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City case studies Cairo: A Vibrant Investment City

In the distribution of FDI in Egypt by number of enterprises, Cairo has an overwhelming lead with 70% of all FDI enterprises
© Lukas Bischoff
Wholesale and retail trade is the main source of employment in Cairo
© Mohamed Ahmed Soliman

In 2015, Cairo, the capital of Egypt, was ranked the number one African city for attracting FDI by PricewaterhouseCoopers (PwC) and continues to receive a large share of the total inward FDI into Africa. The objective of this study is to understand the determinants of these FDI flows into Cairo, the benefits and challenges to both the host country and the foreign investors, and the impact on the domestic and local economies. This study is mainly based on analysis of secondary FDI data on Egypt, as well as interviews with a variety of stakeholders which include highlevel officials from national authorities or agencies, city managers, business associations’ directors and high-level representatives from among ten foreign companies operating in the Greater Cairo area. Cairo is located at the tip of the Nile Delta, about 200 kilometres from Alexandria, Egypt’s main port on the Mediterranean in the north and 120 kilometres from the Suez Canal in the east with its major port cities Port Saiid and Suez.

In terms of population, Cairo is the ninth largest city in the world and the largest city in Africa according to the UN’s World’s Cities 2016 report. Cairo is a densely populated and busy city at the centre of Egypt’s political, economic and cultural life. It is the seat of the main decision-making bodies (e.g. the Presidency, the Cabinet, the Parliament, the Highest Judiciary Court) and of the major trade and industrial federations, the trade unions and business associations.

The Greater Cairo (GC) region, in Figure 1 surrounded with the red dashed line, includes also parts of the Giza and Qalyoubia Governorates and accommodates about 20% of the country’s total population. The GC population was estimated at 22.8 million in January 2017 and Greater Cairo is the largest city in Africa, more than twice the size of Johannesburg, the second largest case study city in this report. The total Egyptian labour force was around 28.4 million in 2016 of which 24.8 million were employed and 3.6 million unemployed. In the GC region 21% of the total labour force was employed and 21.7% unemployed (CAPMAS, 2017).

Private sector enterprises, whether formal or informal, are the key drivers of Cairo’s economy, generating 75% of the total number of jobs. The public sector contributes the remaining 25% of all employment in the GC region (see Figures 2 and 3).

Concentration of economic activities

Cairo has a diversified economy, which includes wholesale and retail trade, manufacturing, construction, transportation, education and health services and public administration. Wholesale and retail trade and related activities are the main source of employment in Cairo (19%). The GC region’s lively and diversified retail scene encompasses everything from street traders to traditional markets (souq) and upmarket boutiques. Over the past decade, however, there has been a marked growth in contemporary shopping malls and hypermarkets.

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About Cities Today

The State of African Cities 2018 is published by IHS-Erasmus University Rotterdam and UN-Habitat in partnership with the African Development Bank. The aim of the report is to contribute to development policies that can turn African cities into more attractive, competitive and resilient foreign direct investment (FDI) destinations. Attracting global FDI is highly competitive and crosses various geographic scales, therefore regional cooperation by cities and nations is critical. But FDI is not a panacea since it has both positive and negative effects and careful choices need to be made by cities in their pursuit of FDI, if it is to lead to inclusive economic growth. This report aims to provide guidance on these choices and to facilitate understanding of the complexity of global investment in Africa.