Egypt Country Profile

Licences, Infrastructure and Public Utilities

Individual Corruption

Global Integrity 2008 reports that the Egyptian law allows all citizens to apply for business licences. However, citizens face many cumbersome bureaucratic procedures and obtaining a business licence can be time-consuming.

Business Corruption

Companies should take note that the Ministry of State for Administrative Development (in Arabic) specifically pointed out public utilities as an area that was particularly marred by corruption. According to Transparency International Bribe Payers Index 2008, business executives perceive the registry and permit services to be the most corruption prone institution in Egypt, so companies should be aware that there is a great risk that they will experience demands for bribes when registering or applying for permits. According to the CIPE & Ahram Center for Political and Strategic Studies Egypt SME Survey Report 2009, almost half of the SMEs surveyed found their experience with government agencies during the establishment process difficult, and many companies reported to have paid bribes to obtain necessary licences. The study also indicates that the average time of establishing a company varies from governorate to governorate, with Minia and Gharbeya governorates being the most time-consuming.

The Unified Construction Law No. 119 (in Arabic) was passed in 2008, bringing together previous laws related to construction and simplifying administrative procedures, with the purpose of reducing corruption.

Despite Egypt having improved its performance in relation to obtaining of licences and permits, obtaining utility connections and the completion of required notifications and inspections, it still lags behind other countries in the region. Companies should note that facilitation payments are often required when dealing with licences.

Political Corruption

According to Al-Ahram Weekly, investigations into the ferry accident in the Red Sea in February 2006 that led to more than 1,000 deaths concluded that the key factors leading to the accident were incompetence by the authorities and neglect by the ship owner. The ship owner was also a member of the Upper House appointed by President Mubarak, and this has led to speculations of collusion and corruption.

Investigations into the Nasr City incident (the collapse of an 11 story building in 2004 that had been illegally modified) confirmed that fining lawbreakers has become an important source of revenue for both municipal and central government alike. This has given rise to speculation of whether the government is 'selling' fines so that citizens can 'pay' to break the law and ignore licensing requirements.

Frequency

The World Bank & IFC: Doing Business 2010:
- To construct a warehouse, a company is required to go through 25 procedures, taking 218 days and costing 331% of the income per capita.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give government administrative requirements (permits, regulations, reporting) in Egypt a score of 3.2 on a 7-point scale (1 being 'extremely burdensome' and 7 'not burdensome at all').

CIPE & Ahram Center for Political and Strategic Studies: Egypt SME Survey Report 2009:
- 42% of SMEs surveyed report having paid bribes to obtain necessary licences in the establishment process, while 29% report to have paid bribes during the operation of the company.

Transparency International: Bribe Payers Index 2008:
- Business executives give the permit and registry services a score of 3.6 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt'), thus indicating this institution as the most corrupt in Egypt.

The World Bank & IFC: Enterprise Surveys 2008:
- 15.2% of companies expect to make informal payments to public officials in order to 'get things done'.

- 13.5% of companies expect to give gifts to obtain an operating licence.

- Around 30% of companies expect to give gifts in order to get a water or electrical connection and 15.5% expect to give gifts to get a telephone connection.