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Thanks to a heavy private sector presence and sizable domestic demand, Egypt’s telecommunications sector has seen immense growth in its subscriber base. Although average revenue per user is low compared to other regional markets – at roughly one-third that of Morocco and one-quarter that of Jordan – affordability and improved features and services have helped drive penetration up to 112%, or 92.44m people, by the end of June 2012. Crucially, data is playing a growing role in boosting revenues. Egypt’s information technology industry has also emerged as an impressive regional player, employing more than 215,000 people across 4700 registered companies, with an issued capital of $7.61bn. The country has seen strong double-digit growth year-on-year in terms of internet penetration, with 31.21m users by the end of June 2012. Access is still uneven although mobile usage is helping improve rural accessibility. Crucially, content and services – particularly in terms of e-commerce and e-government, as well as back-office outsourcing – has been growing, and the government has pushed to boost value addition through innovation incubators. This chapter features a dialogue with Hatem Dowidar, CEO, Vodafone-Egypt; and Yves Gauthier, CEO, Mobinil.

With more than 1.4m people directly employed by the sector and 4m indirectly, tourism is a key income generator for the nation. In 2010 the sector accounted for 12% of GDP and brought in an estimated $12.5bn. Russia accounts for the most visitors to Egypt, with a total of 1.8m visitors travelling to the country in 2011. Another promising source market is the Gulf, whence an increasing number of tourists originate. Ranking Egypt 75th out of 139 countries in terms of travel and tourism competitiveness, the World Economic Forum’s list of areas in need of improvement include tourism, ground transport, and information and communications technology infrastructure. Despite the current difficult circumstances, the Ministry of Tourism is targeting 25m visitors by 2020. Areas for development include retirement tourism, adventure activities and attracting high-end tourists. This chapter contains an interview with Mounir Fakhri AbdelNour, Former Minister of Tourism.

Industrial activity remains an economic mainstay in Egypt, with well-established sectors such as textiles, food processing, consumer staples and automotive assembly. Although 35% of industrial producers suffered significant setbacks in 2011 following the political upheaval, the consumer staples segment fared well throughout the year, and even experienced growth. The shift to modern retailing has only just begun in Egypt. With more than 98% of all commercial interactions taking place informally, modern retailers take a long-term perspective when entering the market. Although the average monthly income per household hovers at $244, Egypt is still considered to have a relatively large middle class, into which 85% of Egyptians fall based on income levels over $2 a day. Global grocery retailers have long eyed the Egyptian market, but in the past, success has been limited at best. Today, a small number of major international grocers are moving in once again. This chapter contains an interview with Osama Kamal, former president, Egyptian Petrochemicals Holding Company (ECHEM).

The government has invited the Japan International Cooperation Agency to come up with a new master plan for the transport sector. Urban transport, railways and inland waterways have been identified as key areas of improvement. Efforts are under way to upgrade Egypt’s 6700-km rail network. In 2010 the World Bank announced a $330m loan to support the National Railways Restructuring Project, a plan to modernise the rail system with a focus on management, operations and infrastructure. Additionally, in February 2012 the Qatari and Egyptian governments signed an agreement to build new ports in Port Said and in Alexandria. The expansion of Cairo International Airport’s second terminal will double the number of gates in the terminal and increase its capacity to 7.5m passengers per year, boosting the airport’s total annual capacity from 21m to 25m. With an improved infrastructure and regulatory environment, the sector could reach a compound annual growth rate of 12.7% between 2011 and 2015, according to some estimates. This chapter contains an interview with Ahmed Ali Fadel, Former Chairman, Suez Canal Authority (SCA).

Insurance penetration is comparatively limited and is estimated to range between 0.7% and 1.2%. The sector has a combined total of 29 firms in life and non-life, with an asset base of roughly $6.71bn. Non-life policies have shown steady growth in recent years, rising from $870m in the 2009/10 fiscal year to $954m in the 2010/11 fiscal year. Motor insurance is compulsory and represents the greatest share of non-life policies, accounting for roughly $234m, followed by fire insurance at $128m. Significant reforms are planned for the pensions system, with plans to shift from defined-contribution to defined-benefit system, with the minimum payout equivalent to 15% of the national average wage. An overhaul of health care coverage is also under consideration, with proposals currently targeting universal care. This chapter features an interview with Abdel Raouf Kotb, Chairman, Insurance Federation of Egypt.

Egypt has a vibrant capital market, with 212 listed companies on the Egyptian Exchange, alongside a primary and secondary bond market with 60 listed bonds, and a dedicated small-cap market for small and medium-sized enterprises, the Nilex, with 20 listings. Four indices track the performance of the domestic market, but the political unrest of 2011 led to declines in all of them by the end of the year of between 42% and 49%. The real estate and commodity sectors were hit particularly hard, as was tourism, but given the positive long-term outlook for the market, valuations became increasingly attractive, and dividends yields were up to three times that of the Middle East and North Africa average. Since the start of 2012, the performance has been far more robust, with a 27% rise in January 2012 – the largest gain in seven years. This chapter contains an interview with Mohammed Omran, Executive Chairman, Egyptian Exchange, as well as a viewpoint from Hussein Choucri, Chairman and Managing Director, HC Securities & Investment. Furthermore, the chapter provides individual stock analyses and data on a cross-section of locally listed companies, courtesy of HC Securities & Investment.