Why Do Foreign Investments Prefer Other Arab Countries Over Egypt?

International companies have concluded three deals worth $25 billion in Arab countries, providing their people with more than 40,000 job opportunities at a time when Egypt is suffering from the flight of foreign investors and its share of the investment directed to the Middle East is declining.

The three deals took place, the first of which took place in Qatar, in the Internet sector, at a value of $18 billion in the UAE, in the e-commerce sector at a value of $5 billion, and in the electric car sector in Morocco, with an investment of $2 billion.

These deals prompted Egyptian observers to question the reasons for their country's exit from the investment plans of international companies, despite its raw materials, labor force, strategic location, ports in the Mediterranean near Europe, and others in the Red Sea toward the Asian tigers.

 

Microsoft and Amazon

In early September 2022, the American technology giant Microsoft opened its first high-scale cloud data center in Qatar, pushing it to enter the global cloud computing market, whose investments amounted to $368.97 billion in 2021.

The largest software factory in the world, with revenues of $85 billion in 2016, employing 114,000 employees, said in a statement: "We are adding more than $18 billion to the economy over the next five years, and we are also adding more than 36,000 new jobs over the next five years," expecting Doha to turn into a digital center for the region and the world.

This investment supports Qatar's 2030 vision to transform from the oil and gas economy to diversify income, digital transformation, and attract global technology companies, which is going in conjunction with Microsoft training 50,000 people in Doha in 4 years.

On August 30, 2022, Amazon Web Services (IWS) launched the cloud computing unit of the largest e-commerce market in the world, the second cloud region in the Middle East in the UAE, supporting entrepreneurs and companies in the Gulf country.

Developers, startups, entrepreneurs, institutions, government agencies, educational institutions, and non-profit organizations have the competence to run their applications, enhance the efficiency of their operations, and provide innovative services to users.

The step of the world's largest online retailer in terms of sales and market value adds $11 billion in 15 years to Abu Dhabi's GDP and provides 6,000 jobs through investments of $5 billion until 2036.

The Emiratis described the step as a milestone in the history of the digital infrastructure of Abu Dhabi and the UAE, which is striving toward a competitive digital economy, according to the head of the Department of Economic Development, Mohammed al-Shurafa, to the media.

 

Egypt's Crisis

On the other hand, Egypt is facing severe financial and economic crises that prompted analysts and experts to predict its bankruptcy, with the volume of debts reaching $157.8 billion by the end of June 2022, according to a Central Bank report.

Egypt is required to pay a severe bill as a result of those debts, which, according to the economist Mamdouh al-Wali's estimation, amount to 41.5 billion dollars, until the end of 2022.

These loans, along with the billions of Gulf support for President Abdel Fattah Sisi following the 2013 coup, estimated at 50 billion dollars according to press reports, could have turned Egypt into an agricultural and industrial producing country that fulfills an export bill that corrects the balance of payments for an import bill of more than 80 billion dollars annually, according to monitors.

However, Sisi made decisions that harmed the national economy and pushed the country towards construction projects in the new administrative capital, the new city of el-Alamein, and the city of Galala, in addition to the construction of the Suez Canal branch, the electric train, and other projects that experts described as futile.

The country's cash reserve of foreign currencies is reviewed monthly, recording $33.143 billion, in July 2022, with the collapse of the local currency price against foreign currencies recorded on September 6, 2022, against the dollar, about 19.24 from 15.60 in March 2022.

In the face of the worsening situation, Egypt has requested a loan from the International Monetary Fund since March 2022 to pay off debt interests, and the bank did not respond, calling on Egypt to provide facilities to the private sector, stop the expansion of the army in the economy, and reduce the value of the pound again.

 

Change is the Solution

For his part, International Political and Economic Adviser Dr. Hossam el-Shazly said: "The world is changing, and the criteria for choosing international and transcontinental companies for their investment centers are controlled by multiple and complex factors, and countries are competing to develop attractions for giant entities."

He added to Al-Estiklal: "Qatar has invested millions of dollars in education and scientific research, and now has local branches for the camps of international colleges that are at the top of the world rankings."

He continued, "While Egypt, exhausted by dictatorship and military rule, was left out of the world rankings for education, these Egyptian universities have become the first to carry the torch of science to the Gulf, at the bottom of international rankings, and their degrees are not accepted by most countries."

From the approach of the Egyptian case with Qatar, el-Shazly stressed that "the same applies to the case of the UAE and Morocco, as the first provides an attractive environment for giant international entities and their lands at the top of the choices of stockholders, and members of the boards of directors of transcontinental institutions as a center for managing the Middle East and North Africa."

As for Morocco, according to el-Shazly, "it has made advanced achievements in the fields of renewable and clean energy projects and the automotive industry, and amended laws to support attracting industrial investments, turning it into a reliable partner."

"While Egypt is cumulating debts, and going from a failed government to another, with the lobbies of corruption controlling the reins of business, and they are now being driven by honest hands and exploited politically, which led to the creation of expulsive conditions for international companies and investors," he said.

He believed that "Egypt needs to return to political and economic stability, and focus on building an advanced and secure infrastructure, as well as the impossibility of returning international companies' interest in Egypt without developing the education system, digital and technological education, and clean and renewable energy research."

El-Shazly concluded his speech by emphasizing the need for "investors and companies to be secure in their business, lives, and families under a just and non-politicized security and judicial system, and none of this will be achieved without a comprehensive political change that guarantees the existence of a democratic system of governance."