A Brief Introduction to Egypt: 7 Graphs About Egypt
Micro, small and medium enterprises contribute over 40% to Egypt’s economy and account for over 75% of the country’s total employment. Entrepreneurship clearly plays an important role in Egypt’s economy. With a population of over 110 million inhabitants, of which 76% are under the age of 40 - Egypt also boasts an enviable consumer-base of young, digitally savvy technocrats - attracting investors from within Egypt as well as from abroad. In this chapter, we cover Egypt’s economics, demographics, and macros along with some government policies that emphasize the importance of entrepreneurship in the country.
Infobyte: Egypt: The Gift of the Nile
Nestled at the crossroads of Africa and the Middle East, Egypt, a country in North Africa stands as a nation draped in the mystique of ancient wonders, infused with the allure of a vibrant cultural kaleidoscope. Considered a cradle of civilization, Egypt’s Cairo remains one of the world’s oldest human settlements, and many historians credit ancient Egypt as the birthplace of some of the earliest forms of writing, agriculture, urbanization, organized religion and centralized government structures.
The country has come a long way from ancient times to modern times, and is currently experiencing a profound economic transformation, propelling it towards a future defined not only by its illustrious past but by the dynamic aspirations of its people. Though Egypt is currently undergoing economic hardships, the country fared relatively well through the pandemic.
It wasn’t until the post-pandemic global recession and the Russian invasion of Ukraine, that Egypt’s predicament worsened – shedding light on Egypt’s long-standing dependence on fuel and food imports.
Despite Egypt falling on hard times in 2023, as the devaluation of the currency continues – we must remember that Egypt is still the 3rd largest Startup Ecosystem behind the UAE and Saudi Arabia, in the Middle East (excluding Israel). Egypt has emerged as a focal point for a burgeoning SME- and startup-focused economic boom, fueled by a renewed commitment to innovation and entrepreneurship. We’ll touch more on that, but for now, let’s get the basics down.
1. Egypt Has One of the Largest Populations Across the Middle East & Africa
Egypt, considered part of the MENA region, though on the African continent, is the only country with a population of over 100 million in MENA, making it the largest country in the Arab world by population. Situated in the North-Eastern corner of the African continent, the country has the third largest population across Africa, and is the 15th most populous country in the world.
Infobyte: Population Across Middle East & Africa (Millions)
2. Egypt is Young, Even Compared to Other Middle East & African Nations
Infobyte: Economic Wealth (GDP PPP) and Size + Median Age of Population 2022
Egypt has the largest population in the MENA region and is also home to a relatively young population; this is true even compared to other Arab countries, which is a region that is generally viewed as a youthful part of the world.
The Median age for Egypt’s population is 23.9, and 76% of Egyptians are under the age of 40. Meanwhile, 74% of Saudi Arabia’s population is under 40, as of 2022; and more than 90% of UAE’s population is under the age of 54, however the largest Emirate of Dubai has 74% of its population under the age of 40. In contrast, the aging population of Japan shows that only 37% of Japan’s population is under 40 and 48% of Canada’s population is under 40 (as of 2021).
The difference is also noted in median age, where countries like Canada (40.2), Japan (48.4) and the United States (37.7) have median age of 35 and above, while the majority of MENA countries have populations with a median age of 35 and below.
So why are youthful populations important? Younger populations are economically more productive populations full of working aged people that should theoretically be driving money into the economy, generating employment, enhancing a country’s GDP, and simply by paying taxes. In contrast, aging populations tend to cost governments more, forcing them to increase spending in healthcare, while they have largely stopped paying income tax and instead are living off retirement pensions.
Infobyte: Median Age 2021
3. Egypt Is the 38th Largest and 18th Wealthiest Economy in the World
Infobyte: Top 40 Largest Economies in 2023 GDP (USD Billions)
Infobyte: Top 25 Wealthiest Economies in 2023: GDP PPP (USD Billions)
Egypt is the 2nd wealthiest country in the MENA region behind Saudi Arabia on a GDP PPP basis, and by the same measure, ranked 18th out of 25 wealthiest economies in the world. It’s noteworthy that Egypt has a GDP PPP that is higher than that of Australia and Thailand. Where it differs from other MENA countries is on a per capita basis, where its GDP per capita stands at approximately US$ 3,770 lagging behind the wealthy GCC countries. Among the 40 largest economies in the world, Egypt ranked 38th based on total GDP, ranking just above Nigeria and South Africa, making it the most productive African nation on the list. Egypt’s GDP falls just behind the size of Malaysia’s.
4. Egypt’s Economy has Nearly Doubled from 2017 to 2022
Infobyte: Egypt GDP ($ Billions) and Growth Rate
In November 2016, the Central Bank of Egypt made the decision to fully float its currency, the Egyptian pound (EGP); after which the parallel market flourished, urging the Central Bank of Egypt (CBE) to raise interest rates by 300 basis points on the same day. Within a month after the CBE announcement, the banking sector had successfully pulled in more than US $3 billion after floating the currency. The improvement in the infrastructure and the increase of investments contributed to raising the GDP. The country’s exports became more competitive in the global market and as local assets became more affordable, Egypt became more attractive as an investment destination, leading to higher FDIs.
A more competitive currency also made Egypt an attractive destination for tourism, which saw numbers rise to over 13 million tourists in 2019. While the pandemic impacted travel globally, the rebound in tourism has been highly impressive with Egypt having witnessed near prepandemic levels of tourist arrivals at ~12 million in 2022. Thereafter 2023 has been a tough year, as the GDP has dropped from 2022.
Multiple reasons account for this drop including an inflationary environment, and currency devaluation which has led to a weaker overall purchasing power.
We will be highlighting the impact of the devaluation of the Egyptian pound later on in Chapter 2.
5. Main Drivers Include the Manufacturing Industry and Wholesale and Retail Trade
Infobyte: GDP Distribution by Economic Activity 2022 (%)
Major manufacturing products include chemicals of all sorts, food products, textiles and garments, cement and other building materials, and paper products as well as derivatives of hydrocarbons (including fuel oil, gasoline, lubricants, jet fuel, and asphalt).
Within manufacturing, petroleum refining forms 21%. Thus, petroleum refining, manufacturing, import/export, agriculture, construction and real estate account for over 50% of the country’s economic productivity.
6. Egypt’s Trade is Driven by Petroleum Products
Infobyte: Egypt’s Trading Partners and Products
In 2022, China was Egypt’s largest trading partner, accounting for 18% of imports and trading more than double that of 2nd place Turkey. Turkey and the United States are also large trading partners of Egypt with each country accounting for significant exports and imports.
7. Egypt’s Unemployment in Decline
Infobyte: Egypt’s Unemployment Rate
The country’s lower unemployment rate is due to aggressive reforms that included the liberalization of the Egyptian pound, elimination of most subsidies and the introduction of new taxes such as the value added tax, in 2016. The reforms led to a rise in foreign currency reserves and in exports, and a drop in imports.
With the drop in imports, local demand driven production had increased and national megaprojects that included the construction of new cities, thousands of kilometres of roads, electricity plants and bridges also supported increased employment. 2023 has seen increasing unemployment rates with the 2nd quarter of 2023 registering a 7% unemployment rate, increasing to 7.1% in the third quarter of 2023. The Egyptian government anticipates an unemployment rate of 7.6% by mid-2024, however with plans to create 800,000 jobs, across agriculture, construction, retail, and manufacturing sectors, the unemployment rates are expected to improve to 6.9% by mid-2026.
Next Read: Egypt’s Resilient Tech Ecosystem: 10 Graphs You need to see to understand Egypt’s Startup Ecosystem
