Egypt continues towards economic and political stability

Egypt has long been central to the development of MENA. A focus of cultural output and political thought, the country continues to be a key influencer within the Arab world. While the oil riches of the Gulf have changed the equation somewhat, Egypt still remains one of the most significant actors in the wider MENA region.

History

“From the heights of these pyramids, 40 centuries look down on us,” Napoleon Bonaparte declared during the French campaign in Egypt more than two centuries ago. Indeed, from Ramses Square in Cairo to the new Alexandria library, tributes to Egypt’s deep past permeate the country’s modern culture. However, Napoleon’s statement did not fully capture the antiquity of Egypt. The land was first settled approximately 7000 years ago by hunter gatherers entering the Nile Valley. However, the Pharaonic period, which began around 3100 BCE, defines ancient Egypt for many and remains a key component of the country’s identity. For 3000 years, up until the arrival of the Romans in 30B CE, the Nile Valley was at the centre of the human story and civilisation. Successive pharaonic dynasties made contributions to human advancement in a number of fields, from economic organisation and legal structures, to art, architecture, mathematics, technological development and medicine.

To some extent, Egypt’s modern history has been subject to numerous attempts to restore the country to some imagined pharaonic ideal. From the dreams and hubris of 19th-century European colonisers to the experiment with monarchy and beyond, to the presidential rule of Gamal Abdel Nasser, Anwar Sadat and Hosni Mubarak, modern Egyptian history has often been defined by a singular personality.

Egypt gained independence in 1922 with the end of the British protectorate, but for many, true independence did not arrive for another 30 years, when Nasser overthrew King Farouk in the 1952 revolution. For the remainder of the 20th century the country was run along statist lines, first by Nasser, then by his successors, President Sadat and President Mubarak. Since the turn of the century, there have been attempts to liberalise the economy, but reform has often been piecemeal and adversely affected by political instability.

Political System

Since 1952 Egypt has operated as a presidential republic. Abdel Fattah El Sisi is the current president and has served since 2014. The current prime minister and head of government, in office since 2015 is Sherif Ismail. The president is elected by an absolute majority to a four-year term and is eligible to serve for a second term. President El Sisi was elected in May 2014 and the next presidential election will be held in March 2018. The prime minister is appointed by the president and approved by the House of Representatives.

Egypt’s legislative branch is unicameral. The House of Representatives has 596 seats. Three-quarters of its members are directly elected. A further 120 seats, allocated for women and minorities, are decided using a party list system, while 28 members are appointed by the president. Members of the body serve a five-year term. Following the last election in December 2015, the three biggest parties in the chamber are the Free Egyptians Party (with 65 seats), the Nation’s Future Party (53 seats) and the New Wafd Party (36 seats). However, 59% of seats are occupied by independents.

Population

Egypt is a large and fast-growing country. It is the most-populous Arab nation, the third-most-populous country in Africa and the 14th-most-populous country in the world. As of 2016 the population was some 96m, according the World Bank, and growing by 2% a year. Given these trends, it is perhaps unsurprising that Egypt is a young country. Although population growth has been driven, at least in part, by improved health outcomes and a longer life expectancy, the country’s fertility rate remains high. While the rate fell from 5.6 children per woman in 1980 to 3.2 children per woman at the end of the millennium, according to data from the World Bank, it has since shown a slight increase to 3.3 children per woman.

Despite a relatively high fertility rate and longer life expectancy, however, the country has a somewhat low dependency ratio compared to many of its regional peers. The dependency ratio stood at 62.8% in 2016, which suggests that Egypt has a relatively large working-age population that can drive productivity and tax revenue, reduce the welfare expenditure burden and help promote economic transformation in the country.

Population density is a significant challenge in the country. Some 95% of people live within 20 km of the Nile River and its Delta. Furthermore, while the urban population remains below 50% (43.2% in 2016), it is growing at a rate of 2.2% per year.

Economy

Population pressure is one of the key factors driving the national economic agenda. With an extensive subsidy scheme and a large public sector in place, the country’s public finances have become increasingly problematic in recent years. The current administration is attempting a broad reform programme backed by a $12bn IMF loan that includes floating the currency and slashing subsidies.

Following the January 2011 revolution, the country’s economy has struggled. In that year, GDP growth stood at just 1.8%. It remained depressed for the following three years, but jumped above 4% in 2015. According to IMF figures, in 2016 the economy reached an annual growth rate of 4.3%, while it stood at 4.1% in 2017. It is forecast to grow to 4.5% in 2018. Services are the biggest economic engine, accounting for 55.2% of GDP in 2016. Industry makes up a further 32.9%, while agriculture accounts for some 11.9% of the country’s GDP.

Although economic growth has improved since 2015, further progress is needed in order to address the issue of jobs and unemployment in the country. The estimated unemployment rate for 2017 was 11.6%. However, youth unemployment stood at 33.1% in the same year. Given the large and growing youth cohort, the number of job market entrants will continue to rise and the pressure on job creation is only likely to increase in the foreseeable future.

Language & Ethnicity

The official language of Egypt is Arabic. English and, to a lesser extent, French are also used in bigger cities and within the business community. The locally spoken Arabic dialect is widely understood across the Middle East because of Egypt’s film and entertainment industry exports.

The population is 90% Muslim, the vast majority of whom are part of the Sunni denomination. One in 10 Egyptians is Christian, with a number of denominations present in the country, such as Coptic, Maronite, Orthodox and Anglican. Egypt also has a small Berber population, one local tribe being the Amazighs. There are approximately 30,000 Amazigh speakers in Egypt, although as many as 12m Egyptians are descended from the Amazighs.

Geography

Located in the Eastern Mediterranean, Egypt is bordered by Libya to the west, Sudan to the south, and Israel and the Gaza Strip to the north-east, thus placing the country in the heart of the MENA region. Regarded as the longest river on earth, the Nile River is 6850 km long, reaching deep into the African continent.

Egypt is the 30th-largest country in the world by land area. However, much of it is an arid desert plateau. Indeed, there is only 36,500 sq km of irrigated land in a country of approximately 1m sq km, and just 3.6% of the territory is used for agriculture. The topography and climate are not conducive to mass commercial agriculture. In the desert interior, temperatures in the summer have an average high of 43°C and a night-time low of 7°C. Temperatures go from an average low of 0°C to a high of 18°C during winter. Along the coast, temperatures have an average high of 30°C, while the winter low is 14°C. Although the coast has more manageable temperatures, it is prone to intense humidity. In Alexandria, humidity can reach as high up to 77% during the summer months. Northern Egypt also experiences the khamseen, a spring wind lasting for 50 days. This strong wind brings with it sand, dust and heat, reaching speeds of up to 140 km per hour.

Economic activity and habitation is highly concentrated along the banks of the Nile River and the Nile Delta. Egypt has a coastline of 2450 km and control of the Suez Canal, a strategic waterway connecting the Mediterranean Sea with the Red Sea and the Indian Ocean beyond. As such, Egypt has an extremely strategic location on the trade route between Europe and Asia. In addition to geographic advantages, the country generates revenue and employment through several natural resources, such as oil and gas, iron ore, phosphates and limestone.