Executives upbeat about domestic growth prospects, findings reveal

By ; Bakinam Khaled

Egypt’s businesses have begun increasing the tempo of their operations in recent months, buoyed by the country’s prospects for economic recovery, with newly adopted digital solutions and access to credit helping them to elevate their performance, according to a new Covid-19 CEO Survey carried out by the global research and advisory company Oxford Business Group (OBG) in association with the real estate company Tatweer Misr, the leading Egyptian real estate Company, and the Global Appraisal Tech (GAT).

Titled “Next steps: After a historic year, where do Egyptian business leaders see things heading in 2021?”, the survey gauges the views of executives on the economic consequences of the pandemic, as well as their outlook for the near term on a company and country level.

Alongside the findings, the survey includes an in-depth analysis of the answers and the broader economic climate in which they were obtained by Harry van Schaick, OBG’s Regional Editor. The results of the survey can be viewed in full at https://oxfordbusinessgroup.com/blog/harry-van-schaick/obg-ceo-surveys/next-steps-where-do-egyptian-business-leaders-see-things   

In an encouraging sign, given the challenging macroeconomic conditions across both emerging and more advanced markets, 71% of executives told OBG that their company is already operating at 61% capacity or above. Almost one-third (30%) had already returned to full operations by November 2020, with 36% expecting to be operating at 100% capacity by March 2021.

Bank loans - particularly those in local currency - remain the preferred source of capex financing amongst business leaders, according to OBG’s survey, highlighting the ample liquidity and high levels of capitalisation that lenders have, with a combined 40% of respondents selecting this as their favoured option, followed by internal financing (32%).

The findings also revealed that the majority (71%) of executives surveyed had sought out digital solutions to facilitate business continuity in the pandemic, suggesting that digitalisation efforts under way in Egypt are gathering momentum and reflecting trends witnessed worldwide.

OBG also asked business leaders for their views on whether Egypt’s recovery was likely to be driven by mostly internal or external factors. Almost half (48%) of respondents said they believe Egypt’s recovery will depend equally on domestic and international influences. Significantly, however, amongst the respondents who selected one over the other, the majority felt domestic factors would play a greater role than international influences in galvanising a recovery, implying confidence remains high amongst the business community in Egypt’s ability to navigate its future.

Dr. Ahmed Shalaby, President and CEO of Tatweer Misr, said that Egypt had reached several unprecedented economic milestones over the years on the back of the economic reforms programme implemented by the government, which had resulted in the country achieving economic growth of 3.6% in 2020, according to the International Monetary Fund (IMF) - the second-highest rate worldwide and in spite of the global pandemic.

“Egypt’s ambitious 2052 urban development plans represent a major breakthrough since, for the first time, the government is making steady progress in addressing the rise in population growth by increasing the country’s urban areas twofold to 14%” he said. “The plans also saw more than LE1 trn channelled into infrastructure upgrades between 2013 and 2017, connecting Egypt’s cities and providing modes of transportation that are now producing opportunities across the economic sectors.”

Tarek Madany, Managing Director of appraisal company Global Appraisal Tech (GAT) told OBG that the real estate sector is the major driver of economic growth in Egypt and remains the biggest contributor to GDP.

“Although nominal real estate prices continue to rise, real values remain stagnant. This is attributable to lower interest rates, new construction and ownership laws, the increase in supply from the construction of 20 new cities, as well as Covid-19. The outlook, however, remains positive," Madany added.

Madany and Shalaby also explored the results of the survey further in a vidcast with OBG’s editor, Harry van Schaick, which will be released in the coming week.

Van Schaick said that the optimism displayed by business leaders reflected broader expectations that domestic growth is likely to outpace a projected sluggish global recovery, building on years in which Egypt’s economy has displayed considerable resilience.

“Looking ahead to 2021, while the IMF’s growth forecast for Egypt is a relatively modest 2.8%, the country is still expected to outperform others in the region,” he said. “Assuming that Egypt’s growth is more closely correlated with domestic factors than international ones, the continuous push to develop more infrastructure, reduce unemployment and cater to rapid population growth will be crucial to ensuring a positive economic trajectory in the coming years.”

Van Schaick’s viewpoint can be found in full on OBG’s Editor’s Blog, alongside additional analysis by all four of OBG’s Regional Editors on the markets that they cover. Titled “Next Frontier”, the blog serves as a platform for OBG’s experts to share their thoughts on the latest developments taking place across the sectors of the 30+ high-growth markets covered by the company’s research.  

OBG began producing its CEO Surveys 5 years ago, as a way of giving licence-holders a handle on business sentiment in the economies it covers, termed the Yellow Slice markets, in reference to its corporate colour. Since then, they have become a highly popular and integral part of the firm’s portfolio of research tools.

The OBG CEO Surveys feature in the Group’s extensive portfolio of research tools. The full results of the surveys are available online and in print. Similar studies are also under way in the many markets in which OBG operates.