Egypt has recently been through the most profound of changes with a popular revolution, widely referred to as the Arab Spring, sweeping away the decade’s long, semi-totalitarian rule of Hosny Mubarek and replacing it with another form of authoritarian rule.
Time will tell whether new, democratic institutions will be restored and whether Egypt can regain its position as one of the fastest growing economies in the world – a country which many economists predicted would become increasingly successful and influential in the MENA region.
Egypt is, in a strange way, both a secular and a religious state and it is worth bearing these two important strands in mind on any business trip to the country. It could be said that the Egyptian economy is split in two vital but differing ways.
Firstly, many businesses were nationalised after independence and during the prolonged period of Arab socialism which typified the Egyptian governmental approach in the 1960s and 1970s. The government still plays a vital role in setting both business and macro-economic agendas but the past couple of decades have seen the proliferation of larger-scale private companies which may be locally (usually family) owned or joint-venture operations with overseas conglomerates.
Secondly, companies fall into the category of either Islamic or non-Islamic in orientation. Those companies which are Islamic in orientation will govern their approach to business through the strict interpretation of classical Sharia law which impacts on such varied issues as attitudes to borrowings, shareholder profile and HR policies.
Before entering into business negotiations in Egypt it is important to do some homework on any potential contacts. Is the company state-owned or private; is it Islamic or secular in approach?