Egyptian expatriates struggle with red tape at home

Egypt’s balance of payments is showing a decline in the volume of remittances from abroad during the first half of the current fiscal year.
Saturday 17/08/2019
An employee of the Egyptian Embassy checks documents of an expatriate national at the country’s embassy in Kuwait.(Reuters)
A long way to go. An employee of the Egyptian Embassy checks documents of an expatriate national at the country’s embassy in Kuwait.(Reuters)

CAIRO - The Ministry of State for Migration and Egyptian Affairs Abroad and the Small and Medium Enterprises Development Agency signed a cooperation protocol to develop ideas for projects to be funded by savings of Egyptian citizens living abroad and thus develop job skills of Egyptian youth.

Under the terms of the protocol, the Ministry of Immigration would target Egyptian migrants all over the world to market investment opportunities in small and medium enterprises in Egypt, in addition to providing easy terms and facilities such as land in industrial zones and ready-made feasibility studies prepared by the Small Projects Authority.

Cairo is trying to return the volume of remittances from abroad to what it was a few years ago. Remittances by Egyptians living abroad still represent a major source of foreign currency in the country.

Egypt’s balance of payments is showing a decline in the volume of remittances from abroad during the first half of the current fiscal year. Remittances fell to $12 billion, compared to $12.9 billion during the same period last year.

Cairo’s ambitions are being hampered by a heavy bureaucracy that even investors at home are suffering from. Some Egyptian expatriates said they have let their anger and frustration show, especially at the government’s lack of communication with them and because of bitter experiences regarding many projects.

Michael Leon, an Egyptian in New York, spoke of how he had purchased several housing units in the Beit al-Watan project through the website that the Egyptian Ministry of Housing had specifically designed for expatriates. He said that, after making several payments, he sent a large number of e-mails to the address allocated to inquiries about the project but all went unanswered. Now, he said, he is reluctant to deal or make any transactions with Egyptian agencies. Expatriates cannot deal with a deep bureaucracy, said Leon.

Beit al-Watan is a government megaproject offering housing units for sale at cities being constructed. Cairo allowed Egyptian expatriates to purchase the units if they pay in US dollars.

For decades, Cairo has not been able to find a common language to communicate and deal with Egyptians living abroad. Even the annual conference of Egyptian expatriates, which should have been an opportunity to put together ideas and programmes beneficial to Egypt, was transformed into small-scale workshops in the Ministry of Immigration.

Nasser Saber, head of the Egyptian community in New Jersey, said that during a conference of Egyptian expatriates in Cairo at the end of the 1990s, it was announced that investments by expatriates were welcomed. He said he invested more than $15 million in reclaiming and developing more than 1,300 hectares of desert in Beni Suef governorate, south-west of Cairo, and turned them into productive land that would export its produce. Now the Egyptian government is threatening to take the project from him.

Nasser said local authorities have delayed for a quarter of a century and did not complete the official procedures for him to acquire deeds to the project.

Two years ago, Cairo introduced investment certificates in dollars and euros with a 5% yield intended for Egyptian expatriates. The initiative, however, failed and the new financial product did not result in increasing the volume of remittances from abroad.

Fouad Thabet, chairman of the Federation of Economic Development Associations, said that attracting investments by Egyptians living abroad depends on the flexibility and ease of terms that the government shows in granting industrial land with full facilities at attractive prices and long repayment periods.

He warned that the government cannot continue to deal with investors who have a real estate speculator’s mentality of trying to realise the highest profit margin from the sale of the land.

Thabet said: “The price of industrial land in Egypt is excessive compared to neighbouring countries. Incentives given to investors in some countries can go as far as granting the land free of charge.”

Land in the industrial zones is selling at about $245 per square metre. This price is quite high because the smallest plant would require at least 700 square metres and thus would require about $170,000 just for land, notwithstanding investments for buildings, machinery and equipment. At these prices, no Egyptian living abroad would be tempted to invest in his country, Thabet said

What is making matters worse is that the private sector is copying the pricing policy of the public sector. Industrial land outside the government’s industrial zones is selling for as high as $500 per square metre.

Majdi Sharara, chairman of the Small Projects Committee of the 10th of Ramadan Investors Association, said the government is contradicting itself. The state has many unsold industrial zones because of the high cost of setting up factories. At the same time, it is trying to present investment opportunities to Egyptians abroad. What the government needs to do is to reform its policies to attract this category of investors, he said.

Sharara pointed out that it was a good idea to attract investments by expatriates but the government needs to solve investment problems first. Applying current measures and policies in the case of Egyptian expatriates wishing to invest in the country would eat up their savings before the projects get off the ground, he said.

The most important areas expected to receive new investments are cities in southern Egypt, Northern Sinai, East Port Said and Damietta on the Mediterranean and the Suez Canal axis.

“The government aims to revitalise the sector of small enterprises through investments from Egyptians living abroad,” said Economic analyst Yasser Amara. “The new activities will focus on technology and recycling of waste and electronic components, in the hope of upgrading these industries through input from expatriates.

“Cairo is encouraging expatriates to return to Egypt to benefit from the skills they acquired abroad and, at the same time, reduce the migration of young people abroad. The message the government was hoping to convey was to show that Egyptian expatriates are returning to their homeland to work there again, something that may motivate unemployed young people to use their skills.”

Amara stressed that returning expatriates represent many advantages, including ideas for projects and often sizeable savings to finance the projects, thus saving the government the burden of funding the projects.