Introduction
Egypt is one of the major countries in the North Africa and the Middle East. The country has the biggest population in its region; it represents 25% of the total population in Arab population with more than 82 million inhabitants (Tignor, 2011). The majority of the population falls in the bracket of 15-25 years. Egypt enjoys a significant cultural, political and economical influence in the Arab region serving as a trendsetter to the many countries in Middle East. Egypt has affirmed that foreign private capital is welcomed and that foreign investors in the country are therefore welcomed to invest in the country. Investors from foreign countries are assured of efficient facilities and equipment that includes efficient transfer of profits, capital withdrawal and employee personnel (Mark, 2011, p. 177.This report will incorporate economical, political and cultural aspects of Egypt in order to determine whether this region is a potential investing region for Australian firm.
Economical environment of Egypt is the economic factors that affect the running of businesses in Egypt (Mikawy & Handoussa, p. 107). There are a number of factors that an investor should consider before investing in Egypt.
Economical facts and impacts
The economy of Egypt is among the few prosperous economies in Africa, despite its prosperity, the economy of this country is susceptible to external negative factors that are likely to affect its growth negatively, factors that are likely to cause inflation in this country include the continuous conflicts in the regions surrounding the country and the subsequent fall in tourism and oil sectors (Farah, 2009). Egypt is classified as a middle income country and continuous to record an increase in its economical growth even though its foreign donors advocate for reforms in the country (Belev, p.109).
Notably, the country has in the recent years experienced a steady economic growth. Other than increased economic growth of this country; there are many other success factors that the Australian business should consider while choosing to invest into this country.
Egypt faces economical challenges that include unemployment, water scarcity and poverty. Egypt has a well structured and developed communication networks and infrastructure, the infrastructure network covers the whole country, in most centers of the country there is easy access to internet
Political environment definition
Political environment is the government actions which influence the functions of a business or an organization. These actions may be international or local, the political environment of Egypt is those factors that influence the country’s operations and the government is the source of this actions.
Political environment facts and impacts
Egypt is a democratic and a multi party country, the political system in this country is the one whereby the prime minister shares power with the president. The country is in good terms with most countries in the Middle East, the political stability in this country has been shaken, and this makes the country unsuitable for investors, both the domestic and foreign to investors in the country for the fear that peace of the country might be compromised.
The cost of living in Egypt is cheap when compared to other European countries. Maintaining and managing a business is therefore easy, this favors foreign and domestic entrepreneurs aspiring to venture into the Egyptian market (Jencks & Smith, 1973).
The government of Egypt has developed a programme whereby credible reforms by the donors are implemented. The reforms that have been currently considered by the government include increased price controls, reduced subsidiaries and eased restrictions on foreign investment and trade
The government of this country has setup various steps to ensure a peaceful and favorable investment climate in the country; this is evident from the law enacted in the year 1997 that allows foreign investors and foreign companies to have 100% ownership of Egyptian companies. (Sornarajah, 2010, p. 34)
Additionally, the government of Egypt has formulated a positive list that let foreign investors to discover favorable areas to invest. Areas that need huge investment in Egypt include fishing, land reclamation, tourism mining and livestock keeping. In order to invest into these areas, foreign investors will require no approval.
Egypt is not stable political wise. For the past year the country has had riots and change of government from the resigning president Mubarak to the military hands and after recent election the country has a new government under Mohamed Morsi (Dickovick, 2012, p. 46). Morsi and the group that are with him are called the brothers and there is a huge problem in them winning because the military generals stated before the election that they will not let the brothers have full control if they win and will not let the group dominate Egypt political politically even if they win (Zahid, 2010). Considering that this country is still struggling to gain the respect and also the authority it needs, the generals have to stand for the country needs which is to stabilize themselves and get back to normal life. At the moment the country is not safe to invest in due to the facts stated and that the brothers who are ruling right now seems like there still in an experimenting time with the generals waiting for them to make a mistake that might ignite the riots or political debates about brothers group right and suitability to rule. As seen from the above facts and the impacts they had on the country Egypt is not a safe investing environment at the moment for Australian business due to lack of organization in the country and it is unstable situation that might change very quickly.
Socio-cultural environment definition.
Socio-cultural environment is a set of norms practices and behaviors that exist within a population. Investors normally investigate the social cultural environment prior to establishing business in the country.
Socio-cultural facts and impacts
In conclusion, the huge economical growth and strong infrastructural development in Egypt has boosted investment level of the country in general. Low cost of living, easy access to airline transport and strong economy in the country has helped boost the ease of venturing into the market of the country. The people in Egypt are welcoming and loving, this is because they have ethical norms and strong culture that restrains them form harming others. The country has serene environmental conditions and attractive sceneries. Majority of the inhabitants in the country understand English hence preventing language barrier situations. Despite the serene and good economical policies, investment in this country is more likely to be compromised due to the political instability in the country.
Recommendations
It is recommendable for Australian business not to venture into the market of Egypt and set up businesses. Egypt presents many promising factors to business excellence, but with the existence of political instability in the country everything will be confronted. Despite the country having a well developed infrastructure and communication networks, it is therefore not advisable for the Australian firm to make investments in Egypt. The firm should therefore look for opportunities in more stable countries with promising investment returns other than Egypt.
References
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