Trading with Egypt – Overview
Trading with Egypt – Egypt has started to emerge from its political issue, and today, it has the potential to become a high growth market because of its large population and import-dependent economy. Egypt is strategically located and has a highly diversified. This strategic location makes it an ideal place for companies who have commercial activities in the Middle East and Africa. Egypt is identified as a lower middle-income country.
Egypt has a population of 99.5 million people, with over 52% of the population under 25 years of age (source cia.gov).
Strengths of the Egyptian market include:
- A young workforce
- Newly-extended Suez Canal is the hub for world maritime traffic
- Strategic geographical location – with proximity to Asian, African, and Europe
- Having the third largest economy in Africa
- It has several free trade agreements and arrangements
Challenges of doing business in Egypt include:
- Security Issues.
- High level of corruption. Egypt ranked 105/180 in the 2018 Transparency Index.
- High unemployment and poverty.
- Restrictions on foreign property ownership.
- Slow and cumbersome customs procedures.
- An excessive bureaucracy which makes it difficult to do business.
Egypt Business culture
Egyptian Arabic or Masry, which means Egyptian, is by far the most widely spoken in the country. English is spoken across Egypt. It is common for written correspondence to be in English; however, Arabic is preferred within some public sector organizations.
Egypt is an Islamic country, so you should dress and behave conservatively, observe Islamic customs, and ensure that travel documentation, including passports and any necessary visas, are valid and up-to-date.
Egyptian business people are friendly and open. Developing personal relationships is essential in Egyptian business culture.
It is always advisable to make an appointment to meet someone in Egypt. It is considered rude to try and hurry a meeting.
For business occasions, it is customary to wear suits and ties in the major cities. Lighter clothing is acceptable for business purposes in other cities. Jackets and ties are recommended when dining at the better hotels and restaurants. Women should be modestly dressed at any occasion.
Egyptians love to bargain; you should allow for this in any original deal, this process can significantly enhance your chances of an ongoing business.
Always bear in mind that in Egypt, the written contract is not generally considered to be the final deal. Egyptians will often want to continue to negotiate better terms throughout the business relationship.
Setting up in Egypt
There are many ways you can do business in Egypt. The most common are:
- appoint a local partner, distributor or agent
- set up a representative office or branch office in Egypt
- form a joint stock or Limited Liability Company
Commercial agents must register the existence of their agency with the Ministry of Trade and Industry Commercial Registry Department, giving basic facts about the agreement, including the amount of commission received on sales.
The most common form for foreign investors is a limited liability company.
Banking and Finance
The unit of legal tender in Egypt is the Egyptian Pound E£ (EGP).
The Egyptian banking system consists of 40 banks categorized as the commercial, non-commercial public, and private sector. The National Bank of Egypt, Bank Misr, and Banque Du Caire are large public-sector banks which control 40 percent of the banking sector. All banks in Egypt are subject to supervision by the Central Bank of Egypt (CBE).
Trading with Egypt – Tariffs and Non-Tariff Barriers
Taxes and duty rates are revised continuously in Egypt and can change without notice.
Further information on excise taxes can be obtained from the website of the Egyptian Customs Authority.
Tariff rates in Egypt have been reduced to a maximum of 40 percent – except cars, alcoholic beverages, and certain luxury items. Tariffs on many things are lower, with the average rate still above 25 percent.
Alcoholic beverages, larger cars, tobacco, and tobacco products are subject to duties up to 3000 percent.
Duty reductions apply to goods imported for domestic processing and assembly.
The Egyptian Minister of Industry and Trade requires foreign manufacturers of specific products to register for export with the Egyptian General Organization for Export and Import Control (GOEIC). Decree (43/2016).
Under Decree 43/2016, listed products will only be allowed entry into the Egyptian market if they are registered by the owner of the manufacturing facility or the legal holder of the trademark in advance.
Product labeling, certification, and packaging
The Labels/ Stickers of goods exported to Egypt must be in Arabic (other languages can also be added). The information on the labels must include:
- Complete details of the product, including name, quality and ingredients in proportions (including additives and preservatives)
- Detailed instructions for usage and storage
- Full details of the manufacturer including country of origin
- The date of production and the expiry date
- The net weight and gross weight
- The name and address of the Egyptian importer
For meat and poultry products, the label must include the following statement “slaughtered according to the Islamic ritual” or “Halal slaughtered.” Labels must be inserted inside the package as well as on the outside. The label on the meat must include the following:
- Country of origin
- Producer’s name and logo
- Name of slaughterhouse
- Slaughter date
- Name and address of the importer
- Name of the entity that issued the “Islamic slaughter” definition. The Egyptian Ministry of Health requires that the batch number must be added to all consumer products.
Other goods, imported in the form in which they are sold to the public, must bear a label in Arabic indicating:
- Country of origin.
- Handling and transportation instructions.
- Kind of product and style.
- Producers name and trademark (if applicable).
- Product specifications and instructions for usage.
- Production and expiry dates where applicable.
- Goods must be shipped from the country of origin ports.
Egypt uses the metric system.
Egypt’s import and export regulations stipulate that the package should be fit for preserving the product, and the product should occupy the space of the container in full. If a crate is wooden, the container itself should be accompanied by an official certificate that states it is free from wood-harmful pests and insects.
Data that appear on equipment, tools, and machinery should be identical to those appearing on the package. The country of origin should be indicated on each item and be non-erasable. They should be accompanied by an Arabic-language catalog showing the following:
Exporters should make sure that any packaging used is capable of protecting the products from extreme weather and climate changes as well as the rigors of transport and handling.
Methods of quoting and payment when trading with Egypt
Quotes are can usually be FOB, C&F, or CIF (Incoterms 1990) basis.
An irrevocable letter of credit (L/C) payable at sight is commonly used for settlement of international transactions. It offers protection to both the exporter and the importer. The currency can be in US$ or Euro.
Payment terms must be agreed to in advance. Whatever payment terms are agreed upon, make sure all parties understand them and that your client, representative or contact signs a mutually agreed document.
It is best practice for sellers dealing with new customers to use secured payment terms such as 100% payment before shipping, letters of credit, sight drafts, or bills of exchange.
Trading with Egypt – Documentary & Clearance Requirements
The following documents are required for any shipment to be accepted through customs in Egypt:
- Bill of lading – No special requirements.
- Commercial invoice – A minimum of three copies is required. It must indicate all details usually provided and include a full description of the goods, all price details (including freight, packing and other charges and discounts) and the country of origin. Consular legalization is not required unless stipulated in the L/C or by the consignee.
- Certificate of origin – The Egyptian Consulate must authenticate this in the country of origin
- Packing list – A packing list is not compulsory, but is recommended and will facilitate clearance.
- Pro-forma invoice and letter of credit
Egypt no longer requires import licenses for most products, although permits are required for animal products.
When a goods land into Egypt, the importer must present Egyptian Customs with the documentation needed to allow the products for entry into Egypt.
Egyptian Customs and Security Office are required to conduct a security inspection for illegal products.
Business Risks when trading with Egypt
Companies wishing to operate in Egypt should commit to the highest level of corporate behavior and familiarise themselves with the laws of the country and the penalties about bribery of foreign officials.
Intellectual Property Protection
Trademark counterfeiting, copyright piracy, and patent infringements are issues in Egypt. There is little enforcement of IP law in Egypt.
However, Intellectual property law in Egypt conforms to international standards and provides recourse for infringements. Egypt is a member of the World Intellectual Property Organisation (WIPO) and a signatory to the Paris, Madrid, and Bern Conventions.
Patents are registered with the Egyptian Patent Office
Egyptians legal system is comprised of three legal systems – Napoleonic Codes, Roman law, and Islamic law. Commercial and contractual disputes are adjudicated by the ‘Court of First Degree’ (Mahkmat El Daragah El Aoulah). There are also several specialized courts, such as the Economic Courts and Environmental Courts
Hiring a local legal representative is the best advice.
Trading with Egyptian – Web Resources
Trading with Egypt – About the Author
Aidan Conaty is the founder of TCI China and Goodada.com. Aidan has spent over 15 years assisting companies to trade internationally. TCI China provides trade support services for China. Goodada helps companies to trade internationally.
Aidan can be contacted email at firstname.lastname@example.org or can be contacted at:
- (Europe/ Rest of the World) +353 1 885 3919
- (UK) +44.020.3287.2990
- (North America) +1.518.290.6604