investment monitor - gafi 2014.pdf · investment monitor monthly report ... the egyptian exchange...

Monthly Report - June 2014 Issue No. 6

Investment Monitor

Investment Monitor

Monthly Report

June 2014

2014 Monthly Report - June 2014

Issue No. 6

Focusing on Investment News and Investment Indicators in Egypt

General Authority for Investment and Free Zones (GAFI)


Contents

Investments New Establishments

Distribution of New Establishments by Sector

New Establishments by Gender

Legal Form of New Establishments

Geographical Distribution of New Estab

lishments

Estimates of New Job Creation by Occupation

Estimates of New Job Creation by Gender

Investments in New Establishments Distributed

by Nationality

Capital Market

The Egyptian Exchange Indices

Trading Aggregates

Performance of different sectors

Egyptians versus Foreigners

Market Capitalization

Bonds

Investment News in Egypt

New investment dispute settlement committee

has been created

Investment legislation amendments top gov-

ernment’s priorities

Investment and CIT protocol to improve busi-

ness climate

Index compiler MSCI kept Egypt in its emerg-

ing markets list

License procedures simplified

GAFI new branches in Sohag, Sixth of October

and Gamasa

Microfinance law adopted

USD 5.8 billion investments in petrochemical

compound in Suez

EU launches “Euro-Med Invest 2” to inject EGP

310 million grant to Southern Mediterranean

Macro economy

Growth Trends

Inflation

Interest Rates

Net International Reserves

Employment

2


New investment dispute settlement committee has been created

The Prime Minister, Ibrahim Mehleb issued a decree to set up a committee to settle investment disputes. The

new entity is chaired by the Minister of Justice and includes the Ministers of Trade and Industry; Local Develop-

ment; Finance; Investment and Transitional Justice; chairman of the General Authority for Investment and Free

Zones; chairman of the State Council’s Advisory Body and secretary general of the Council of Ministers.

Source: Al Gomhoreya

Investment legislation amendments top government’s priorities

Update and amendment of the investment laws top the priorities of the Ministry of Investment, said the Minis-

ter of Investment, Ashraf Salman. These laws will play a big role in encouraging investments and clear out many

obstacles and issues, which used to hinder both domestic and foreign investors, he added.

Attraction of foreign investments will receive much attention in order to enhance the economy, create more

jobs and reduce the high unemployment rate, Salman said following the meeting of the newly-reshuffled coun-

cil of ministers with President Abdel Fattah Al Sisi.

Source: Ahram

Investment and CIT protocol to improve business climate

In order to take practical steps towards the implementation of the protocol of cooperation signed between the

Ministry of Investment and the Ministry of Communication and Information Technology (CIT), the Ministers

Ashraf Salam of Investment and Atef Helmy of CIT had a meeting to discuss this cooperation. The Ministry of

Investment is represented by the General Authority for Investment and Free Zones (GAFI) in this protocol of

cooperation.

The meeting was attended by Chairman of GAFI and senior officials of the Ministry of Investment, Ministry of

Communication and GAFI.

Salman urged a speedy finalization of this project, which would improve the investment climate and business

environment, while liaising with other entities in order to push forward the one window system.

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He said that the Ministry of Investment is willing to work closely with the Ministry of Communication and Infor-

mation Technology to expand the latter’s scope of action within affiliates to the Ministry of Investment such as

the Egyptian Financial Supervision Authority. This includes provision of all forms of IT support to increase their

efficiency.

The protocol of cooperation signed in April 2014 specifies the update and development of GAFI’s IT infrastruc-

ture of hardware, devices, services and communication lines. It also seeks to improve procedures to establish

companies, carry out the electronic archive system, computerize GAFI’s investment services through its official

interactive website and create an advanced customer service center.

Source: Afak Masria

Index compiler MSCI kept Egypt in its emerging markets list

Index compiler MSCI is no longer considering removing the Arab country from its much coveted emerging mar-

kets list.

MSCI in its annual market classification review said: “Following the substantial increase in Egyptian foreign

currency reserves, MSCI announced that it is no longer considering launching a public consultation on a poten-

tial exclusion of the MSCI Egypt Index from the MSCI Emerging Markets Index.”

Source: Journal Net

License procedures simplified

All services rendered by the General Authority for Investment and Free Zones are being revised in order to be

simplified and streamlined, said chairman of GAFI, HasanFahmi. GAFI seeks to achieve decentralization through

its branches in Alexandria, Assiut, Ismailia and Tenth of Ramadan, Fahmi added.

More coordination will take place with different license providers so that licenses are issued from GAFI’s One-

stop Shop, Fahmi announced.

Coordination is underway with the National Center for Planning State Land Uses to offer lands available for in-

vestment via GAFI, while allocation shall be made by competent bodies.

Source: Bawaba News

GAFI new branches in Sohag, Sixth of October and Gamasa

The General Authority for Investment and Free Zones will have three new branches in Sohag, Sixth of October

and Gamasa in FY 2014/15 to provide investment services in these places, said the Minister of Trade, Industry

and Investment, Monir Fakhri Abdel Nour.

The inauguration of these new branches comes within the course of the Ministry’s plan to roll out the One-stop

Shop system to bring together into one place providers of licenses and permits of investment zones, expand

decentralization and help investors. Abdel Nour said that the government seeks to clear out all obstacles to pro-

ducers and investors and provide necessary support to start up their businesses. He noted that coordination is

underway with the Ministry of Housing and the New Urban Communities Authority to design specific and ap-

propriate mechanisms for the distribution and allocation of industrial lands for investors in the period to come.

Source: Al Youm Al Sabea

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http://www.msci.com/eqb/pressreleases/archive/2014_Mkt_Class_PR_Eng.pdf


Microfinance law adopted

The Council of Ministers approved a draft law on microfinance in order to create new mechanisms of finance

for microenterprises, which cannot have access to traditional finance institutions, said the Minister of Trade,

Industry and Investment, MonirFakhri Abdel Nour.

The law primarily seeks to regulate and supervise the microfinance business, ensuring protection for related

parties’ interests, oversee providers of finance to ensure efficiency, transparency and social justice and fight

poverty. According to the new draft law, a special unit will be established within the Egyptian Financial Super-

vision Authority to oversee microfinance provided by associations and NGOs. The law will fight abuses this type

of finance in illegal activities, which require no substantial finance, with associations being an easy and penetra-

ble target. The unit will include representatives of relevant ministries and entities, most notably the Social Fund

for Development.

Abdel Nour explained that the new law will not be applicable to banks supervised by the Central Bank of Egypt

or the Social Fund for Development; both entities’ role in providing microfinance will not be impaired accord-

ing to their own legislation.

The draft law provides a six-month grace period for associations and NGOs providing microfinance to adjust

their positions. The Minister added that the new legislation will allow for expansion of financial services to mi-

croenterprises and targeted customers in order to reduce the finance gap in this sector. To this end, establish-

ment and license of companies will be encouraged and regulated and sources of finance will be made available.

According to the law, microfinance is “each finance for productive, service or commercial economic purposes in

the areas and for the value specified by the board of directors of the Egyptian Financial Supervision Authority,

not exceeding EGP 100,000. By virtue of a Prime Ministerial decree, the maximum threshold may be increased

over 5 percent per annum as per a request from the board of directors of the Egyptian Financial Supervision

Authority”.

USD 5.8 billion investments in petrochemical compound in Suez

An industrial petrochemical compound will be established in AinSokhna over five square kilometers for invest-

ments of USD 5.8 billion, said Mohamed Rifaat, chairman of the Economic Zones North-West Suez Gulf.

The project, titled Al Tahrir, has domestic investments of 50 percent and involved a KSA-UAE partnership

through companies listed on the financial chambers of the UAE and London, reflecting a strong Arab financial

position. The project will provide 20,000 direct and 100,000 indirect jobs during the construction of the com-

pound, which will last for three years, providing 3,000 direct and 50,000 indirect jobs with the commencement

of operation. The compound comprises a number of plants to provide chemicals to the domestic market and

export via Al Sokhna and Adabeya Ports in Suez.

Source: Ahram Masaey

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EU launches “Euro-Med Invest 2” to inject EGP 310 million grant to Southern Mediter-

ranean

The Med-Alliance announced the implementation of “Euro-Med Invest 2” Project, which seeks to attract invest-

ments, develop exports of the southern Mediterranean countries and provide technical assistance to SMEs. The

MedAlliance includes the five main business organizations: the Association of the Mediterranean Chambers of

Commerce and Industry (ASCAME), the Union of Mediterranean Confederations of Enterprises

(BUSINESSMED), the German Arab Chamber of Industry and Commerce (GACIC), the Association of European

Chambers of Commerce and Industry (Eurochambers) and ANIMA Investment Network. The MedAlliance coor-

dinates its action with UNIDO, the Union for the Mediterranean, the Italian Initiative to Support SMEs and the

League of Arab States represented by the Arab-European Council.

Dr. Alaa Ezz, Member of the Med-Alliance Executive Council said: “The Marseille meeting witnessed the signa-

ture of the grant agreement with Irene Mnjaasun, Director of Regional Project and members of the Executive

Council, giving the go ahead sign to the three-year program covering 127 areas of business. These include or-

ganization of investment and commercial delegations of more than 4500 companies, finance participation in

exhibitions on both parts of the Mediterranean, sectorial feasibility studies to attract and promote investment,

mechanisms for networking between investors targeting 1,000 joint venture projects and raising the efficiency

of 1,000 male and female entrepreneurs.”

Source: El Masry El youm

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Growth Trends The economic growth rate stood at around 2.5percent in Q3 of FY 2013/14 compared to some 2.2 percent dur-

ing Q3 of FY 2012/13.

Figure (1): Real GDP Growth

Source: Ministry of Planning

Inflation According to the data of the Central Agency for Public Mobilization & Statistics (CAPMAS), the change in the

monthly CPI inflation reached 0.9percent in June 2014 compared to around 0.9percent in June 2013.

Figure (2): Change in Inflation rate in Consumer Prices (Month on Month)

Source: CAPMAS

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Interest Rates The Monetary Policy Committee (MPC) decided, following its meeting on Thursday May 29, 2014, to maintain

the overnight deposit and lending rates at 8.25 and 9.25 percent respectively. It also decided to maintain the

Repo. rate at 8.75 percent and the credit and discount rate at 8.75 percent.

Figure (3): Overnight Deposit and Lending Rates at the CBE

Source: Central Bank of Egypt

Net International Reserves At the end of June 2014, net international reserves held by the Central Bank of Egypt (CBE) stood at US$ 16.7

billion. Net international reserves (NIR) imports coverage ratio stood at 3.5 months by the end of May 2014.

The reduction of net international reserves by the end of June 2014 as compared to May 2014 is attributed to

the fulfilment of Egypt’s commitments to Paris Club.

Figure (4): Net International Reserves Held at the CBE

Source: Central Bank of Egypt

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USD bn


Employment According to the most recent labor force sample survey conducted by the end of Q1 of 2014, the unemployment rate

stood at 13.4 percent compared to 13.2 percent by the end of Q1 of FY 2013.

Figure (5): Unemployment in Egypt

Source: CAPMAS

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New Establishments

In June 2014, a total 800 new companies were es-tablished by the Egyptian, Arab and Foreign private investors,

compared to 755 companies set up in June 2013. The daily average of new companies established in June 2014

reached 36 companies (160 per week on average).

Figure (6): Weekly Number of New Established Companies during June 2014

Source: GAFI

Distribution of New Establishments by Sector In June 2014, the Services sector accounted for the bulk of new establishments, with 344 new companies. This was

followed by the Manufacturing sector (208 companies) Construction and Building (128 companies), CIT (46 compa-

nies), Agriculture (43 companies), Tourism (29 companies) and Financing services (2 companies).

Figure (7): Sectoral Distribution of New Establishments during June 2014

Source: GAFI

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It is worth mentioning that the total issued capital of new establishments amounted to EGP 1403.5 million in

June 2014. The Service sector attracted a total issued capital of EGP 432.5 million in June 2014. This was fol-

lowed by the Construction and Building sector (EGP 361.5 million), Manufacturing (EGP 259.4 million), Tourism

(EGP 249.2 million), Agriculture (EGP 82.6 million), CIT (EGP 16.4 million) and finance (EGP 2 million).

Figure (8): Sectoral Distribution of Issued Capital by New Establishments during June

2014

Source: GAFI

New Establishments by Gender During June 2014, females accounted for 9percent of new establishments. On the other hand, males accounted

for 77 percent of newly established companies during June 2014. Legal entities accounted for 14percent of new

establishments.

Figure (9): New Establishments by Gender during June 2014

Source: GAFI

Male

Female

Legal Entities

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Legal Form of New Establishments Limited liability companies had the largest share of newly established companies (35.6percent) during June

2014, followed by joint stock companies (28.6percent), individual companies (23percent), limited partnership

companies (6.6 percent) and joint venture companies (6.1percent).

Figure (10): New Establishments Distributed by Legal Form during June 2014

Source: GAFI

Geographical Distribution of New Establishments During June 2014, a total of 888 companies were established with issued capital of EGP 1403.5 million. At the

level of investment in specific governorates, Assuit accounted for the bulk of new establishments, with 19 com-

panies, followed by Sharkia with 12 companies and Cairo with 8 companies.

Regarding the value of issued capital, Assuit accounted for the largest share of issued capital invested in new

companies established during June 2014, with a total of EGP 29.6 million. This was followed by Suez with EGP

23.7 million and Souhag with EGP 10.6 million.

The following figure indicates geographical distribution of new establishments, issued capital, and numbers of

new jobs created during June 2014:

Limited liability

Joint stock

Individual

Limited partnership

Joint venture

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Table (1): Distribution of New Establishments by Location, Issued Capital and Esti-

mated Jobs during June 2014

Source: GAFI

Governorates No. of Companies Issued Capital EGP

Million No. of new jobs created

Cairo 8 1.7 33

Giza 6 5.1 22

Alexandria 7 7.3 140

Other governorates 706 1293.8 4683

Dakahlia 5 1.4 130

Sharkia 12 1.7 73

Qaliubia 6 0.9 47

Monofia 1 0.0 3

Kafr El Sheikh 2 1.3 11

Assiut 19 29.6 260

Luxor 1 5.0 1

Fayoum 2 0.6 10

Menya 4 0.4 10

New Valley 2 0.6 18

Beni Suef 3 8.7 15

Sohag 7 10.6 215

Qena 1 7.1 20

Ismailia 1 0.3 20

Suez Canal 2 23.7 50

Red Sea 5 3.7 18

Total 800 1403.5 5779

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Estimates of New Job Opportunities by Occupation Newly established companies during June 2014 are expected to provide 5779 job opportunities for Egyptians, which include 2594 blue collar jobs, 2333 white collar jobs, 366 jobs in the engineering sector, 246 in the health care sector, 136 agriculture jobs, and 104 jobs in the tourism sector.

Figure (11): Estimates of Job Creation in New Establishments Distributed by Occupation

During June 2014

Source: GAFI

Estimates of New Job Opportunities by Gender Males are expected to occupy 55 percent of these new job opportunities, while females are expected to account for 5.6 percent of jobs created. Some 39.3 percent of new jobs will be avail-able for either males or females.

Figure (12): New Establishments by Gender During June 2014

Source: GAFI

Male

Female

Male/Female

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Investments in New Establishments Distributed by Nationality Egyptian investors accounted for the largest share in issued capital of new establishments during June 2014,

having standing at 90.3percent whereas Arab and Foreign investors accounted for 5.8percent and 3.8percent

respectively.

Figure (13): New Establishments by Nationality During June 2014

Source: GAFI

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Egyptians

Arab

Foreigners


Market Indices Performance EGX 30 index closed at 8162 points, recording a decrease of 0.98percent while EGX70 index tended to increase,

posting gains of 0.28percent closing the month at 591 points. EGX 100 index increased by 0.33percent, conclud-

ing the month at 1034 points.

Table (2): Egyptian Exchange Indices

Source: The Egyptian Exchange (EGX)

Total Market The total value traded recorded EGP 41.9billion, while the total volume traded reached 5,639 million securities

excuted over 541 thousand transactions this month.

For the last month, the total value traded recorded EGP 28.6 billion, while the total volume traded reached 5433

million securities executed over 595 thousand transactions.

The Nilex Stock Exchange recoded EGP 50.9 million in traded value and 14.2 million securities executed over

6,662 transactions during the month.

Stocks trading accounted for 61.57 percent of the total value traded on the main market, while the remaining

38.43 percent were captured by bonds over the month.

Table (3): Total Market in June 2014


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Table (4): 10 Most Active Companies in Terms of Volume Traded (Main Market) during June 2014


Sectoral Performance

The health care sector realized the highest positive return during June 2014, having amounted to 4.20 percent.

Figure (14): Sectoaral Performance during June 2014


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Investors' Activity

Egyptians controlled 86.23percent of the value traded during the month. Non-Arab foreign investors accounted

for 6.70percent while Arab investors captured 7.07percent, after excluding deals. Arab investors were net buy-

ers, with a net equity of EGP 1,402.13 million. Non-Arab foreign investors were net buyers, with a net equity of

EGP 307.48 million. Non- Arab investors were net buyers, with a net equity off EGP 328.37 million since the be-

ginning of 2014, while Arab were net buyers of EGP 2,521.57 million during the same period, after excluding

deals.

Figure (15): Investors' Activity (foreigners and Egyptians) during June 2014


During this month, institutional investors accounted for 59.57percent of the value traded, while the remaining

40.43percent were for the individuals. Institutions were net sellers during this month, with a net equity of EGP

307.82 million, after excluding deals.

Figure (16): Investors' Activity (individuals and institutions) during June 2014


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Market Capitalization The total market capitalization of the listed stocks culminated at EGP 478 billion at the end of this month, as depicted

in the table below.

Table (5): Market Capitalization during March 2014

Source: Egyptian Exchange

Bonds Over the month, the total bonds' traded value amounted to EGP 11,258 million; with a total trading volume of 10,858

thousand bonds, as depicted in the following table.

Table (6): Trading Aggregates of Bonds in March 2014

Source: The Egyptian Exchange

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Published by General Authority for Investment and Free Zones (GAFI)

Prepared by:

Dr. Mona Farid Badran

Amr Abu El-Ela

Ahmed Ismail

Asmaa Anis

Mona Emad

Ola Mamdouh

Translated by Tarek Fawzy

www.gafinet.org

Distributed in the Arab Republic of Egypt and abroad to individuals and institutions concerned with monitor-ing the performance of investment in Egypt.

The information in this publication may be freely re-used and reproduced provided appropriate credit is given to the source.


Previous Publications and Reports

Periodic Publications:

English and Arabic Monthly Reports ( January– April 2014)

English and Arabic Quarterly Reports (Q1,Q2, Q3, Q4 2012-2013) ( Q1, Q2 2013/2014)

Macroeconomic Presentation until July 2014

Non- Periodic Publications:

Snapshot on the Egyptian Economy (November 2013)

Snapshot on the Egyptian Economy 2013

Snapshot on the Egyptian Economy 2012

Invest in Egypt 2010

Egypt Macroeconomic Indicators in 2009

For more Reports and Studies, Visit the website of Ministry of Investment and General

Authority of Investments and Free Zones

http://www.investment.gov.eg

http://www.gafinet.org

http://www.investment.gov.eg

http://www.gafinet.org

investment monitor - gafi 2014.pdf · investment monitor monthly report ... the egyptian exchange...

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