood products to Egypt.

The main imports from Egypt are vegetables and fruits, medicines, plants used in perfumery and pharmaceuticals, outerwear, fabrics and wool.

A joint line for the production of MAZ trucks has been set up on the basis of the Helwan Machinery and Equipment company of the Egyptian Ministry of Military Production, as well as for the assembly of road-building equipment. The work is carried out to create assembly lines for Belarusian tractors, diesel engines, gas buses, elevators, and agricultural machinery in Egypt.

The key areas of cooperation with Egypt include supplies of agricultural, cargo and passenger equipment, engineering and petrochemical products, cooperation in wood processing, medicine and pharmaceuticals, logistics and tourism.

Residents of FEZ Grodnoinvest supply plastic packaging and chemical products to Egypt. In 2023, residents’ exports to Egypt increased 3.6 times compared to 2022 and amounted to $0.6 million.

If you are interested in cooperation with Egyptian business circles, please contact the Foreign Economic Activity Department of the Administration of FEZ Grodnoinvest via tel: +375 (152) 41-23-17 or e-mail: invest@grodnoinvest.by. You will be provided with the necessary information and support in establishing business relations.

We also invite you to take part in the Egyptian and Belarusian Business Forum, which is scheduled within the framework of the official visit to Cairo headed by Mr. Golovchenko, the Prime Minister of the Republic of Belarus, from 27 April to 1 May 2024. The visit will be organized by the Belarusian Chamber of Commerce and Industry.