CAIRO: Egypt ranks as the top African nation in terms of foreign direct investment (FDI) flows, beating South Africa for the first time, according to the World Investment Report 2007 published by the United Nations Conference on Trade and Development (UNCTAD). "FDI into Africa doubled between 2004 and 2006 to a record $36 billion, spurred by the search for primary resources and increased profits as well as by a generally improved business climate, the report states. According to the report, cross-border mergers and acquisitions (M&A) as well as green field/expansion investments played an important role in the top host African countries, particularly Egypt and Nigeria. In Egypt - the leading recipient in the region - inflows exceeded $10 billion in 2006, 80 percent of which were in non-oil activities. "FDI in Egypt is [on the rise] which explains this year's high ranking, said Maher Nasser, director of the United Nations Information Center in Cairo. "Investment spreads across an array of sectors including manufacturing, agriculture, tourism, and banking, which highlights another positive trend. Generally, the report traces a widespread growth in global FDI, approaching the year 2000 peak level. Global FDI flows, reads the report, grew for the third consecutive year to $1.306 billion. Inflows to developed countries rose by 45 percent ($857 billion), while developing countries recorded a 21 percent growth rate ($379 billion). This year's world top ten recipients of FDI inflows are the United States, the United Kingdom, France, Belgium, China, Canada, Hong Kong, Germany, Italy, and Luxembourg. As for Egypt, the report indicates that FDI flows have almost doubled from some $5 billion in 2005 to more than $10 billion in 2006. It also ranks Egypt the second Arab country in FDI flows after Saudi Arabia, moving up one position compared to last year's place. "The current surge in FDI flows to Egypt is a result of a number of measures introduced by the government, especially those related to business start-up procedures, tax reforms, and currency stability, explained Assem Ragab, newly appointed chairman of General Authority for Investment and Free Zones (GAFI). He particularly referred to GAFI's efforts to eliminate bureaucracy and facilitate business procedures through establishing One-Stop Shops that significantly cut time of establishing a business from several months to almost two days. "Investors seek countries that are proactive on implementing reforms, bureaucracy-free, and will boost their revenues, he added. "And ranking high on such international reports shows that the government is moving in the right direction and is sincere about implementing reforms, which will in its turn increase investors' confidence. On a global ranking, this year's UNCTAD report reveals that Egypt has moved up from 68 to 33 (out of 141 countries) on the Inward FDI Performance Index that measures ratio of a country's share in global FDI inflows to its share in global Gross Domestic Product (GDP). Indeed, recent statistics records that FDI in terms of GDP increased from 4.4 percent to 5.7 percent in 2006. Egypt was surpassed by countries such as Singapore, Jordan, Bahrain, Lebanon, Sudan, and the United Arab Emirates. It, however, scored higher than countries like the United Kingdom, Israel, Sweden, Saudi Arabia, Turkey, France, and Canada. As for Egyptian share of investment in global FDI, the country ranked 77 (up from last year's 81) surpassed by countries such as Switzerland, Bahrain, Kuwait, Israel, United Kingdom, the United Arab Emirates, South Africa, Qatar, Lebanon, and India. "Egyptian investment in world FDI rose this year due to an increase of acquisitions made by Egyptian companies - such as Orascom Construction Industries - in markets outside of Egypt, Ragab said. While the report shows that Egypt's economic reforms are bearing fruit, there is still a lot of scope for more improvements. "The main [objective] is to utilize these figures [FDI] to increase employment, growth rates, and export capacity, Ragab added.
