The political instability in Egypt and neighbouring countries has hindered the influx of investment. Businesses’ are nervous about the political outlook and this has aggravated worries about Egypt’s infrastructure and regulation.
Nevertheless, Egypt offers longstanding benefits for both local and international companies. And it is possible to cut through or minimise the infrastructure problems and political risk. So despite the challenges, there remain compelling reasons for doing business there.
One way for businesses to navigate the current scenario is to build flexibility into their planning. They should avoid locking themselves into arrangements that may not be appropriate if the situation deteriorates.
Real estate is a prime example. By using flexible workplace solutions that allow them to change their footprint or move quickly without penalty, companies setting up in Egypt can reduce the financial risk arising from the political risk. By using pay-as-they-go workspace, they can also control costs.
Outsourcing frees up management resources
Another way to ease the process of operating in Egypt is to let someone else shoulder the work of running an office there. Instead of trying to manage their own workspace, businesses can outsource it. For example, companies that use serviced office space at Regus’ two business centres in Cairo have less red tape to deal with; Regus also manages aspects like power back-up and keeping the phones, IT and internet running. It’s a great weight lifted off an organisation’s back, especially one with a handful of staff.
One company that took this route is Bimed Teknik, a cable fittings manufacturer in Turkey with offices in Egypt, Germany and Canada.
Milad Magdy, country manager said “I was searching the Internet to establish offices in Egypt and found Regus and contacted them directly – that was three years ago. I looked at another office but it didn’t have the services Regus offered – I needed an office with internet and phone and a reception desk. The Regus serviced office system and the centre’s location were very good, especially for customers visiting me. New Cairo is a good place for international companies, many of which have established offices here.”
Balancing the risk and the benefits
The political situation means there are undoubtedly risks in Egypt. But investment continues to come to the country. Egypt recently awarded eight oil and gas exploration contracts for prospecting projects off the North Coast of the Mediterranean Sea. Companies including BP, Petroceltic International, Sea Dragon, Pura Vida Energy and Dana Gas are paying a total of $73.2 million to secure the license deals, which require a minimum investment of $1.2 billion.
So despite the problems of political nervousness and creaking infrastructure, there are strong reasons to support Egypt’s economy and hook into its business attractions. Just make sure you do it in a way that reduces the risk and the inconvenience.
