Egypt’s economic and political fortunes have been uncertain for the past several years. With numerous challenges from political transition to domestic security and economic pressures, whether Egypt would be able to overcome the challenges it faced was not clear. However it seems that the country is managing to come back from the edge with recent developments indicating that opportunities are emerging and there are reasons to hope for rapid improvement in the coming period. While challenges remain, Egypt’s outlook appears to be improving, and the country’s economy is attracting praise and investor interest regionally and globally.
Egypt’s insurance industry is underdeveloped compared to regional neighbours and is growing from a low base. The country’s insurance market is equivalent to just 1.2% of GDP, and Egyptians spend just 0.005% of their income on insurance, compared with 4% among Moroccans and 8% among Lebanese. The sector experienced a further slowdown in the aftermath of Egypt’s January 2011 uprising. According to the Insurance Federation of Egypt, the country’s insurance sector has witnessed over EGP 1 bn in losses since 2011 as violence and political instability has led to higher levels of insurance claim pay outs in recent years.
During the last decades, the Egyptian economy has made great strides, managing to capitalize on the country’s natural wealth, appeal as a tourist destination and young, educated population to generate economic growth, industry and investment in key economic sectors. Although Egypt’s legacy of state socialism and political authoritarianism has hindered the country’s ability to build an equal opportunity economy, the Egyptian government has, in recent years, shown a willingness to cooperate with local and international investors to facilitate economic expansion, and to engage in public-private partnerships to push forward infrastructure and other development projects. Although Egypt’s economic progress has stagnated in recent years due to local and regional instability, the conditions that made the country’s economic success persist.
Egypt’s banking sector is currently one of the most promising industries in the country. Egypt’s local network of banking and finance institutions are a continued cause for hope. Global banks and numerous Egyptian-founded securities brokerages, investment banks and private equity firms anchor the local banking and finance sector, and have driven its growth and development into a world-class market in recent years. While regulation remains a challenge, these corporations have managed to build high-functioning institutions based on international best practices in corporate governance that offer tailored services to the local and regional markets.