“Be fearful when others are greedy and greedy when others are fearful.”
Warren Buffet’s sound business advice for picking good stock might apply perfectly in the case of a start-up looking to expand internationally. When scouting for a location for its second African office, Infomineo settled, rather quickly, on Egypt as a logical choice to fortify the company’s geographical footprint on the continent.
Arguably, Egypt has weathered the storm relatively peacefully compared to neighbouring regions, showing the country has some solid stability pillars that are hard to shake. No doubt about it, Egypt is still experimenting with democracy, and stability will take longer than initially expected to take full shape, which is enough reason to be fearful.
However, if investors wait until the country is fully up and running on the business track, it might be too late by then to take full advantage of the business potential, even more reason to be “greedy” and invest in the country now.
Analysing the hard economic figures published after 2011 will be the tree that hides a forest of opportunities that is currently Egypt. So it will be misleading to base an investment decision solely on those. This article won’t, but will rather consider the big picture on why investing at the current juncture makes perfect business sense.
Every argument made in favour of investing in Egypt prior to 2011 is still valid now: Egypt is geographically and culturally proximate to the big central Middle Eastern markets and its human capital is qualified, abundant and competitively accessible. Not to mention that demand from its own domestic market, on top of being important in itself, is constantly increasing.
Somewhat blinded by the post-revolution political instability, investors started ruling out the country as a destination for their economic projects, often forgetting Egypt’s privileged position as an outsourcing platform for both the region and the world. For more than a decade now, it successfully hosted service support centres for renowned international companies and is able to host many more, thanks mainly to the available business facilities, a developed telecom infrastructure and the well-trained workforce.
India’s example is a clear testament that countries can become international powerhouses in selected service industries while in parallel developing socially and economically. Some might argue that India reached that level in part thanks to being an established democracy. Time will tell if Egypt will choose to walk the same path, adding political stability to its already long checklist of investment-friendly criteria.
Mohamed Zin El Abidine is a manager at Infomineo, a business research company focusing on Africa and the Middle East. Infomineo provides its clients, including the majority of the leading global management consulting firms and several Fortune Global 500 companies, with ad hoc data on countries, markets, companies and people gathered through primary and secondary research. For more information please contact [email protected] or visit www.infomineo.com.