Egypt Country Profile And Relations With Türkı̇ye

Egypt is important with its proximity to Türkiye, manageable transportation, domestic market size and strategic location obtained by the Suez Canal. Priorities within the scope of incentives in the development plans of the country have been determined as: gas-oil, textile, logistics, IT, petro-chemistry, packaging, education, financial services, insurance, clinical services, agriculture and land reclamation, tourism, furniture and wood production, pharmaceuticals, chemical products, rubber (especially tyre), real estate, construction materials, automotive and sub-industry, leather, retail.

Türkiye-Egypt Trade

The trade volume between Türkiye and Egypt has improved since 2007 when the Free Trade Agreement entered into force. The foreign trade volume, which was 1.5 billion dollars in 2007, reached 8.2 billion dollars in 2021. Our exports in 2021 increased by 44% compared to the previous year and reached 4.52 billion dollars. In 2021, Egypt's share in our total exports was 2% and ranked 15th.

Egypt is Türkiye's 17th trade partner in the world and 1st in Africa. Our trade volume, export, and import figures reached the highest level in 2021. In the first 5 months of 2022, Türkiye's exports to Egypt amounted to 2.14 billion dollars, increasing by 25.7% compared to the same period of the previous year. On the other hand, imports in the same period amounted to 2.4 billion dollars, increasing by 167% compared to last year.

Turkish investments in Egypt are around 2 billion dollars and provide direct employment to approximately 50 thousand people. The investments of Turkish companies in the textile sector are about 1.5 billion dollars. Turkish companies make 1/3 of Egypt's textile exports. Our companies also have an essential presence in the chemistry and glass industry, and Turkish companies have investment plans for the upcoming period.

Most of the factories exporting Turkish textile companies in Egypt are within the scope of Qualifying Industrial Zones and free zones. They can make duty-free sales to the USA if they use 10% of Israeli-origin products in their production. Many of our textile companies take advantage of this opportunity to be exempt from the high tax imposed by the USA on textile products.

In addition to developing existing commercial cooperation areas, Egypt has significant potential for the construction sector. In this context, the Turkish construction sector,which has an important position in the world, has potential in terms of its participation in large infrastructure projects in Egypt and the cooperation opportunities that Turkish- Egyptian companies can develop in third countries by establishing partnerships. So far, Turkish construction companies have undertaken 26 projects worth 900 million dollars in Egypt.

Egyptian Islamic Banking System

Islamic banking is making rapid progress with its structure operating in different fields worldwide and its financing services. While the global size of the Islamic banking sector is around 3.3 trillion dollars as of the end of 2021, this figure is expected to reach approximately 3.7 trillion dollars by the end of 2022. The Islamic finance sector has been adopted as a new investment area for developing the country's economies in the globalising world economies. Egypt is one of the most important countries of Islamic finance that continues to evolve.

The first example of interest-free banking worldwide is Mit Ghamr Savings Bank, established in Egypt in 1963. Al-Faisal Banking group, which includes the Faisal Islamic Bank of Egypt, the pioneering Islamic banking sector in Egypt today, has also played a leading role in the world since the beginning of the history of interest-free banking. Prince Mohammed Al Faisal formed the group as part of an initiative to expand Islamic banking worldwide in the 1970s.

On the other hand, 14 banks operate in the field of Islamic banking in Egypt today. While 3 carry out only Islamic banking activities, the other 11 banks offer Islamic Banking services through window systems in their traditional banks. There are over 60 Islamic banking products in the country that meet the needs of customers.

Islamic banking activity volume in Egypt increased by 14.6% to reach approximately 22.2 billion dollars as of June 2022, which constitutes 5% of the Egyptian banking market.

The Islamic banking market, which grew by 17.4% compared to the previous year, has great development potential. Macroeconomic developments in Egypt, increase in quality and diversity in services and products, access to potential markets and developments in information technologies are listed as the main reasons for Islamic banking to grow faster than traditional banks. In addition, sukuk issuances and Islamic participation funds, the volume of which has increased significantly in the country, have recently contributed positively to the sector's development.

According to the Egyptian Islamic Finance Association (EIFA) report, the country's Islamic deposit volume also reached around EGP 350.4 billion in 2021, representing about 7% of the total deposit volume in the Egyptian banking market. Of the EGP 43.2 billion deposit increase in the market compared to 2020, EGP 13 billion comes from Faisal Bank. The number of Islamic branches in the Egyptian market is approximately 250, representing 5.6% of the total market. It is stated that the number of customers served by the Islamic banking sector is more than 3.2 million.

Faisal Islamic Bank of Egypt, which carries out purely Islamic banking activities in Egypt, holds 30.6% of the Islamic banking market in the country. Founded in 1977, the Bank is a leader in the sector with a business volume of EGP 131 billion.

Abu Dhabi Islamic Bank Egypt, which also provides purely Islamic banking services, ranks third in the market with a business volume of 89.5 billion EGP and a share of 20.9%; Al-Baraka Bank ranks fourth with a turnover of EGP 82.3 billion and a share of 19.2%. Banque Misr ranks second in the Egyptian Islamic banking market with a business volume of EGP 95 billion and a share of 22.2%.

The Islamic banking sector in Egypt has been developing steadily over the past few years. Especially with the successful corporate sukuk issuances, the development of the sector has become one of the priority policies. The importance of the Islamic finance sector has reached a remarkable level, especially in diversifying financing sources.

In addition, Egypt has hosted the Islamic Development Bank Annual Governors meeting between 1-4 June 2022. In this context, it was announced that the regional office of the Islamic Development Bank covering 7 countries would be opened in Egypt and 13 agreements and MoUs were signed between Egypt and the Bank.

So far, the Islamic Development Bank has provided funds amounting to 18 billion dollars to 369 projects in Egypt. In the 2021/22 fiscal year, Egypt's transaction volume with the Bank has approximately been $2 billion.