The joint report, produced with Egyptian economic ministries, stated that redirecting investment could help sustain long-term growth by boosting productivity, job quality, and technology spillovers, while strengthening links between large companies and small and medium-sized enterprises (SMEs).
The review found that most foreign investment flowing into Egypt between 2013 and 2023 was concentrated in construction and resource-based industries, including energy, coal, oil, and gas. While these sectors deliver relatively high productivity, they offer limited potential for innovation and knowledge diffusion, the report said.
By contrast, innovative sectors attracted only a small share of inflows. Just 0.2 percent of total FDI during the period went into innovation-driven industries, and only 5.5 percent of foreign firms reported spending on research and development.
Greenfield investment—where foreign companies build new operations from scratch—has been rising in software and ICT, but remains heavily skewed toward energy and construction. About four-fifths of greenfield FDI between 2013 and 2023 went to renewable energy (45.7 percent), construction (17.5 percent), and oil and gas (17.1 percent).
Egypt ranked ninth globally for FDI inflows in 2024, drawing about $47 billion, up sharply from 32nd place a year earlier.
In the first quarter of fiscal year 2025/26, net FDI inflows reached roughly $2.4 billion, including $9.3 billion directed to petroleum and mineral resources, of which $1.57 billion represented new foreign investments.
According to the report, foreign firms operating in Egypt are on average 1.5 times more productive than domestic companies and are twice as likely to export, highlighting the potential for deeper integration into global value chains (GVCs).
Foreign companies also source about 63 percent of their inputs from Egyptian suppliers. While this creates opportunities for technology transfer, the OECD warned it could widen productivity gaps if local firms fail to keep pace.
Greenfield projects created about 275,598 jobs between 2013 and 2023, up from 165,390 in the previous decade, largely in manufacturing. More recent labour demand has shifted toward renewable energy and ICT.
Despite this, the report cautioned that job creation may not accelerate sufficiently in the coming years. Egypt still faces a structural employment gap, with roughly 1.3 million young people entering the labour market annually, but only about 500,000 jobs are created each year as of November 2025.
Foreign and domestic firms pay broadly similar wages and employ skilled workers at comparable rates, the report said. Foreign companies are more likely to provide training, but are no more gender inclusive, with youth and female employment remaining relatively low. Real wages also remain weak despite recent nominal increases.
SMEs account for about 98 percent of Egypt’s private sector, underscoring their importance to growth and the government’s Vision 2030 strategy.
The OECD urged Egypt to strengthen macroeconomic stability and direct more investment toward SMEs to help integrate them into major supply chains, expand research and development, and improve the business climate.
Recommendations included accelerating the finalization of Egypt’s National FDI Strategy for 2025–2030, being prepared with the World Bank and the General Authority for Investment and Free Zones (GAFI), and improving coordination among government bodies to reduce overlap and increase transparency.
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