Our new Doing Business in Egypt Guide looks at a country that immediately conjures a wealth of mythological images and history, but is currently less thought of as an export market due to its more turbulent recent history. We all know about the pyramids and ancient civilisation but less known is Egypt’s ongoing economic recovery.
Egypt remains the largest Arab country and an ideal entry point into the North African, Mediterranean and Gulf Regions. It is a lower middle income country that boasts almost 100 million in population and it is now the largest destination for foreign direct investment into Africa. It ranks 128th in the World Bank’s Doing Business Rankings, yet historically it is a market that is generally pro-business and pro-trade.
Egypt is a member of both the League of Arab States (Arab League) and the Common Market for Eastern and Southern Africa (COMESA). The EU-Egypt Association Agreement came into force in 2004, creating a free-trade area between the European Union and Egypt by removing tariffs on industrial products and easing restrictions on agricultural products. EU-Egypt trade has doubled since 2004 to €27.9 billion in 2017, making the EU Egypt’s largest import and export partner. For the UK specifically Egypt was its 42nd largest export market for goods and 55th for services as of 2013. The top UK exports to Egypt include metal scrap, fruit and vegetables, industrial machinery, and medicinal and pharmaceutical products.
Companies looking to do business in Egypt should be conscious of a business culture that is low on punctuality but high on interpersonal relationships. It would be a surprise if your contacts in Egypt are on time to any meetings, partly due to its cities’ gridlocked traffic and also because Egyptian businessmen are not averse to keeping overseas prospects waiting. Meetings are often not particularly private and there will be far more interruptions than you are accustomed to in Western meetings.
The key is to be calm, relaxed and patient. Gift-giving and entertaining are often part and parcel of working with Egyptians – though, as ever, do be conscious of the UK Anti-Bribery Act when striking up new partnerships. Egyptians often like confectionary gifts, as well as electronic gadgets, and you should be conscious that it isn’t polite to eat your plate clean, so always leave behind a small portion.
In terms of the technical aspects of exporting to Egypt, be aware that the VAT rate is currently 10%, and there are corporate, individual, and indirect taxes to factor in. The Egyptian Customs Authority implements customs regulations and laws, but for goods sourced from the UK or EU the authority does apply preferential import duties, should you fill the EUR1 Certificate of Origin form. When shipping to Egypt you will also need to ensure you provide a commercial invoice, packing list, bill of lading, pro-forma invoice and a letter of credit.
Egypt has no doubt had plenty of uncertainty in recent years, with political and social instability accompanied by increasing poverty, a crippling fiscal deficit and falling investment and tourism. With things starting to look up, though, there will no doubt be plenty of opportunities in a market that could act as the ideal gateway to the Gulf and Africa, with historic ties to the UK to boot.
As always, feel free to get in touch with the Institute for advice and training to help you overcome the cultural challenges and paperwork involved in selling into Egypt.