Egypt continues to be blighted by internal turmoil, but new prime minister Essam Sharaf says the future is bright, in spite of the challenges.

Egyptian prime minister Essam Sharaf has urged foreign companies and banks not to delay investing in the "new Egypt". "We have had major changes with the revolution and there will be ups and downs, but what I can say is that whoever wants to invest in Egypt now is investing in the future," he says.

"I know these are difficult times, but I travel a lot and what I am hearing is that people are still thinking very highly of Egypt. Investors in Arab, African and European countries, and even the US, understand very well the value of Egypt. We must get through this bottleneck of the transition, but the future is very bright."

Transition to democracy

The three-decade rule of former president Hosni Mubarak ended in February after mass protests. The country is now in transition from dictatorial rule to popular democracy and the current government is in a caretaker role at the behest of the military council until elections take place, expected in a few months.

Mr Sharaf stresses that "all the inputs for the industrial future of Egypt" are intact, regardless of political fluidity and short-term uncertainty. He adds: "The location of Egypt within the Middle East and Africa means that the country can play a major role. And of course with the US and Europe, there is an old and close relationship as well."

Mr Sharaf's message comes as clashes between Coptic Christians, a minority religion in Egypt, and some Muslim factions has raised tensions on the streets of Cairo, sparking fears of sectarian conflict in the Arab world's largest and most influential country. Government officials have been at pains to insist that such fears are overblown.

Caretaker role

A former transport minister in the Mubarak government before resigning five years ago, Mr Sharaf was appointed by the country's ruling military council in early March. His predecessor, Ahmed Shafiq, was forced to step down to appease protesters who felt he was too closely tied to the previous regime. Mr Mubarak had appointed Mr Shafiq days before the collapse of his regime. 

Mr Sharaf, a US-educated engineer from Purdue University, had been a vocal opponent of the Mubarak government in recent years and supported the street protests that toppled the old guard. He is also a staunch opponent of normalising ties with Israel and considers the resolution of the Israel-Palestine conflict to be a precondition to co-operation between Israel and Egypt.

Investment worries

Foreign investment into Egypt saw large increases in 2008 and 2009, with greenfield project numbers rising 57% and 21%, respectively, according to greenfield investment monitor fDi Markets, but declined by more than a quarter in 2010.

If Egypt is to recover as a destination for investment, it must first secure social stability by providing basic goods for poor Egyptians, as well as jobs. Agriculture, which remains the sector that is the country's largest employer, and manufacturing are seen as the main drivers in reviving economic growth. But tourism could also play a major role if a stable environment can be created.

Tourism is Egypt’s top foreign-exchange earner, supplies one in every seven jobs in the country and last year accounted for 11.5% of gross domestic product and $13bn in revenues. However, the political upheaval has cost the industry dear: the number of international visitors dropped 45% in the first quarter of 2011. Cumulatively, the drop-off has cost Egypt more than $2bn.

While the recent upheaval is considered the worst-ever crisis for Egypt's tourism industry, even more so than the 1997 shootings at Luxor because it is a continuous state of affairs rather than a one-off event, things are moving in the right direction, with tourist numbers down only 35% in April from the previous April, compared with 80% in February and 60% in March.

Mr Sharaf clearly understands the challenges facing Egypt as it recovers but it will be a long hard struggle to complete the task.

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter