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A Study on Remittances and Investment Opportunities for Egyptian Migrants

The Ministry of Manpower and Migration

International Organization for MigrationE-mail: [email protected]: http://www.egypt.iom.int

The International Organization for Migration (IOM) is committed to the principle that humane and orderly migration benefits migrants and society. As an intergovernmental organization, IOM acts with its partners in the international community to: assist in meeting the operational challenges of migration; advance understanding of migration issues; encourage social and economic development through migration; and uphold the human dignity and well-being of migrants.

This report has been made possible through the contribution of the Italian Cooperation, under the framework of the project “ Integrated Migration Management System for the Arab Republic of Egypt” (IMIS Plus).

The material presented herein may be used for information purposes only. While IOM endeavoured to ensure the accuracy and completeness of the contents of this publication, the views, findings, data, interpretation and conditions expressed in the report are those of the authors and do not necessarily reflect the views of IOM and its Member States..The designations employed and the presentation of material throughout the report do not imply the expression of any opinion whatsoever on the part of IOM concerning the legal status of any country, territory, city or area, or of its authorities, or concerning its frontiers or boundaries.

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A Study on Remittances and Investment Opportunities

for Egyptian Migrants

2

This report has been made possible thanks to the generous contribution of the Italian Cooperation, under the framework of the Integrated Migration Management System for the Arab Republic of Egypt (IMIS Plus).

This report was prepared by: Ray Jureidini, Iveta Bartunkova, Ahmed Ghoneim, Nadia Ilahi and Erin Ayjin from the Center for Migration and Refugee Studies (CMRS) at the American University in Cairo, with technical assistance by George Thabet.

CMRS is grateful to the International Organization for Migration (IOM) for its technical, editorial, and intellectual support for this project, with particular thanks to Luigi Carta, Priyanka Debnath and Roberto Pitea.

CMRS also wishes to thank the interviewers, interviewees and the many individuals who gave their time, their personal details and insights while participating in this project.

Acknowledgements

3A Study on Remittances and Investment Opportunities for Egyptian Migrants

Table of Contents

Acknowledgements 2

Table of Contents 3

List of Tables and Figures 4

List of Acronyms 6

Executive Summary 7

1. Introduction 10

2. Methodology 17

3. Brief Literature Review 18

4. Rules, Regulations and Policies Governing Establishing Businesses in Egypt

with Special Focus on SMEs 21

5. Profile of Remitting Migrants 29

6. Characteristics of Remittances Sent 34

7. Characteristics of Remittance-Receiving Households 38

8. Uses of Remittances Received 38

9. Household Investment Decision-Making 45

10. How Migrant Households Invest 47

11. Why Most Migrant Households Do Not Invest 51

12. Conclusions and Recommendations 56

13. References 59

Appendices 64

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List of Tables and Figures

List of Tables

Table 1: Select development indicators in the Cairo, Menofeya, Sharkia and Fayoum governorates.........................16

Table 2: Age of migrant ...............................................................................................................................................29

Table 3: Occupation of migrants in destination country ..............................................................................................32

Table 4: Frequency of receiving remittances ...............................................................................................................34

Table 5: Methods used by migrants to send remittances to Egypt ...............................................................................35

Table 6: Reasons for preferred method of receiving remittances ................................................................................36

Table 7: Currency in which remittances are sent .........................................................................................................36

Table 8: Currency in which remittances were received ...............................................................................................37

Table 9: Amount of remittances received (EGP) .........................................................................................................41

Table 10: Different uses of remittances .......................................................................................................................42

Table 11: Migrant’s advice on spending remittances ...................................................................................................45

Table 12: Reasons for decisions to invest ....................................................................................................................48

Table 13: Advantages of investment choice .................................................................................................................49

Table 14: Disadvantages of investment choice ............................................................................................................50

Table 15: Areas of desired investment .........................................................................................................................51

Table 16: Is your area conducive to profitable business?.............................................................................................52

Table 17: Do government rules and regulations create unfavourable conditions for investment? ..............................53

Table 18: Obstacles to investing ..................................................................................................................................54

Table 19: Suggested areas for social projects ..............................................................................................................55


List of Figures

Figure 1: Remittance inflows to Egypt from 1999 to 2009 (USD millions) ................................................................10

Figure 2: Yearly growth of remittance inflows to Egypt from 1999 to 2009 (%) ........................................................11

Figure 3: Remittances sent by Egyptian migrants, according to country of destination .............................................12

Figure 4: The General Framework for Establishing Manufacturing Enterprises.........................................................25

Figure 5 : Classification of education of migrants from the study population .............................................................30

Figure 6: Educational level of migrants in the four governorates ...............................................................................30

Figure 7: Current country of residence of migrant (N= 198).......................................................................................31

Figure 8: Marital status of migrants (N=199) ..............................................................................................................33

Figure 9: Relationship to migrant ................................................................................................................................38

Figure 10: Breakdown of average monthly household income by governorate ..........................................................39

Figure 11: Average monthly expenditure items compared to monthly income ...........................................................39

Figure 12: Average savings compared to average income ...........................................................................................40

Figure 13: Remittances as a percentage of total household income ............................................................................41

Figure 14: Median of remittances for all four governorates ........................................................................................42

Figure 15: Investment compared to other household expenditures and total household income (in EGP) ...............46

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List of Acronyms

CMRS – Center for Migration and Refugee Studies

EU – European Union

GAFI – General Authority for Investment and Free Zones in Egypt (Egypt)

GCC – Gulf Cooperation Council

GDP – Gross Domestic Product

GOE – Government of Egypt

IOM – International Organization for Migration

IMC – Industrial Modernization Center

KSA – Kingdom of Saudi Arabia

EGP – Egyptian Pound

EHDR – Egypt Human Development Report

MTO – Money Transfer Office

NILEX – Egyptian Stock Exchange for SMEs

OECD – Organization for Economic Co-operation and Development

SMEs – Small and Micro-Sized Enterprises

SFD – Social Fund for Development

UAE – United Arab Emirates

UNIDO – United Nations Industrial Development Organization


Executive Summary

Migrant remittances from abroad are an important source of income for the Egyptian economy, and in 2008 represented 5.3 per

cent of the gross domestic product (GDP). This research project aimed to shed light on the use of remittances by Egyptian migrants and their potential to foster local investment opportunities, with a particular focus on establishing small and micro-sized enterprises (SMEs). A desk study of the relevant rules, regulations and policies governing investment was conducted followed by an empirical survey of 200 remittance-receiving households in Cairo and in the governorates of Menofeya, Fayoum and Sharkia. The overall objective of this study was not only to find out how remittances are used by remittance-receiving households, particularly with regard to investment practices, but also to explore the decision-making dynamics in terms of remittance usage at the household level.

The investment climate in Egypt has been restructured since 2004, as business reforms aiming to alter the business environment were launched. The strategy of improving the business climate in Egypt stands on six main pillars: legislative reform, monetary and banking reform, tax reform, trade policy reform, investment policy reform, and expanding the role of the private sector (OECD, 2006). One practical example in legislative reform was an 80 per cent reduction in the capital requirement for starting a new business – from EGP 50,000 to 1,000 (28% of per capita income) (World Bank, 2009). Other incentives devised by the government over the years have included promoting access to the free economic and industrial zones, easing company and tax laws, lowering banking charges and exchange rates to enhance investments. Alongside the new policies, designated facilities were established to assist entrepreneurs in the process of business creation. For instance, the Social Fund for Development (SFD) was created to offer small lines of credit to new investors. Similarly, the General Authority for Free Zones and Investment (GAFI) was established which subsequently initiated a one-stop shop

to expedite the establishment of most new businesses within 72 hours (with the exception of those related to health). The SFD offers lines of credit in the area of small and micro loans through 28 branch offices in various governorates. While the services of GAFI and SFD are available to all Egyptian citizens, including migrants, this study revealed the little awareness of migrant households of the availability of such facilities. During interviews, however, the representatives of SFD expressed their interest in supporting migrants and their families in establishing businesses in Egypt. This study found that while entrepreneurial motivations prior to leaving Egypt (those who explicitly left with the intention to save for a productive investment) applied to only 1 per cent of the sample, 20 per cent of remittance-receiving households were actually channelling remittances towards various forms of investment. Of those who did invest (40 out of the 200 in the study sample), almost half invested in real estate and a lesser number invested in SMEs, stock markets and agriculture. The large majority (80%) of the study population was more concerned about utilizing remittances for meeting the daily needs of their families, including health care and education. The study also found that there was a strong preference and trust in the banking system for receiving remittances because of their perceived safety, convenience and low cost. Nevertheless, in this study sample, around 22 per cent of the remittances were received using informal channels, for instance, through either a trusted friend or a relative of the migrant who was visiting the migrant in the destination country. It is important to mention here that this percentage in reality might be higher because of the bias in this survey’s sample towards highly educated migrants who may be more likely to use formal banking channels due to ease of accessibility and general awareness of the benefits. The survey found a relationship between the volume of the remittances transferred and the education levels of the migrants in terms of their preference between formal and informal channels of transfer. The larger the volume of remittances and the higher the education level of the migrant, the more likely it is that he/she will opt for

8

formal channels of remittance transfers (i.e. banks and official money transfer institutions).

The majority of migrants from the households surveyed in this research were male and at the time of the research, most of them (81%) resided in destination countries in the Persian Gulf, mainly in the Kingdom of Saudi Arabia (KSA). The migrant-sending households in Egypt averaged four members; most of them (67%) were female-headed in the absence of the male migrant (husband/father). For these households, remittances represented an important source of income, accounting for 43 per cent of their total household income, on average, across the four governorates studied. Most migrants from the sample studied had dependents in Egypt – 81 per cent of migrants had spouses in Egypt and 85 per cent of migrants had children who remained in Egypt. Nevertheless, having dependents living in Egypt was not a significant factor in determining whether migrants invested their remittances in Egypt or not. The spending and potential investment of most remittances was not based on the unilateral decisions made by the migrant abroad. Only in a few cases (11%) did the migrant alone decide how his/her remittance money was to be used. In an overwhelming number of cases, the decision about ways to use remittances was decided through a process of mutual consultation between the migrant and the head of the household (mostly the wife). However, the head of the household who received the remittance also enjoyed a fair deal of autonomy in deciding how the money would be spent. Overall, around 20 per cent of respondents and migrants in the sample used some part of their income for productive investment. In Cairo, 31 per cent of households invested at least part of what they received. In Menofeya and Sharkia, 20 per cent of the households engaged in the investment of their remittances. Among the four governorates, Fayoum had the lowest proportion of investing households (11%). The largest proportion of investors (39%) chose to invest in real estate, followed by 22 per cent who invested in small agricultural business ventures employing fewer than five people. The smallest proportions of investors (6%) invested in medium private businesses employing no more than 20 people. In Cairo and Fayoum, small and private business was the most represented investment activity, while in Menofeya and Sharkia, the primary investment activity was reported to be real estate. The

choice of whether to invest and on what to invest seemed to be based on cautious considerations that take into account the availability of sufficient financial resources, knowledge regarding the type of investment and avenues of risk minimization. In particular, Cairene respondents seemed to emphasize the need for minimizing potential risk/loss when making an investment decision, while respondents from the other governorates prioritized experience in their chosen field of investment.

Nevertheless, it is important to emphasize the fact that approximately 80 per cent of the migrant-sending families interviewed in the four governorates did not engage in investment. When asked why they do not invest, the most common explanation offered by the household heads were concerns regarding pre-existing financial constraints that their households were facing, including limited or no access to formal credit. One-fifth of the interviewees stated that the investment climate in Egypt is “too risky”. Another 10 per cent of the study population reported that they lacked information on the different investment opportunities and were not sure as to how and when to start the process. The locality, its infrastructure, overall development and purchasing power of the population in the area also play an important role in migrant household investment decisions. More than half of all respondents did not believe that the area in which they lived was conducive to opening a profitable business.

A large majority of the respondents believe that government policies play an important role in their investment considerations. The perception of difficulties and obstacles to investment varied depending on the governorates in which the respondents lived. Corruption in various forms was perceived the primary obstacle to investment in Cairo, whilst high taxes were of primary concern for respondents from Fayoum. Similarly, bureaucratic “red tape” troubled many of those interested in investment in Menofeya and in Sharkia.

Notably, Egyptian migration is predominantly a male phenomenon (87%). With the social fabric being conventionally patriarchal, migration often generates strong changes in family dynamics. In the absence of a father/spouse, women/mothers primarily fill the role. While this ultimately creates extra burdens for women,


it may also represent a subtle but positive shift in gender capacities that deserves more detailed investigation.

The findings from this study show that while remittances contribute up to 40 per cent of the income of Egyptian households, and they represent a major source of foreign currency earnings at the national level, remittances are primarily channelled towards essential expenses and consumption. A small but significant proportion of remittances (approximately 20%) is invested in real estate and other forms of productive investments, Survey respondents and key stakeholders interviewed for this study pointed out that several crucial factors impede migrants from engaging more in productive investment. While the Government of Egypt (GOE) has taken several positive steps in reforming the legislative framework and opening up one-stop shops to improve the investment climate in Egypt, these provisions have not produced a significant impact for migrant investors, partly due to lack of information, but also due to the nature of the investments of Egyptian migrants, mostly in the form of small and medium enterprises.

The study concludes with a set of recommendations to improve the development impact of remittances, namely through increased incentives for small and migrant investors, as well as by generally improving the business climate in Egypt and reducing the perception of risk associated with investments in the country.

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The role of migrant remittances is one of much interest within the current discourse on international migration and development. It is

significant particularly for countries which are relatively small and are still developing. In 2008, for example, remittances in low-income countries were 5.8 per cent of GDP, while in middle-income countries they reached 1.9 per cent of GDP. However, there are countries such as Tajikistan and Moldova where remittances were as high as 49.6 per cent of GDP (Ratha et al., 2009).

Egypt can be grouped into the lower end of the middle-income countries. Remittances from Egyptian migrants continue to contribute significantly to the country’s developing economy. While the global financial crisis resulted in a yearly negative growth of remittance flows of 10 per cent, Egypt ranked as the seventh- biggest

remittance receiving country in the world in 2009, with an estimated remittance inflow of USD 7.8 billion. The decline in remittances caused by the global financial crisis in 2008-2009 took place at the end of a decade of rapid growth in remittances that witnessed a 158 per cent increase between 1998 and 2008, constituting one of the top earners of foreign currency and surpassing revenues from the Suez Canal (Ratha et al., 2009). However, although the volume of remittances was significant, it was less than the Foreign Direct Investment (FDI) in the fiscal year 2008 (USD 11.6 billion) (UNCTAD, 2008). Using the national accounts statistics of GDP from the United Nations, the following figures have been constructed. They show the steady growth in the importance of remittances to Egypt as a proportion of its GDP between the years 2000 and 2009.1

1. Introduction

1 Note that the proportions here differ (slightly higher) from others. The World Bank, for example, estimated remittances as USD 5.3 billion (5% of GDP) (Migration and Remittances Factbook 2008, available at http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1199807908806/EgyptArabRep.pdf. Data was also also obtained from the Central Bank of Egypt (2008) database.).

Figure 1: Remittance inflows to Egypt from 1999 to 2009 (USD millions)

Source: Ratha et al., 2009.

8,000

10,000

6,000

4,000

2,000

7,000

9,000

5,000

3,000

1,000

1999

2003

2001

2005

2008

2000

2004

2007

2002

2006

2009

est


1999

2003

2001

2005

2008

2000

2004

2007

2002

2006

2009

est

40.0%

60.0%

20.0%

0.0%

-20.0%

30.0%

50.0%

10.0%

-10.0%

2 It has been argued by some scholars that the negative effects from spending remittances on everyday consumption as well as on real estate in Egypt is an increase in inflation rates and increase in the level of property prices. International Migration Outlook (2006) cites Adam’s (1991) work stating that between 1980 and 1986, the price of agricultural land rose by 600 per cent in Egypt due to remittance inflows.”

Paying particular attention to the role remittances play in developing economies, it has been widely acknowledged that they have the potential to promote economic development by creating investment opportunities, as well as assisting in the human development of migrant families and their wider communities at home. The existing evidence of the patterns of remittance usage in Egypt suggests that although the country receives a substantial amount of remittances from Egyptians living abroad (according to Wahba (2007), remittances represent the second-largest source of migrant household income after labour income), the bulk of remittances is channelled to housing and consumption expenditure, rather than into productive investment.2 Such patterns of remittance usage, however, are neither new nor particularly unique to Egypt. Existing literature on the topic tends to portray remittances being mainly spent on everyday consumption items (Chandavarkar, 1980). Carling (2005) notes that generally, only a small proportion of remittances is used to set up small businesses, improved agricultural practices or other forms of productive investment. Carling points out that this is well-understood, creating a degree of disillusionment over the potential developmental impact of remittances among researchers and policymakers from as far back as the 1970s and 1980s. Nevertheless,

it is important to mention that the reasons for the lack of remittances being directed to productive investment in Egypt have, been under-researched. While there is a growing body of literature on various aspects of Egyptian migration, the identification and overview of factors that determine decisions regarding the usage of remittances remain relatively underexplored. One of the reasons for this is that investigating the usage of remittances is challenging, both conceptually and methodologically. Furthermore, the lack of reliable and accurate statistics on the number of Egyptian migrants and diaspora communities makes it difficult to make strong reliable quantitative or qualitative analyses.

In order to better understand the rationale behind the current pattern of remittance spending by the Egyptian household and to explore the obstacles to productive investment such as investing in SMEs in Egypt, the critical influence of a number of factors need to be examined. As Carling (2005) points out, factors including migrants’ characteristics, the characteristics of their country of employment (destination countries) and the characteristics of their country of origin (Egypt), all have a bearing on migrants’ propensity to remit and invest. Similarly, the characteristics and decision-making

Figure 2: Yearly growth of remittance inflows to Egypt from 1999 to 2009 (%)

Source: Ratha et al., 2009.

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structure of the households left behind play a significant role in determining the patterns of remittance spending.

1.1 Importance of the Characteristics of Migrants

The characteristics of migrants include issues such as the migrants’ intention to return, number of years spent abroad, gender and marital status, education and occupational levels. Scholars seem to agree, for example, that temporary migrants are more likely to remit money, as are those who leave their spouses behind in the country of origin (Russell, 1986, 1992; Stahl, 1982; Carling, 2005).

In the case of Egypt, migration is predominantly a male phenomenon and temporary in nature (Talani, 2003; Wahba, 2007b; Nassar, 2008). The division of temporary and permanent emigration originates in Law No. 11 of 1983 that differentiates between temporary and permanent migration. Nassar (2008) argues, however, that in practice the distinction is a purely geographical one, whereby all migrants to the Arab states are assumed to be temporary, even though they may have been there for many years. In contrast, all migrants to Europe, North America or Australia are assumed to be permanent, even if they had migrated only recently. The reason for this is because the US, Canada, Australia and some European Union (EU) countries are traditionally immigrant-receiving countries providing opportunities for permanent residence and subsequently for citizenship. However, migrants/foreign workers working in Arab states are not given similar opportunities for permanent residence or citizenship. Under the kefala or sponsorship system prevalent in the Arab region, permanent residency and citizenship possibilities are basically closed to foreigners even if they are from a neighbouring Arab country. Hence, the formal categorization of temporary and permanent is not based on the duration of stay of the migrant, but rather on the probability of whether a migrant can apply for permanent residency followed by citizenship.

The intentions of migrants in terms of their length of stay are difficult to determine; it is also difficult to obtain reliable responses from migrants when asked. Understanding incentives to return can shed useful light

in terms of the patterns of remittance investment. For example, Wahba (2004) found that those who managed to accumulate savings and who did invest and became entrepreneurs upon their return to Egypt were, on average, more likely to be married with spouses left behind. Thus, the desire to be reunited with their families is presumably a strong incentive for migrants to return to their country of origin. Nonetheless, this is not a sufficient explanation for why one person engages in entrepreneurial activity and another does not.

Drawing from a large data set provided by the recent Egypt Labour Market Panel Survey (2006), Wahba (2007) confirms that in 2006, among Arab destination countries, the maximum number of temporary Egyptian migrants went to KSA, followed by Jordan, Libya, Kuwait and United Arab Emirates (UAE). The figure below shows the main countries of origin of remittances sent by Egyptian migrants to Egypt through formal channels in 2008, according to the Central Bank of Egypt.

Figure 3: Remittances sent by Egyptian migrants, according to country of destination

Source: Central Bank of Egypt, 2009.Note: Data refers to 2008. * Data for the EU includes only those for the following countries: France, Germany, Italy, the Netherlands, the United Kingdom, Greece and Spain.


1.2 The Characteristics of the Country of Origin

The characteristics of the country of origin, which require consideration when exploring the issue of remittances and their use, include the perceptions on the level of political and financial risk involved in sending, receiving and investing remittances; the level of hardship and the patterns of household consumption in the country of origin; and the existence of incentive programmes to remit and invest (Russel 1986, 1992; Stahl, 1982; Carling, 2005). Interviews conducted with officials from the Egyptian Ministry of Manpower and Emigration and GAFI during the course of this research revealed a sense of responsibility on behalf of the government to promote a stronger sense of national identity among the Egyptian diaspora and to encourage them to invest in Egypt. For instance, changing company and tax laws, banking and exchange rates and other charges, opening free trade zones and sponsoring Arabic language courses abroad are attempts by the Egyptian government to maintain ties with its diaspora communities. It should also be noted that the overall investment climate in Egypt has been undergoing positive changes since 2004 in an attempt to make the country a more lucrative destination for investment. The strategy of improving the business climate in Egypt stands on six main pillars: legislative reform, monetary and banking reform, tax reform, trade policy reform, investment policy reform, and the expanding role of the private sector (OECD, 2006). One example of a practical step in legislative reform was the reduction of the capital requirement for starting a new business by 98 per cent, from EGP 50,000 (81.5% of per capita income) to EGP 1,000 (16% of per capita income). Other incentives devised by the government include the promotion of access to the free economic and industrial zones. Alongside the new policies, a new designated authority, GAFI, was established to assist investors. GAFI instituted an efficient service called the One-Stop-Mall for investors. The investors can come to this One-Stop-Mall and avail of different services related to opening a new business. One-Stop-Mall brings together the different sub-authorities that one needs to visit to fulfil different requirements to obtain license to start a new business. This dramatically increased efficiency by

reducing the processing time as well as the hurdles that investors had previously encountered. Along with GAFI, the GOE has also created the SFD to provide microfinance opportunities to Egyptian citizens.

1.3 Characteristics of the Migrant Household

The composition of the migrant household, the relationship between the migrant and family members left behind, along with the overall economic behaviour of the migrant’s household can contribute to further understanding the potential of, and barriers to, investment opportunities. For example, the existing migration research on Egypt suggests that the heads of households receiving remittances are more likely to be female, rural (almost 69%) and are less likely to be waged workers, that is, they are more likely to be out of the labour force (Wahba, 2007a). In cases when the remitting migrant is the main breadwinner, or in situations when family members remaining in Egypt are without adequate social protection from major contingencies such as unemployment, sickness or old age, the remittances may be allocated to meet the daily living expenses of households, including nutrition, health care needs and the education of younger household members. These types of households also tend to save part of the remittances for future unforeseen emergencies, rather than invest it any form. For these households, remittances are likely to serve as an informal and safe form of insurance. This resonates with the central argument of the New Economics of Labour Migration, which claims that the decision to migrate is not an individual decision; rather, it is a decision taken by the entire migrant household. Furthermore, proponents of this theory claim that people migrate not only to increase their income, but also to diversify the sources of household income in order to insulate the household from any risks that might come due to external factors in the country of origin (Taylor, 1999).

Risk minimization strategies are important given the chronic high unemployment rate, as well as the less than adequate social protection faced by the Egyptian population. The unemployment rate has recently been estimated to be around 8.7 per cent (CIA Factbook, 2008). However, under-employment and a significant reliance

14

on the informal economy (often estimated as one third to one half the size of the official GDP) are also major features of the Egyptian economy. Government and private estimates put the number of job seekers entering the labour market annually at anywhere from 700,000 to 800,000 (Nassar, 2008). At the same time, as the analysis of the 2005 Egypt Human Development Report, published by the United Nations Development Programme (UNDP, 2005), reveals, Egypt’s social protection system struggles with difficulties ranging from insufficient targeting, lack of outreach and social exclusion of the poorest, to inefficiencies in the implementation of social protection schemes and misallocation of resources. UNDP (2005) estimated that 20 per cent of the country’s population is living below the national poverty line (measured as income poverty) and 31.8 per cent is experiencing subjective poverty (measured as relative deprivation). The report also notes that “the proliferation of private and relatively expensive alternatives (to state-subsidized deliverables such as health care) attests to the fact that even those least able to afford them now pay for services deemed essential but lacking” (UNDP, 2005: 77). The estimated cost of education is reported to be EGP 748 per year, of which 22 per cent is spent on private tutoring. Similarly, health care expenses frequently have to be paid out of pocket3 and the respondents in the survey reported that the bulk of their expenditure on health care goes to paying for doctor’s fees well as for medications (UNDP, 2005).

1.4 A Brief Description of the Study Sites (Four Governorates) for this Research

The four different governorates of Egypt that represent the geographical focus of this study –Cairo, Menofeya, Sharkia and Fayoum – have different demographic and resource endowment profiles, with different levels of education, standards of living, development outcomes, etc.

1.4.1 Cairo

Cairo is an urban governorate and the capital city of Egypt with 7.8 million people (not including Greater Cairo, which would add another 10 million to the population). It has a high population density (2,560 people per square kilometre). There is a high concentration of government institutions, commerce, trade and the industrial production of textiles, iron, steel, consumer goods, etc. The major proportion of Cairo’s labour force is employed in the service sector (78%), followed by the manufacturing sector (21%). Notably, professionals represent more than a quarter of the labour force, the largest representation among all governorates in Egypt. However, Cairo also has one of the highest unemployment rates (11%), where 43 per cent of those with a university education or better remain unemployed. Nonetheless, Cairo also has one of the smallest proportions of its population ranked as poor (4.6%) or ultra poor (0.5%). At the same time, among the four governorates, it is the governorate with the highest income inequality (Gini coefficient of 37.8)4 (UNDP, 2008).

1.4.2 Menofeya

This is a governorate located north-west of Cairo with a population of 3.3 million. It is known as an area with extensive agricultural production in cotton, wheat and potato. Menofeya is home to a mostly rural population (80%) living in rural units, villages and hamlets. The largest proportion of the Menofeya labour force is in services (53%), followed by agriculture (36%). Professionals represent 12.4 per cent of the total labour force of the governorate. The unemployment rate of the governorate is 7.3 per cent. Among those who are unemployed, 64.5 per cent had secondary education and 28.5 per cent had university education. The percentage of the poor population in Menofeya is higher than that in Cairo. Approximately 17.5 per cent in the governorate was ranked as poor in 2005 and 0.4 per cent as ultra poor. However, income inequality is lower in Menofeya than in Cairo (the 2005 Gini coefficient of Menofeya is 22.1) (UNDP, 2008).

3 Out of pocket payment is direct payment made for a service such as health care by the recipient of the service.4 A low Gini coefficient indicates a more equal distribution, with 0 corresponding to perfect equality. A higher Gini coefficient indicates more unequal distribution, with 1 corresponding to perfect inequality. Note that the Gini coefficient can range only between 0 and 1, but it can be multiplied by 100 to range between 0 and 100, as is the case here.


1.4.4 Fayoum

The Fayoum governorate, located 85 kilometres south of Cairo, is an important agricultural area of Egypt. Most of the land is cultivated by small farmers. In 2006, 76 per cent of the 2.5 million population of the governorate lived in rural areas, operating as owners, tenants, and sharecroppers. The main crops were wheat, cotton, maize, rice, etc. Almost an equal share of the population is employed in agriculture (46%) and in services (47%). Professionals, however, represent less than 10 per cent of the total labour force of the governorate. In 2006, the unemployment rate in Fayoum was one of the lowest (3.7%). The structure of unemployment is similar to that in the other governorates; those with higher educational attainment form the bulk of unemployed. Eighty per cent of those who were unemployed in Fayoum had secondary education and 16 per cent had university education or above. Along with having a comparatively low unemployment rate, the governorate of Fayoum has a lower proportion of poor (12%) and ultra poor (1.1%) relative to the other two rural governorates in this study (Menofeya and Sharkia). The income inequality in Fayoum (Gini coefficient of 24.9), however, is higher relative to the governorates of Menofeya and Sharkia.

Table 1: Select development indicators in the Cairo, Menofeya, Sharkia and Fayoum governorates

Industry Services Agriculture

% % %

Cairo 21 78 9

Menofeya 11 53 36

Sharkia 10 51 39

Fayoum 7 47 46

1.4.3 Sharkia

The governorate of Sharkia is located in the Suez Canal region and is one of Egypt’s largest agricultural governorates, comprising of up to 10 per cent of Egypt’s cultivated agricultural land and a population of 5.3 million. Apart from agricultural production (particularly in cotton and wheat), the governorate hosts a number of industries, including the textile, cotton spinning and chemical industries. Most of Sharkia’s population is rural (77%). More than half of Sharkia’s labour force is employed in the services sector (51%), followed by agriculture (39%). Compared to Menofeya and Fayoum, there are more professionals in Sharkia (14.2%). Unemployment in Sharkia reached almost 11 per cent in 2006, and, as elsewhere, those with higher education were more affected: 64 per cent of Sharkia’s unemployed were those with secondary education and 27 per cent, with university education and above. Among the four governorates studied, Sharkia is the governorate with the highest percentage of poor (28%) and ultra poor (2.9%). At the same time, Sharkia has the lowest income inequality among the four governorates (Gini coefficient of 19.7).

Table 1 lays out the composition of the different features of the four governorates.

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Unemployment Higher Edn. Unemployed Poor Ultra Poor Inequality (Gini)

% % % %

Cairo 11 43 4.6 0.5 37.8

Menofeya 7.3 28.5 17.5 0.4 22.1

Sharkia 11 27 28 2.9 19.7

Fayoum 3.7 16 12 1.1 24.9

Source: UNDP, 2008.

1.5 Structure of this report

This study builds upon existing qualitative and quantitative research on Egyptian migration and remittance-related behaviour, including the characteristics of migrants abroad, from a survey of 200 remittance-receiving households. The study is divided into three parts. The first section gives an introduction to the Egyptian migration experience and background information about the four governorates. The second section briefly discusses the methodology employed for collecting data and conducting the overall research. The third section gives a brief overview (literature review) of some previous research on remittances and investment. The fourth section explores the investment climate in Egypt, focusing on the current policy framework underscoring the efficacious changes that have taken place within the last five years. Importantly, this section draws upon the challenges that potential and current investors face. The succeeding seven sections summarize the primary research findings. Finally, concluding remarks and recommendations are provided based on the research findings.


The research project utilized a participatory approach to research, employing a combination of qualitative as well as quantitative techniques.

Information was gathered through semi-structured interviews, focus group discussions and survey questionnaires. A total of 200 households were surveyed in the governorates of Cairo, Fayoum, Menofeya and Sharkia. These governorates were chosen as they are reported to be the major governorates of origin of Egyptian emigrant populations. The respondents were selected using the snowball sampling method.

In the survey, household heads were interviewed in each of the four governorates to collect basic socio-economic data on each household member, including the remitting migrant. The questionnaires administered in this project consisted of 91 questions and are composed of five major sections: basic demographic information of household members, personal migration histories, remittance transfer patterns, allocation of spending on household goods and investments, and information on non-investment related expenditures. Sixteen trained research assistants administered the questionnaires in Arabic. The chosen method of administering the questionnaires aimed to maximize answers to the questions, and also to probe for deeper narratives from migrant families and, in some cases, the migrants themselves. The questionnaire is attached in Appendix 13 of this report.

Semi-structured interviews with key informants and stakeholders ranging from investment experts within particular Egyptian ministries, government institutions and non-governmental organizations (NGOs) that work with migrants provided insight to the current investment climate in Egypt. Subsequently, the narratives of migrant families were juxtaposed against the information gathered through policymakers/stakeholders to inform the findings and conclusions of this paper.

The key limitation of the research is its modest sample size. Since the primary sampling method was snowball

sampling, which tends to be biased in favour of informal networks, the findings of this study cannot be generalized. Access to certain villages in some governorates was met with some obstacles. To counter this, local-level researchers were employed to gather data and ensure access to the different households within the specific communities. Further, as most migrants themselves were not present during the interview, some caution should be taken with regard to interpreting information on certain circumstances that are specific to the migrants abroad. For instance, the question regarding the transaction costs of sending money was difficult for the respondents (migrant’s family in Egypt) to answer. There was no way to verify the figures given on income and remittances received, so it cannot be determined how precise they were. This is an inherent methodological limitation of these types of research for at least two reasons. First, the issue of income and expenditure in private households is generally sensitive and requires establishing considerable trust between the researcher and the respondent. Second, people cannot always recall or keep receipts that document their income and expenditure in the reference period. Future research should consider time-series studies that obtain the consent of households to actually document income and expenditure in detail on a daily basis over a specified period of not less than one month, and allowing for repeated visits. This will help to ensure the accuracy and reliability of the data collected.

2. Methodology

18

capital and knowledge capital) when starting up an SME in the country of origin.

Remittances at a Conceptual Level

Traditionally, usage of remittances as a category of analysis have been conceptually approached in “either/or” terms, distinguishing between “productive” and “non-productive” forms of investment. While in general, productive investment can be classified as an investment in an asset or activity that produces a positive income flow,6 these notions of clear division lines between the two types of investment and their assumed developmental impact (or lack of it) have been challenged on several grounds.

To start with, there have been considerable debates surrounding the very term “productive investment”, and what exactly it constitutes. Murshid et al. (2002) also underscore this argument that the term has not been adequately defined. They also state that some authors consider the use of remittances to construct or repair houses, purchase consumer durables and acquire land to be unproductive, while others argue to the contrary.

Glystos’ (1993) research in Greece found that to some extent, spending on non-investment related goods such as consumption and housing is beneficial for the local economy as it positively impacts the industries which produce these items. Glystos argues, “investment in housing is very productive and keeps the multiplier benefits well within the domestic economy” (1993: 154). In other words, employing labour, purchasing building materials and all the other supplies required for house construction and renovation stimulates consumption and further demand in the local economy. While housing may not be a direct income-producing investment for the

3. Brief Literature Review

The term remittance has been defined in several ways. Carling (2005) defines remittances as “transfers of value by emigrants or their

descendants to their country of origin” (Carling, 2005). Such transfers include not only those covered by the balance of payment statistics5 but also “social remittances”, that is “the ideas, behaviours, identities and the social capital the migrants export to their home communities” (Levitt and Nyberg-Sorensen, 2004: 8). Also included in the notion of transfers of value are remittances in kind and transfers made through informal value transfer systems (Levitt and Nyberg-Sorensen, 2004; Carling 2005; Adams 1991). Nevertheless, for the purpose of this study, the following IOM definition of remittances would be used:

Migrant remittances are defined broadly as monetary transfers that a migrant makes to the country of origin. In other words, financial flows associated with migration. Most of the time, remittances are personal, cash transfers from a migrant worker or immigrant to a relative in the country of origin. They can also be funds invested, deposited or donated by the migrant to the country of origin. The definition could possibly be further broadened to include in-kind personal transfers and donations (IOM Glossary).

Remittances can take numerous forms, including personal deposits, investments, intra-family transfers, charitable donations made by migrants both as crisis relief and long-term development contributions, and pension and social security transfers from destination countries where migrants obtain the right to pensions. While the focus of this research is on financial remittances, it must be acknowledged that the categories and forms that remittances take, in practice, are not easily separable. For example, in the case of entrepreneurs, the skills and networks they acquire while abroad act as an asset (social

5 This in turn includes : 1. compensation of employees – wages, salaries, other benefits paid to non-resident workers; 2. worker’s remittances – transfers made by migrants who are considered residents in the country where they are employed; 3. migrant’s transfers – assets and liabilities that migrants take with them when they move from one country to another.6 This definition leads to some difficulties in deciding the tipology of investment . For instance, the purchase of a house could be defined as “non-productive investment”, if the house is bought with the intention to live in it, and a “productive investment” if the house is rented out, thus generating an income.


migrant and his/her family, it does have economic benefits at a broader level than simply capital appreciation of housing over time.

Similarly, in a study of remittances and its investment characteristics in Guatemala, Adams (2005) maintains that migrant households that are receiving remittances tend to spend more in the way of “human capital” – education, health and housing – and characterizes these spending choices of the households as a form of investment. Adams’ analysis is similar to that of Glystos. He claims that expenditures on housing represent a form of investment for the migrant; at the same time, it boosts the local economy through increased demand. This in turn has other positive developmental impacts, such as the creation of new employment opportunities in the local economy for both skilled and unskilled workers.

Other scholars, such as Levitt and Nyberg-Sorensen (2004) argue that expenditures on education and health care should be seen as an investment in the human capital of the country. Today’s children are tomorrow’s future labour force. They also claim that a simple increase in the level of consumption by poorer households is often equivalent to poverty alleviation, which is in itself a developmental goal.

Remittance Investment and the Role of Policy-Making

The second key aspect of the debate concerning remittance usage is more policy-oriented. It deals with the actual opportunities and barriers to the productive investment of remittances.

A recent empirical study (IOM, 2005a) surveyed 312,000 remittance-receiving households that owned a productive unit in Guatemala and was concerned with how remittances stimulated the growth of SMEs amidst the absence of microfinance institutions and microcredit programmes. The study found a link between the methods of remittance transfer and their usage, concluding that remittances would further shape productive investment if

the formal channels of transferring remittances reduced costs.7 Similarly, Ghosh’s (2006) study raises important issues regarding the limitations that migrants face, such as the lack of formal migrant associations, to aid them in gearing their remittances into productive mechanisms.

Other research findings raise the notion that productive investment is dependent on the individual characteristics of the migrant (for example, the migrant’s skill level), the general governance and investment environment in the area where the migrant household lives, and how this investment climate is perceived by the migrant household (Adams, 1991b, 2004, 2005; McCormick and Wahba, 2004; Ghosh, 2006). McCormick and Wahba (2001), in their study of Egyptian migration, found that illiterate migrants tended to rely on savings as a force to drive investment endeavours at home, whereas literate migrants’ investment opportunities were inspired by their time spent abroad, owing to their foreign work experience and acquired skills. Two other notable studies on Egyptian migrants were done by Arif and Irfan (1997) and Ilahi (1999). Both these studies revealed that the experience of transnational migration indeed affects a migrant’s life-cycle and his/her occupational behaviour (Ilahi, 1999: 184) as well as occupational mobility (Arif and Irfan, 1997: 2). Similarly, Wahba’s (2004) evidence suggests that the experience of work abroad plays an important role in migrants’ entrepreneurship and their investment decision through two different channels – overcoming credit constraints and the accumulation of human capital.

Policies in the country of origin can play an important role in ensuring that the migrants view the investment environment in their country as safe and sound. In relation to the domestic investment environment, Reichert’s (1993) exploration of six villages in the Egyptian countryside offers a good starting point. Reichert (1993) argued that while unskilled workers are not entrepreneurs per se, they could benefit from investment possibilities if they have access to proper supportive facilities, as well as economic environments advantageous to SME growth. Furthermore, Reichert’s study explains that migrants in rural villages

7 IOM Policy Paper: Working Notebooks on Migration, 2005b.

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tend not to invest in SMEs because of the capital required and the difficulties faced in securing funding for such projects. The study argued that underinvestment is in part caused by the lack of government initiatives to involve return migrants and their savings in a systematic approach for fostering economic and social development in the countryside (Reichert, 1993).

Exploring the issue of the importance of the perception of the safety and security of the investment environment, Adams (2005) found that, of those receiving remittances, a large percentage of them invested in land because it was seen as a good investment, i.e. an investment with limited risk exposure and a more predictable rate of return. For peasant migrants, land is a less risky endeavour because it usually tends to appreciate in value and keeps up with the changing rate of inflation (Adams, 1991b).


This section will detail the specificities of the Egyptian laws that govern the investment climate in Egypt. Companies in Egypt must, in

principle, be formed under one of two laws --- the Code of Commerce 17/1999 for partnerships or the Companies Law 159/1981 for corporations (joint stock companies or limited liability companies). Furthermore, the activity of the company determines whether it is subject to the Investment Incentives and Guarantees Law 8/1997 and its amendments. Thus, to say that a company is an Investment Law company means that – in terms of activity – it is formed under the provisions of Law 8/1997 (or preceding investment laws if the company has been established before this law was enacted). Law 3/1998 introduced some amendments to the existing Companies Law 159/1981 allowing automatic registration of a company upon presenting an application to the Companies Department, which was previously a division in the Ministry of Economy and Foreign Trade, but is now under the umbrella of GAFI (Handoussa et al., 2003).

Investment Law (8/1997) and its Amendments

This law and its amendments is the main law governing investment activities in Egypt. Law 8/1997 which used to provide tax exemptions (cancelled by the tax law in 2005) did not discriminate against SMEs. In fact, the law treated all legal forms of a corporation equally, without any differentiation based on size. Moreover, neither the law nor its executive regulations favoured large sizes of capital. The 16 (plus) fields to which this law applies include areas where SMEs are likely to be active, for instance, poultry, fish production, as well as projects

financed by SFD. Hence, the main investment law in Egypt did not discriminate explicitly against SMEs or projects with low capital. Nevertheless, the law did not provide any incentives or special treatment towards SMEs.

The Investment Incentives Law No. 8 1997 was extensively amended in 2005 by Law 94/2005, in conformance with the new income tax law. The preferences and incentives that were previously offered to new investors in priority sectors, such as housing, transportation, petroleum, and computer software, were eliminated. However, the incentives provided by Law 8 for agricultural activities including reclamation, cultivation, irrigation, animal breeding, bee-hiving and fish farming were not removed by Income Tax Law 91/2005 (Article 41). Article 42 of the new tax law (Law 91/2005) ensured also that the profits of projects financed by SFD will be subject to a five-year tax holiday (executive regulations of Law 91 of 2005). Law 94 of 2005 amended the Investment Incentives Law and made companies incorporated under the Investment Incentives Law subject to the relatively simpler incorporation provisions of the Companies Law 3 1998.

It is worth pointing out that there are three types of special zones in Egypt, namely free zones, economic zones and industrial zones. Free zones follow Law 8/1997 and envisage the possibility of establishing a firm in public zones (established by the government and involve several activities) or private free zones (established by private sector for a specific activity). Normally, firms in free zones are exempted from taxes and tariffs, however, their products are not considered to be of Egyptian origin. Economic zones follow Law 83/2002. Firms established

4. Rules, Regulations and Policies Governing Establishing Businesses in Egypt with Special Focus on SMEs 8

8 This section has been written by Ahmed Farouk Ghoneim, Associate Professor of Economics, Faculty of Economics and Political Science, Cairo University. Email address: [email protected]. The author would like to thank Mr. Ahmed Rizq for excellent research assistance.

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new cities for small and micro enterprises. In addition to such advantages, a Prime Ministerial decree allocates 10 per cent of government procurement to SMEs.

Tax Laws

In 2005, the Egyptian parliament approved Law 91/2005. The law lowered the corporate profit tax rate from 32 per cent and 40 per cent for firms working in the fields of services and manufacturing, respectively, to a flat tax rate of 20 per cent regardless of the size of the firm. Tax holidays and exemptions were eliminated and the withholding tax on interest and royalties was reduced to a 20 per cent flat rate. The law included provisions to expand the tax base, including incentives aimed at encouraging individuals and companies in the informal sector to legalize their status. Law 91/2005 eliminated some of the incentives in the Investment Incentive Law, namely all corporate tax exemptions and tax holidays that the latter law had authorized for newly established companies. So, while the new law provided significant tax reductions, it also curtailed some of the benefits given by the previous law.

In addition to lower tax rates, tax administration was made much easier and transparent, putting more trust on the taxpayer while strengthening the punishment for tax evasion. In 2006, the Ministry of Finance continued to reduce the tax burden by abolishing the tax on check transactions. The ministry also passed a stamp duty law which lowered the stamp duty rate on a number of services and goods, including advertising, from 36 per cent to 15 per cent.

The sales tax ranges from 5 to 25 per cent, and can reach up to 45 per cent in limited cases. Every importer is required to pay the tax and register for sales tax. Although like a value added tax (VAT) in many ways, the sales tax is not in fact a full VAT. Manufacturers suffer from the imposition of sales tax on the capital goods they use, and despite the fact that this has been raised several times, the GOE did not respond to their demands by abolishing sales tax on capital goods. It has been mentioned that the GOE is intending to replace the sales tax with VAT, but still this has not yet been achieved. Issues that can be considered as double taxation from investors’ point of

in economic zones are granted Egyptian origin and enjoy expedited customs tariffs and tax measures, but are not exempted from them. Industrial zones are clusters of industries and enjoy better facilities regarding infrastructure, but there exist no specific laws for them.

Companies Law 159 of 1981 (Amended by Law 3/1998)

This law applies to domestic and foreign investment in sectors not covered by the Investment Incentives Law, whether shareholder, joint stock, limited liability companies, representative offices, or branch offices. The law permits automatic company registration upon presentation of an application to GAFI, with some exceptions.

Bankruptcy Law

Egypt does not have a bankruptcy law per se, but the Commercial Code 17 of 1999 includes a chapter on bankruptcy. The terms of the bankruptcy chapter are silent or ambiguous on several key issues that are crucial to the reduction of settlement risks. According to the Ministry of Trade and Industry, the GOE is planning to amend the bankruptcy provisions of Law 17 of 1999, but these amendments are still pending. The amendments are crucial for enhancing the investment climate for migrants since they ensure transparency in separating personal from stakeholder liabilities. In other words, more clarity will help the migrants feel secure about their investment.

SMEs Law (141/2004)

Law 141/2004 provides a definition of small and micro enterprises using capital and number of employees. According to Articles 1 and 2 of Law 141/2004, for small enterprises, paid capital needs to be above EGP 50,000 and less than EGP 1 million and labour needs to be less than 50, whereas for micro enterprises, paid capital needs to be less than EGP 50,000. Law 141/2004 assigned the SFD as the central agency for small and micro enterprises in terms of providing financial support as well as facilitating their operations in ways such as startup, functioning, licensing, etc. The SME law also allocates 10 per cent of land in industrial zones, tourist zones and


view can have negative impacts on investment decisions in many sectors as it reduces the profitability of projects. Moreover, the pending status of changing the sales tax to VAT delays the market entry of investors who are waiting for these changes in the laws to concretize.

Customs Laws and Regulations

As for customs laws and regulations, several reforms were undertaken. Tariff rates were cut unilaterally (i.e. not because of the commitments made at the World Trade Organization or Regional Trade Agreements) in 2004, 2006, 2007, 2008, and 2009, substantially bringing down rates to an average weighted rate of less than 6.9 per cent. In addition, the engagement of Egypt in several regional trade agreements with Arab countries, the EU, Turkey and the Common Market for East and South African countries implied duty-free access for a large number of imports and facilitated increased market access for Egyptian goods in these markets. Moreover, customs administration drastically improved in recent years. For instance, in 2005, exporting a container from the port of Alexandria would have required, on average, eight documents, 27 days and USD 1,014. Since 2008, exporting this same container has required, on average, six documents, 15 days and USD 714. This has enormously benefited Egyptian businesses. During the 2004 tariff reform, the government abolished service fees (ranging from 1% to 4%) and import surcharges associated with imports, along with reducing the number of ad valorem tariff bands from 27 to 6 (World Bank, 2009). Such changes have acted positively to improve the investment climate in Egypt as well as expand the export opportunities for Egyptian businesses.

The main legislations relating to international trade is the Customs Law 66/1963 (amended by Laws 88/1976, 75/1980 and 158/1997 respectively), and Law 118/1975 on Import and Export (known together with its executive regulations as the Import and Export Regulations).

Moreover, in accordance with Law 121/1982, all persons or companies importing goods into Egypt must register with the General Organization for Export and Import Control within the Ministry of Foreign Trade and Industry. The Law also requires that all registered

importers be Egyptian nationals and fulfil a number of other conditions, including financial reliability and the presentation of a proven record of past commercial activities. When registering, importers must also provide details of the products they intend to import. Importers must pay for imports through a bank operating in Egypt.

4.1 Policies adopted by the Government of Egypt to enhance business environment and SMEs

Investment Policies

Over the last few years, and particularly since 2004, several major economic reforms have been undertaken by the existing cabinet to make the environment more conducive to business. In terms of investment procedures, several reforms were undertaken to attract businesses, including the reduction of capital requirement for starting a new business by 98 per cent from EGP 50,000 (815% of per capita income) to EGP 1,000 (16% of per capita income) following an amendment of the Company Law (159/1981) (World Bank, 2009). Moreover, the procedures were simplified, along with reducing the days needed to start a new business. The process that took over a period of 43 days, included 13 steps and cost 63 per cent of income per capita in 2004 was reduced to nine days, seven steps and required only 28.6 per cent of income per capita in 2007.

Moreover, the adoption of the one-stop-shop model by GAFI further helped in lessening the number of days needed to start a new business from 10 to 7 days. The one-stop-shop brings together all the government ministries needed for establishing a new business and provides after-care services for existing companies. This shop reportedly processes approvals for new investments within 72 hours, on average. It also simplified registration procedures by making it possible for entrepreneurs (once registered) to file all documentation at this one-stop shop –including tax registration (for both income and sales taxes) and chamber of commerce registration. The entrepreneur pays all fees at the bank counter, notarizes the contract at the notary counter and returns the following day to pick up the final registration documents. Furthermore,

24

publication can be done immediately at the registry for a much lower fee. The approval system is computerized and in some instances, regulations enable a company to begin operating pending security clearance. While not a legal requirement, in practice, all proposed foreign investments are scrutinized by the security services, which has caused significant delays in the approval process in the past. Figure 4 shows the normal procedures for starting a manufacturing business, which has been much simplified in terms of time and cost by GAFI’s one-stop shop.

Although, the one-stop-shop model is not active in all the governorates, it has been spreading in other governorates, including Alexandria, Assiut and Ismailia. The spread of one-stop shops implies that local entrepreneurs do not need to go to Cairo for completing the paperwork for starting their new businesses. It is worth noting that Egypt is close to having one of the best world practices in this regard, falling only behind OECD countries, where it takes six days to start new businesses. However, despite such improvements, still some delays and extra costs are associated with obtaining licenses from certain agencies. For example, for manufacturing activities, the firm needs to obtain operating licenses from the Industrial Development Authority in Cairo, which can cause delays for business units not based in Cairo.

Other decrees, such as Decree No. 719 for 2007 by the Ministries of Trade and Industry and Finance, provide further incentives for industrial projects in the governorates of Upper Egypt. Decree 719 provides the investors with an incentive of EGP 15,000 for each job opportunity created by their project, given that their investment costs for the project exceed EGP 15 million. Although helpful for large-scale investors, this decree implicitly discriminates against SMEs, where many returnee migrants might be interested in investing.

In an attempt to enhance production and quality, the Industrial Modernization Center (IMC) provides technical support and training. Nevertheless, its activities remain biased towards large enterprises. To overcome this biased attitude towards large enterprises, the IMC established ten business incubation centres, in addition to programmes specially designed for industrial clusters where SMEs have more chances to benefit.

Despite the policies undertaken by the GOE to enhance the business environment, a number of problems still prevail which could have significant impacts on SMEs. These are discussed in detail below:

- The most significant obstacles are the procedures for land acquisition, obtaining building permit, getting access to utilities, and finally, obtaining an operating license.

- Although GOE has taken several positive steps towards reducing many costs regarding setting up new businesses, there are still some arbitrary fees that need to be paid to obtain different approvals. These fees create extra costs for investors, particularly small-scale investors.

- Long waiting times to obtain security clearance for foreign partners involved in the business ventures delay the process of starting new businesses.

- Investors establishing their enterprises in governorates instead of industrial cities are faced with different procedures and requirements for land allocation and acquisition than those imposed by the New Communities Authority.

- The price of land is overvalued, especially in the new industrial cities which have the necessary infrastructure (Handoussa et al., 2003).

- A lot of micro and small enterprises prefer to refrain from registering themselves with the Income Tax Authority. This deprives them of many services and minimizes their growth opportunities, since they are not recognized as part of the formal sector as long as they are not registered. In this regard, a new law is being discussed to raise the value of registration in the Sales Tax Department for enterprises with a capital of more than EGP 500,000. If that law is adopted, SMEs will be exempted from paying such registration fees. However, at the time of drafting of this report, the law has not been adopted.

- The system of bankruptcy in Egypt is inefficient and costly in terms of time and money. On average, it takes four years to be able to announce bankruptcy in Egypt and the entire cost of the bankruptcy process represents about 18 per cent of the bankruptcy estate (Helmy, 2005). Such


Source: Handoussa et al., 2003.

Figure 4: The General Framework for Establishing Manufacturing Enterprises

* Required Documents:Incorporation documents including incorporation request and the legal form of the Company contract.Power of attorney in case of authorization to carry out procedures on behalf of investor.Security intelligence form in case of having foreign partners.Certificate of uniqueness of company name. Bank deposit certificate of 10% of initial capital for joint stock companies and 100% for limited liability companies.Preliminary approval of the New Communities Authority for land allocation (25% of total land value must be deposited in advance.

Legal Requirements for Establishment and Registration*

Land Acquisition

Construction and Equipment

Operation Start-Up

1. Get preliminary approval2. City Council to approve the architectural design (or relevant authority)3. Soil analysis report

Finalize all needed documents1. Legal revision of the documents at GAFI.2. Getting security approval on foreign partners (if any)3. Contract Registration (Lawyer’s Syndicate)4. Notarize company contract5. Commercial Registry6. Tax Registration (General Tax and Sales Tax)7. Social Insurance Registration.8. Approval of the General Organization for 9. Industrialization and Environment Agency.

10. Publish articles of incorporation

1. Approval of Imported Equipment List from GAFI2. Building permit issuance3. Access to utilities (water, electricity, natural gas, waste water, and telephones)

1. Identify operation start-up date (GAFI Committee)2. Operating License Issuance

- Housing/Health Directorates

- Fighting and Civil Defense Department

- New Communities Authority

- General Organization for Standardization

- Federation of Egyptian Industries

- Industrial Development Authority

3. Industrial Register

26

inefficient bankruptcy system has negative impact on investors’ security, thus, deterring them from undertaking investments.

- There are overlaps in the duties of different institutional bodies such as GAFI (affiliated with the Ministry of Investment), Industrial Development Authority (IDA) and IMC (affiliated with the Ministry of Trade and Industry), and SFD which falls directly under the Cabinet of Prime Minister. Moreover, there still prevails a plurality of governing laws, regulations and decrees which, in many cases, are contradictory, outdated and/or overlapping. There needs to be a clearer division of responsibilities among the different government institutional bodies put in place to enhance investment. Furthermore, laws need to address the needs of the investors and should be uniform in nature.

4.2 Remittances, Banks and Finance

Regulations

The rules and regulations dealing with remittances have undergone several changes. The GOE in the 1960s used to ask Egyptian emigrants to repatriate part of their earnings abroad to the government (whereby migrants had to transfer 25% of their income depending on the size of their households), a policy which proved to be unsuccessful. The exchange rate system was reformed by the end of the 1960s and the beginning of the 1970s to encourage the inflow of remittances and the government also started issuing special bonds for emigrants to attract their remittances. For example, during those years, Egypt adopted a fixed exchange rate system but allowed specific rates for migrants to encourage them to transfer their money to Egypt. The government changed its policy in the 1980s and induced migrants to send money to a foreign currency account in Egypt by offering them favourable exchange rates.

Moreover, Article 12 of Law No. 80 of 2002 “Promulgating Anti-Money Laundering Law”, amended by Law No. 78 of 2003, states that travellers shall still be entitled to carry foreign currency into or out of the country under the law, provided that upon arrival they declare amounts exceeding USD 20,000, or their equivalent. None of

the measures had the expected result of an increase in remittance inflows through formal channels. Part of the reluctance of migrants to use such options was the lack of trust among migrants in governmental activities and fear of delays and bureaucracy. None of these policies led to significant growth of access to remittances by official sources (Roman, 2006). In June 2001, the Ministry of Manpower and Emigration requested IOM to set up a project financed by the Italian Government to develop an Integrated Migration Information System (IMIS) between Italy and Egypt. The objectives of this project included, inter alia, the channelling of human and financial capital resulting from migration in order to benefit the economic development of Egypt. The IMIS has helped create a set of interactive websites targeted at the Egyptian diaspora communities, which helped in undertaking better policies towards this community and also helped the Egyptian diaspora to trace social and economic developments in Egypt. However, there are still no special facilities available to these migrants for investing their remittances (savings) while they are abroad or once they return home.

Banking and Channels of Remittance Transfer

The respondents of this survey revealed that neither banks nor the SFD in Egypt have special, tailored products for migrants. It is true that in early 2000, one bank tried to enhance its remittance inflows by offering immediate transfer services with no fees for migrants. However, the project failed as the bank realized that migrants do not leave the money in the bank, thus, creating losses for the bank. The two largest public banks in Egypt – the Bank Misr and the National Bank of Egypt – do not have any special products solely targeting migrants as potential investors. However, these two banks have agreements with almost 56 exchange bureaus in other Arab countries and have a large number of branches in different parts of Egypt and other Arab countries to facilitate access by migrants. During interviews conducted with officials from Bank Misr, it was clear that the bank facilitates remittance transfers by lowering fees to beneficiaries (recipients) of Hewalat (cash transfers). Bank Misr charges a flat rate of USD 2 regardless of the amount transferred, along with an additional USD 2 per thousand dollars received


with a minimum of USD 2 and a maximum of USD 50. The USD 2 charge is abolished when the recipient receives the money in EGP. However, there are charges imposed by either the sending bank, the exchange bureau or Money Transfer Offices (MTO). Bank Misr and the National Bank of Egypt have introduced a new system of cards (similar to ATM cards) whereby migrants abroad can deposit their transfers at the exchange bureaus or cooperating banks using their bank card and the recipients (in Egypt) can withdraw the money by using another similar card.

As for remittances or any other international transfers, private banks have different fee structures. The fees charged by banks (for example, HSBC Bank) for such transactions can vary substantially, but are usually around USD 3 per thousand with lower and upper limits of USD 5 and USD 100, respectively. Arab Bank charges a flat rate of USD 2 if the sender transmits money from another Arab Bank branch. Although in reality these services are targeted towards migrants, the banks do not specifically brand or name products/services as products for migrants.

The Egyptian Postal Service has developed a financial service through which migrants can send money to a specific person using their bank accounts abroad and the beneficiary can cash it in EGP by going to the Egyptian post office against a fee. Moreover, Egypt Post provides a variety of remittance services where migrants can pay government entities when abroad and can have remittances transferred electronically.9

Other initiatives, such as a consortium of Bank Misr (the largest public bank), Egypt Post, Commercial International Bank (the largest private bank) and a payment system expert organization (Inclusion Group) is currently implementing a payment infrastructure in Egypt called the Giro-Nil. The company has launched

a range of interbank payment products, including salary and pension payments, bill payments, money orders and cash withdrawals. The introduction of these products will increase the electronic (Giro) money flows and create a multiplier effect in Egypt. It is expected that in the next ten years, at least 20 million Egyptian citizens will use this infrastructure. Households receiving remittances are a core target group and will be encouraged to open Giro accounts at local banks.

Some existing banks have special programmes for SMEs. In principle, there are around 15 banks which have special programmes, but in practice only five banks are active. Banks offer different services to SMEs, including business Internet services, tailored account services and call centres catered for the needs of SMEs. The banks mentioned in interviews by the respondents do not target start-up businesses. They target established firms and provide a lot of services, including concessional loans.

Microfinance

In Egypt, the microfinance sector includes 900,000 clients. However, their financial demands are not fully covered due to a variety of reasons, including their inability to meet potential demand for loans with the existing supply. The organizations that provide microfinancing in Egypt include business associations with the help of the SFD, specific programmes by banks and international donors such as the United States Agency for International Development (USAID). The main challenges facing banks in responding to the needs of microfinance include the difficulties of identifying markets to be targeted by SMEs, and a lack of responsive systems to cater for the special needs, products and expectations of SMEs (Bore, 2008).

In 2007, NILEX, a new stock exchange for SMEs, was established. NILEX is the first of its kind in the Middle

9 A postal remittance is a financial service to transfer funds from one person to another using a postal document. It has several types as described below: a) Internal remittances (remittances of the public): These are remittances sent by one person to another person within the Republic. These internal remittances are further classified

into two types – withdrawn and cashed. b) Governmental remittances: These are remittances sent by individuals to government bodies as fees for a particular service through post offices without having to physically go to

the government office directly. They are called withdrawn governmental remittances. c) Electronic remittances (immediate remittances): This is a service through which customers can send money within a short time period to others. This service is carried out

electronically. d) Cashed external remittances: These are received by individuals in Egypt. These are sent in foreign currency and are cashed to beneficiaries in EGP from post offices against a

specified fee paid in EGP.e) Cashed remittances in residence: This is a modern service which is provided for customers who wish to opt for it against an additional fee.f) Expired remittances: They are remittances which are not received by their specified consignees within two months. These remittances can be cashed by special procedures and they

are accrued to the authority after five years.

28

East region and it aims primarily to provide access for SMEs to finances which cannot be registered, due to their size, in the normal Egyptian stock exchange. As a result, NILEX helps SMEs to develop and grow by providing new means of financing (El Serafy, 2008). In fact, NILEX can be viewed as a pooling scheme helping SMEs to better access credit. Furthermore, the SFD and the Ministry of Investment, through the new NILEX, have developed many programmes for SMEs, which could have an impact on stimulating migrants to utilize their savings in productive projects.

This short review identifies that access to microfinance is a problem facing SMEs in Egypt, but ongoing efforts identify that this problem of access to finance is being solved through the active engagement of banks and the establishment of NILEX.

4.3 Reasons for weak channelling of remittances into productive investments

Neither a weak business environment nor the lack of sophisticated financial infrastructure can be fully blamed for the weak channelling of remittances through the official banking system and the lack of use of such remittances in productive investments. In the case of Egypt, until 2004, business environments were not conducive and the banking sector was not highly sophisticated. However, things have positively changed due to several policy reforms and new initiatives as discussed earlier. This does not imply that remittances are now expected to be automatically channelled through the banking system into productive investments. Social, cultural, and political factors that act as obstacles are still present.

On the economic side, the new real estate tax (Law 196/2008), which is expected to be implemented in January 2010, is expected to reduce the hyper demand on real estate and could have an impact on diverting remittances into alternative investment avenues, though its effects are not likely to materialize in the short run. Moreover, the positive changes that have taken place in terms of the business environment and the banking system need a bit more time to exhibit their effects to the migrant community. These changes are expected to gradually

change the attitude of migrants and encourage them to invest in Egypt. Finally, Egyptian migrants returning to Egypt might not be aware of the recent changes that have taken place in their country while they were working abroad. Thus, they might not factor in these incentives when deciding how to best channel their remittances and savings.


As mentioned earlier, Egyptian emigration is essentially a male phenomenon (Wahba, 2004; Nassar, 2008). Almost all migrants (91%) from

the households represented in this study sample were male. Family members reported having a migrant relative abroad who is as young as 15 years. The average age of

5. Profile of Remitting Migrants

migrants in the study sample was 37 years (N=197).10 Migrants referred to in this sample were aged between 15 and 70 years. The median age of migrants was 35 years. The table below provides a better breakdown of the age structure of the migrants.

Table 2: Age of migrant

Age of Migrant Frequency Percentage Valid Percentage

Cumulative Percentage

*Valid <20 4 2.0 2.0 2.0

21-25 14 7.0 7.1 9.1

26-30 49 24.5 24.9 34.0

31-35 34 17.0 17.3 51.3

36-40 31 15.5 15.7 67.0

41-45 20 10.0 10.2 77.2

46-50 20 10.0 10.2 87.3

51-55 16 8.0 8.1 95.4

56-60 6 3.0 3.0 98.5

61-65 1 0.5 0.5 99.0

66-70 2 1.0 1.0 100.0

Total 197 98.5 100.0

**Missing System 3 1.5

Total 200 100.0

*Valid refers to the number of people in the sample who answered the question.**Missing system refers to those in the sample who did not answer the question.

10 N refers the number of respondents who answered the particular question referred to. As the reader will see, whenever results are reported in this study, it is usually followed with “N”, representing the number of respondents who answered that particular question.

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Overall, the education levels of the migrants in this survey were high, with 59 per cent having completed university degrees.11 It is interesting to note that the proportion of university graduates within the entire Egyptian population is only around 10 per cent (CAPMAS, 2006 Census). Drawing on the Egypt Labour Marker Panel Survey of 2006, Wahba (2007) shows that around 20 per cent of the Egyptian workforce has post-secondary qualifications. With regard to this study sample, migrants, on average, are more educated (with 27 per cent having post-secondary education) than both the overall Egyptian population as well as those who are in the Egyptian workforce (Wahba, 2007a). While the selectivity of migration results in migrants who are better educated than the average population, the bias in this study sample is mainly due to the use of the snowball sampling technique, which led to the inclusion and therefore interview of more highly educated migrant-sending households.

Figure 5: Classification of education of migrants from the study population

Note: Each category includes both partial and completed levels.

When compared, the levels of education attained by migrants from Cairo were higher than those attained by migrants from other governorates. For instance, 6 per cent of the migrants from Cairo, versus 3 per cent of the migrants from other governorates, completed their post-graduate studies. Furthermore, 65 per cent of migrants

from Cairo completed bachelor’s degrees, whereas only 52 per cent of migrants from other governorates attained this level. Similarly, among those who received vocational education, 15 per cent are from other governorates, while only 2 per cent are from Cairo. Additionally, only 1 per cent of migrants from other governorates completed their primary education, while those in Cairo continued their education beyond primary education. Finally, less than 1 per cent of the migrants in this study sample are reported to be illiterate and they all belong to governorates other than Cairo.

Figure 6: Educational level of migrants in the four governorates

The largest proportion of migrants appears to have left Egypt when they came across an opportunity to work abroad. When asked why their family members left Egypt, 25 per cent of respondents stated that s/he had obtained a contract of employment abroad. Lack of suitable employment opportunities (20%) in Egypt was also cited as a primary reason for emigration. The responses further revealed that various financial constraints and motivations to improve living standards were among other crucial factors causing emigration. To be precise, 14 per cent of the study respondents reported the intention to improve the standard of living of the household as the main cause of emigration. Similarly, 11 per cent highlighted financial constraints and 4 per cent highlighted the need to raise money to pay for marriage costs as reasons for emigration.12 Notably, only 1 per cent of migrants left with the intention to save money to start an investment project. Importantly, for most migrants, the current

11 Fourteen per cent had completed their secondary education and 12 per cent had completed their secondary vocational education. The remaining 15 per cent included those who had some postgraduate education (2%), some college education (6%), completed some preparatory education (4%), primary education (1%) and some secondary schooling (2%).12 The remaining 24 per cent of explanations for emigration included travelling with a spouse (4%), joining a relative or a friend (5%), going to work for the same employer but in a different country (3%), desire to travel (2%), and in some cases, going on a pilgrimage (less than 1%), leaving a marriage (less than 1%) or buying a visa (4%).


stay abroad was their first overseas work experience. Approximately, 81 per cent of respondents reported that the migrant from their family had no previous migration experience. Of those who had migrated previously (19%), some had travelled abroad up to nine times.13 The bulk of the migrants (77%) in this sample was reported to have left Egypt in the last decade – between the years 1999 and 2009. For a breakdown of years of reported absence from Egypt, please see Appendix 2.

In all the cases, the decision to migrate was not a sudden one. Prospective migrants needed a considerable amount of time to meet the administrative requirements before their departure. Some respondents recalled that, on average, it took almost seven months for the migrant to prepare to leave Egypt. The median estimated time spent by the migrant arranging for his/her emigration from Egypt was 3.5 months. The minimum amount of time needed in making necessary administrative arrangements was one month and the maximum was two years. Given that the large majority of migrants in the sample had families, the decision of the husbands and fathers to emigrate needed considerable time and discussion even before the search for jobs abroad was undertaken. As Taylor et al. (1999) noted, migration for economic reasons is more likely to be a collective family decision, rather than an individual one. This issue, however, was not specifically addressed in this study.

Overall, almost all the migrants travelled legally, 90 per cent having obtained a visa to work abroad (N=197). The current legal status of the migrant was noted as irregular by only 4 per cent of respondents. The majority of respondents (68%) stated that their family member had more or less permanent residency status in the destination country, while 28 per cent had temporary status and 4 per cent were irregular (N=198). Over 70 per cent of the migrants in KSA, Kuwait and UAE were reported as having permanent residency status (migrants in these three countries represented almost 71% of the study sample).14 As discussed previously, in the countries of the Arabian Gulf, labour migrants are usually awarded temporary migration status in accordance with the kefala system.

13 For overview of responses regarding destination countries of prior migration experience, please refer to Appendix 1.14 Thus, introducing a bias in the results. The findings of this study need to be interpreted keeping these sample biases in mind.15 Libya (5%), Yemen (1%), Algeria (1%) and Jordan (3%).16 Italy (3%), France (1%), Germany (1%), Greece (1%), Netherlands (1%) and Spain.

The large majority (81%) of migrants in the sample resided in countries in the Arabian Gulf – almost half (47 per cent) lived in KSA, 12 per cent in UAE, 11 per cent in Kuwait, 7 per cent in Qatar, 3 per cent in Oman and 1 per cent in Bahrain. Countries in the Middle East and North Africa (MENA) region account for a further 10 per cent of the migrant destinations.15 A further 2 per cent were reported to reside in the US and another 8 per cent, in European countries.16 Figure 7 below provides a complete breakdown of migrants’ country of current residence.

Figure 7: Current country of residence of migrant (N= 198)

When comparing the choice of destinations of Egyptian migrants who came from the capital (Cairo) versus those who came from the other three governorates, a slight pattern of preference emerged in the choices of the main destination countries. For example, migrants from Cairo appeared to be more represented in Kuwait and UAE, compared to those from other governorates. Conversely, migrants from other governorates were more represented in KSA, Libya, Qatar, Bahrain and Oman.

It is not clear to what extent the choice of destination countries may have been linked to the occupational status opportunities opened to prospective migrants in those countries. Overall, the proportion of managers and professionals within the migrant community in Cairo (63%) was higher than the other three governorates combined (44%). Approximately, 42 per cent of managers

32

and professionals from Cairo went to KSA and 23 per cent to Kuwait. Thus, around 65 per cent of these high-level workers from Cairo gravitated to KSA and Kuwait combined. However, 63 per cent of professionals from all the other three governorates combined went to KSA and Kuwait. Technicians and other associated professionals almost all came from governorates other than Cairo. Approximately, 71 per cent of these category migrants resided in KSA and in Kuwait.

In the overall composition of occupations held abroad by Egyptian migrants, professionals (28% accountants, 28% teachers and 22% engineers) represented the largest percentage of occupations (44%). A further 13 per cent worked as craft and related trade workers (mainly in construction) and 10 per cent in services and sales. Other types of occupations included technicians and associated professionals (9%), such as medical and air conditioning technicians, sports and fitness instructors, drivers of various kinds (6%) and low-skilled labourers (6%) (See Table 3: below for detailed composition).

Table 3: Occupation of migrants in destination country

In the destination countries, most migrants were working in the same occupation they had in Egypt prior to departure. About 90 per cent of migrants who worked as professionals in Egypt were working in the same or in similar professions in their country of destination. However, in a number of cases, former professionals were working abroad as labourers, and former teachers, as drivers, labourers and clerical officers. Interestingly, however, of the 29 migrants who were unemployed in Egypt prior to migration (around 15% of the sample),

Frequency PercentageValid

percentageCumulative

Valid Managers 9 4.5 4.6 4.6

Professionals 86 43.0 43.9 48.5

Technicians and associate professional 17 8.5 8.7 57.1

Clerical support workers 10 5.0 5.1 62.2

Service and sales Workers 19 9.5 9.7 71.9 Skilled agricultural forestry fishery

workers5 2.5 2.6 74.5

Craft and related trades workers 26 13.0 13.3 87.8Plant and machine operators and assemblers

12 6.0 6.1 93.9

Elementary occupations 12 6.0 6.1 100.0

Total 196 98.0 100.0

Missing System 4 2.0

Total 200 100.0

Note: The occupations listed are based on International Labour Organization (ILO) occupational classifications.

eight obtained positions as professionals; one, as a manager; six, as technicians; six, as tradesmen in industry or agriculture; four, in sales; and four, in clerical jobs. Thus, while there was some evidence of downward occupational mobility once some migrants left Egypt, there was also a substantial number (15%) of migrants who were able to find work abroad, rather than remaining unemployed at home.

By country, among the professionals, 53 per cent resided


in KSA, 14 per cent in UAE, 13 per cent in Kuwait and 7 per cent in Qatar. In all of the Gulf states, the proportion of migrants (from this study sample) who had professional positions was around 50 per cent. Countries like Libya, Jordan and Italy had higher representations of tradespeople and labourers; however, the numbers in those countries were not so significant in the overall sample.

Most migrants from the sample had immediate family ties in their home country. An overwhelming majority of the migrants were married (80%), 5 per cent were engaged and only 1 per cent were divorced. The remaining 14 per cent of the migrants were never married (N=199). The large majority of migrants (72%) in the sample also had children, with two children per family, on average.

Figure 8: Marital status of migrants (N=199)

Approximately 81 per cent of married migrant spouses resided in Egypt, while 19 per cent joined the migrant abroad (N=152). Only a minority of their children were residing with them abroad (15%), while the large majority (85%) were living with the migrant’s family in Egypt.

Importantly, of the 109 spouses of migrants who were interviewed, 95 (87%) had children. Of these children (between one and seven children per household), 80 per cent were 18 years of age or less. This gives some indication of the high number of children still financially dependent upon their parent abroad (mainly fathers). It would have been an even higher percentage if those who were older but unmarried were included. This is because in Egypt, it is most likely that they would still be living at home, even if they had independent incomes. Thus, in this sample, the large majority of spouses (mainly wives) of the migrants remaining in Egypt had dependent children

to care for and support using remittance income.

Among the 18 female migrants abroad in this sample, 15 were married with children (between one and three children). Eight out of the 15 married female migrants had their children with them, while the children of the other seven migrants remained in Egypt. However, 12 of the migrants were accompanied by their husbands. The average age of the wives was 32 years and the median was 30 years (compared with an average of 42 years and median of 36 years for the male migrants in the sample). All but one left Egypt since the year 2000 and had no previous migration experience. Ten had obtained work visas prior to departure. Four had migrated because they had obtained a contract abroad; one had been transferred by the organization she had been employed with in Egypt; one left because of financial difficulties in Egypt; three left because they were unemployed in Egypt; and the remaining nine left to accompany their husbands. Among the female migrants, three worked as professionals, one was self-employed and 12 others worked as teachers (nine of whom had been teachers in Egypt). All but one sent remittances back home, mostly to their parents and husbands. Thus, although most of the female migrants in the sample did not migrate independently, almost all had professional careers, mostly as teachers, and were able to remit money back to their families in Egypt.

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More than half (51.5%) of migrant households received remittances monthly, 22 per cent received them every several months, and 25

per cent received them irregularly. Table 4 gives a detailed quantitative explanation.

Approximately 62 per cent of the respondents received remittances through bank transfers. The majority (73%) of those sending remittances from countries in the Arabian Gulf seemed to prefer bank transfers as their primary method of sending money.17 The second most widely used method of delivering remittances was through informal means, that is, hand delivery by either a trusted friend or a relative who was visiting the migrant household (22%). Of those who sent remittances through a friend or a family

6. Characteristics of Remittances Sent

17 Eighty per cent of those residing in Oman, 79 per cent of those residing in UAE, 77 per cent of those in Qatar, 70 per cent of those in KSA and 59 per cent of those in Kuwait send their remittances through bank transfers.18 Over half (65%) of respondents who reported that the migrant from their family visits annually receive remittances through bank transfers. Likewise, most migrants who send remittances through bank transfers (58%) visit Egypt annually. In addition, the majority of migrants who send remittances through a friend or a family member visit the respondent either annually (46%) or twice a year (26%). Over half (63%) of migrants who visit Egypt twice a year send remittances through friends or family members traveling back to Egypt (N= 178).

Table 4: Frequency of receiving remittances

Frequency Percentage Valid Percentage Cumulative Percentage

Valid Monthly 103 51.5 52.3 99.5

Every several months 44 22.0 22.3 47.2

Irregularly 43 21.5 21.8 21.8

Annually 5 2.5 2.5 24.4

Every two months 1 0.5 0.5 24.9

When needed 1 0.5 0.5 100.0 Total 197 98.5 100.0


Total 200 100.0

member returning to Egypt, the largest percentage (43%) resided in KSA, followed by Libya (12%) and Kuwait (8%). Five per cent respondents reported receiving money through the post office and a further 3 per cent received money through Western Union. Lastly, 1 per cent of respondents used a debit card to access their remittances (N= 237).18 It is important to note that the respondents also reported having received remittances through more than one mechanism. The following table lays out all the varying methods used by migrants when sending remittances back to Egypt.


Table 5: Methods used by migrants to send remittances to Egypt

Responses Percentage of Cases Means of Receiving Remittances N Percentage

Bank transfer 148 62.4% 74.4%

Friend or relative visiting 51 21.5% 25.6%

Money transfer services 16 6.8% 8.0%

Post office 11 4.6% 5.5%

Western Union 7 3.0% 3.5%

Debit card 2 0.8% 1.0%

Migrantʼs employerʼs Cairo branch office 1 0.4% 0.5%

In-person, when visiting 1 0.4% 0.5%

Total 237 100.0% 119.1%

The use of primary means of remittance delivery differs to some extent in each governorate. Western Union, the post office and other specialized money transfer services were used predominantly in Cairo. Approximately 26 per cent of respondents from Cairo reported the use of such formal channels as their primary means of receiving remittances, compared to only 6 per cent of those from Fayoum, 4 per cent from Menofeya and 4 per cent from Sharkia. Comparatively, banking services were used as the primary means of remittance delivery in the governorates outside Cairo – 90 per cent in Sharkia, 70 per cent in Menofeya and 48 per cent in Fayoum. In Cairo, 49 per cent of respondents received remittances primarily through bank transfers. The hand-delivery method appeared to be most popular in the Fayoum governorate, where visiting friends and relatives accounted for 46 per cent of the primary means of delivery of remittances. In comparison, hand delivery as a primary means of receiving remittances was cited in 24 per cent of responses from Menofeya, 22 per cent of responses from Cairo and only 6 per cent of responses from Sharkia (please refer to Appendix 3 for a detailed breakdown of the methods used to send money in each governorate).

When asked whether they had any preferences regarding the method of receiving remittances, more than half of the respondents (58%) replied “no” (N= 191). Of those who had a preference and elaborated further, more than

half preferred bank transfers (55%); followed by informal channels of transfer, namely hand delivery (33%). Transfer via post office was preferred by 6 per cent of the respondents and Western Union, by 2 per cent. The remaining 4 per cent stated that they preferred receiving remittances either through the Cairo branch of the migrant’s company or delivery in person by the migrant when he/she visits.

The principle reasons for the preferences given by respondents included: safety (27%), convenience and ease (23%), and low or no costs (14%) (N=86) (see Table 6 below).

36

Table 6: Reasons for preferred method of receiving remittances

Responses Percentage of Cases Frequency Percentage

Reasons

It is safe 29 26.6% 35.4%

Low/no cost 15 13.8% 18.3%

It is fast 14 12.8% 17.1%

Convenience 13 11.9% 15.9%

Ease 12 11.0% 14.6%

Only feasible option 7 6.4% 8.5%

Confidentiality 6 5.5% 7.3%

Proximity 4 3.7% 4.9%

Habit 3 2.8% 3.7%

Avoiding red tape 2 1.8% 2.4%

Personal connection 2 1.8% 2.4%

Get the migrant’s updates 1 0.9% 1.2%

Good customer service 1 0.9% 1.2%

Total 109 100.0% 132.9%

Table 7: Currency in which remittances are sent

Responses Percentage of Cases Currency Frequency Percentage

EGP 85 42.9% 44.7%

USD 55 27.8% 28.9%

SAR 27 13.6% 14.2%

EUR 16 8.1% 8.4%

KWD 7 3.5% 3.7%

JD 5 2.5% 2.6%

QAR 2 1.0% 1.1%

AED 1 0.5% 0.5%

Total 198 100.0% 104.2%


The largest proportion of respondents (43%) stated that the migrants sent remittances to them in EGP. Note that monetary transfers may be sent from abroad in EGP, converted at the point of dispatch, or they may be sent in the sending country’s currency and converted upon receipt. However, the respondents, as remittance recipients, may not necessarily be aware of the conversion processes. This might explain the relatively high percentage of households stating that remittances were sent in Egyptian pounds by the migrant family member. Just above one quarter of respondents (28%) reported that the remittances were sent in US dollars, while 14 per cent said that remittances were sent in KSA Riyals. Other currencies included: Euro (8%), Kuwaiti Dinars (4%), Qatari Riyals (1%), Jordanian Dinars and UAE Dirhams.

In cases where the migrants sent Euros (N=16), 38 per cent were sent through bank transfer, 38 per cent through a friend or a relative, and the remainder through a debit card, post office or money transfer services. When sent

in US dollars (N=50), 66 per cent of migrants opted for bank transfers, 24 per cent sent money through a friend or a relative, and the remaining 10 per cent used money transfer services such as Western Union.

Around 99 per cent of respondents who received remittances in Egyptian pounds reported that the initial money was also sent (by the migrants) in Egyptian pounds. Similarly, in 92 per cent of the 50 cases where the migrants sent remittances in US dollars, the money was also received by their households in the same currency. Almost 60 per cent of households to which KSA Riyals were sent stated that they also received money in the same currency. It is interesting to note that most remittances sent in US dollars and KSA Riyals remained largely unconverted upon receipt. Nevertheless, as mentioned earlier, these results need to be interpreted with caution as many respondents seem to guess the type of currencies in which the remittances was originally sent by the migrant.

Table 8: Currency in which remittances were received

Responses Percentage of Cases Currency Frequency Percentage

EGP 115 57.8% 58.7%

USD 52 26.1% 26.5%

KSA 14 7.0% 7.1%

EUR 10 5.0% 5.1%

KWD 4 2.0% 2.0%

JD 3 1.5% 1.5%

QAR 1 0.5% 0.5%

Total 199 100.0% 101.5%

The respondents stated that on average the sender (migrant) bore higher costs for the transaction than the recipient (respondent/migrant household) in terms of service fees, exchange rates and exchange fees. The average costs of sending remittances to migrant are reported to be 1.5 per cent of the remitted sum. The costs of receiving remittances borne by the respondents are reported to be 0.5 per cent of

the sum received (N= 42). The low number of responses on this particular question about transaction costs may be due to the lack of knowledge of the respondents at the time of interview. Thus, once again, this data needs to be interpreted with caution.

38

On average, migrant households in Egypt consist of four members. The average household in Cairo has four members, while those in

Menofeya, Fayoum and Sharkia have four members, on average. Most (67%; N=131) of the remittance-receiving households were female-headed.

The interviewed heads of households receiving remittances were related to the migrant abroad in various ways: spouse (56%), father (20%), mother (11%), brother (6%), sister (2%), son (1%), uncle (1%), sister-in-law (1%), father-in-law (1%) and grandmother (1%). The following pie chart better depicts this information.

Figure 9: Relationship to migrant

When asked about their occupation, the largest percentage (31%) of household heads described themselves as housewives, i.e. being out of labour force. The second-largest group of respondents (22%) were government employees holding clerical jobs. Eleven per cent of the household heads were teachers, 12 per cent of them were retired and 7 per cent held professional jobs. The remaining 15 per cent of respondents were employed in a variety of occupations including blue collar work, college teaching, farming and business. Finally, 2 per cent of the respondents were unemployed (N= 187).

Among the 131 female heads of household who were interviewed, 77 per cent were the wives of migrants abroad; 15 per cent were their mothers; 3 per cent, sisters; 2 per cent, daughters; 2 per cent, sisters-in-law; and one per cent, grandmothers. The significance of the high proportion of female heads of households in relation to changes in intra-family or household dynamics merits a separate analytical study. Nevertheless, some effects are quite apparent. For instance, the wives with dependent children must undertake extra responsibilities of parenting in the absence of the father. Furthermore, the responsibilities previously undertaken by the migrant, such as managing finances and dealing with other household logistics would now need to be taken up by the new household head (female) along with her previous responsibilities.

To gauge the economic situation of the households and the role that remittances play in the household economy, the proportion of remittances in household income is estimated first, and then the household expenditures19 are assessed against the reported total income of the households. The composition of household income ties up with the reasons given for emigration cited in the previous section, namely, the economic constraints being the push factor behind labour emigration. Remittances sent back home by migrants represent an important source of non-labour household income in all governorates, averaging 43 per cent of total household income across governorates. In Cairo particularly, the remittances represented almost half of the average income of households (48%). Similarly, in Menofeya, they accounted for 45 per cent of average household income; in Fayoum, 44 per cent; and in Sharkia, 35 per cent.

7. Characteristics of Remittance-Receiving Households

19 As estimated by the household heads.


Figure 10: Breakdown of average monthly household income by governorate

Note: EGP 1 equals approximately USD 5.5.

When looking at household expenditures, it is apparent that the basic costs of living are substantially higher in Cairo than in other governorates. When combined, average spending on essentials, defined here as food, health care, education, rent and utilities, represents 41 per cent of the reported average income (inclusive of remittances) of households in Cairo, 37 per cent in Fayoum, 24 per cent in Menofeya and 18 per cent in Sharkia.

The main household expenses, consisting of essentials (as listed above) and those deemed important by the

respondents (such as zakat, personal items and gifts for children), when totalled, accounted for 54 per cent of total household income in Cairo, on average. These expenses together amounted to more than the reported income of these households from labour and production. Thus, for these households, remittances seem to be an extremely important source of income, making up for the difference.

Figure 11: Average monthly expenditure items compared to monthly income

Note: The table does not represent total household expenditures but expenditures on selected items.

40

18% 18%

13%

2%

CairoFayoumMenofeya Sharkia

It is further made clear that the households attach great importance to savings, which account for the second major allocation of household income after essentials. Households in Cairo reported saving, on average, 13 per cent of their income (which includes remittances), while households in Menofeya and Sharkia reported saving, on average, up to 18 per cent of their total household income. Households in Fayoum reported saving only 2 per cent of their household income.

Figure 12: Average savings compared to average income


As already discussed, remittances form a significant proportion of household income in all four governorates researched, representing,

on average, 43 per cent of the total household income (median, 50%) (N= 182).

On average, the recipient households received EGP 2,361 (approximately USD 430) monthly as reported by respondents. The remitted amounts ranged from EGP 110 to 15,000. Note that, although Table 4 indicates that not all households received remittances on a monthly basis, all questions related to income and expenditure amounts have been recorded as being monthly. In instances where remittances were not received monthly, the respondents were asked to calculate an average monthly figure.

8. Uses of Remittances Received

Figure 13: Remittances as a percentage of total household income

Table 9: Amount of remittances received (EGP)

Frequency Percentage Valid Percentage Cumulative PercentageA m o u n t in EGP

1-999 52 26.0 26.9 26.9

1000-1999 54 27.0 28.0 54.9

2000-2999 34 17.0 17.6 72.5

3000-3999 24 12.0 12.4 85.0

4000-4999 6 3.0 3.1 88.1

5000-5999 11 5.5 5.7 93.8

6000-9999 7 3.5 3.6 97.4

10,000-15,000 5 2.5 2.6 100.0

Total 193 96.5 100.0


Total 200 100.0

42

The median of sums received by all the migrant families interviewed is EGP 1,500. There are, however, notable differences observed when results are broken down by governorate. While respondents from Cairo reported a median remittance income of approximately EGP 3,000, the median remitted sum in Fayoum is only EGP 600, which is consistent with the profile of the migrants from Fayoum having significantly less university education overall and holding occupations that pay less in general. Among the migrants who came from Fayoum, the largest proportion (48%) held skilled or blue-collar jobs, while only 16 per cent worked as professionals. Migrants from Cairo, however, held professional positions in 27 per cent of cases and 29 per cent were skilled labourers.

Figure 14: Median of remittances for all four governorates

Table 10: Different uses of remittances

Responses Percentage of Cases Uses of Remittances Frequency Percentage

General household expenses 144 34.8% 74.2%

Education 64 15.5% 33.0%

Health care 49 11.8% 25.3%

Savings 40 9.7% 20.6%

Family expenses 34 8.2% 17.5%

Food 23 5.6% 11.9%

Utilities 16 3.9% 8.2%

Property investment 16 3.9% 8.2%

Personal items 6 1.4% 3.1%

Capital investment 6 1.4% 3.1%

Emergencies 5 1.2% 2.6%

Rent 3 0.7% 1.5%

To finance a marriage 3 0.7% 1.5%

Investment 2 0.5% 1.0%

Nothing specific 2 0.5% 1.0%

Insignificant amount 1 0.2% 0.5%

Total 414 100.0% 213.4%

20 Hence, oftentimes, it adds up to be more than 100%.


When asked how remittances are spent, the respondents provided a plethora of uses (N= 414, multiple responses were recorded for many respondents).20 The most frequent answer was that the household uses the remitted money for meeting their daily living/essential expenses (29% of all responses). The next most represented category was educational expenses (16% of all responses). This was closely followed by health care expenditures (12%).21

When respondents were asked questions as to whether remittances were used for specific purposes, more than half of the respondents informed about prioritizing spending of remittances to address emergencies, obtain health care and provide education for their children. For more information on these expenses, please refer to Appendices 4, 5 and 6.

Notably, 71 per cent of all respondents said that they used remitted money for emergencies. Most of these emergencies were medical, but also included expenditures such as a wedding in the family (Appendix 7 provides more detailed information). Interestingly, 62 per cent of respondents did not put away any proportion of remittances for future emergencies. Half of the respondents (51%) stated that when an emergency occurs, they directly contact the migrant and ask the migrant to send money to meet that particular unexpected expenditure. On average, EGP 1,231 was saved by those who did put money aside for emergencies (N=49). The range was, however, rather wide, ranging from EGP 5 to 30,000, with a median of EGP 800.

More than half (61%) of the respondents employed remittances to cover health care expenditures (N=198). Again, some variation can be observed in responses among different governorates. While 80 per cent of respondents from Fayoum used remittances to meet their health care needs, a relatively lower proportion of respondents from Menofeya (55%), Sharkia (42%) and Cairo (65%) used it for similar purposes (for more information, refer to Appendix 8).

Consistent with the findings of the Egypt Human

Development Report (EHDR) (UNDP, 2005), many respondents paid out of pocket to meet even their basic health care needs. When asked what kinds of medical treatment were obtained with the remittances, the respondents listed a wide range of medical procedures (N= 117) and overall, 53.2 per cent of respondents used remittances for general medical checkups.

Finally, more than half of the respondents (51%) used remittances for the educational expenses of the children living in the household (N=197). This corresponds to the findings of the EHDR, where it was reported that even low-income households incur significant costs for education. In particular, 60 per cent of the Cairo respondents reported using their remittances for this purpose, followed by 51 per cent of respondents from Fayoum, 44 per cent of those from Menofeya and 40 per cent of respondents from Sharkia (see Appendix 9 for more details). The average cost of a school year for a child was said to be EGP 4,504 (N=103, equivalent to approximately USD 820). Importantly, 74 per cent of those who elaborated on the chosen type of education stated that they spend the money on private education for the children (N=34). Furthermore, among those who spend more than EGP 4,000 annually on educational expenses, all sent the children to private schools.

It is important to mention that, contrary to the assumptions in much of the literature on remittances, the receipt of remittances did not seem to have a significant impact on the patterns of consumption of imported goods or entertainment among the respondents surveyed for this study.

When asked whether their consumption patterns had changed, i.e., whether they bought more foreign goods since they started receiving remittances, 88 per cent of respondents answered negatively (N=197). Of those who used the remittances to purchase goods produced abroad, 28 per cent used it to buy electronics; 22 per cent, to buy clothing; and 22 per cent, to buy imported food.22

21 A further 9 per cent of all answers stated that the respondent’s household use the remittances for savings, 7 per cent use it for clothes, 6 per cent use it to purchase food items and 4 per cent use it to pay for utilities. The remaining percentages included emergencies, gifts or settling the migrant’s debt. 22 Further items include home appliances (8%), cell phones (6%) and computers (3%). The remaining 10 per cent represent purchases of miscellaneous items for personal use (N= 36).

44

Similarly, when asked whether they used remittances towards recreational activities and other similar activities,23 78 per cent of respondents answered negatively. Of those who did report using their remittances for such activities, 32 per cent stated that they went to restaurants for dinner, 12 per cent included grocery shopping, 10 per cent stated purchasing items for children and a further 10 per cent reported using it for household improvements.24

Recalling that the remittances represented, on average, 43 per cent of the total income of the receiving households and that most respondents report using them on essential items, it is puzzling that 61 per cent of the respondents claimed that if they did not receive remittances, their standard of living would not be affected. Of those who elaborated on their answers (N=67), over half (58%) said that they also had other sources of income, or that the whole amount of remittances went into savings (22%). Further, some reported that the entire remittance amount was fully invested on behalf of the migrant (9%).25 Among the 61 per cent of the respondents who claim that their standards of living would not be affected by non-receipt of remittances, 42 per cent did not view remittances as part of their household income.26 Furthermore, if the remittances constituted 50 per cent or less of the household income, the respondents were more likely to answer that their standard of living would not be affected if the remittances ceased. The discrepancy between the data may also be partly explained by the difficulty of obtaining accurate information on sensitive issues such as income and expenditures at the level of the surveyed households.

Nonetheless, there were also cases where households wholly, or to a large extent, relied upon remittances and still reported that they would not be affected if they did not receive remittances any more. This type of household constituted 10 per cent of those who stated that their standard of living would not be affected. This may be explained by the fact that many heads of households received remittances from their children and interviewers

23 This category referred to things such as going to a restaurant or buying something new for a child, such as toys and sweets,.24 The remaining 36 per cent spend towards charity (7%), family gatherings (7%), debt repayments (5%) or helping others (5%).25 The remaining 11 per cent of respondents explained that they regard the remittances as a significant addition, but not indispensable, to their livelihood, or that the remittances are fully invested into real estate.26 For 22 per cent of the respondents, remittances represented up to one-quarter of household income. For a further 17 per cent of the respondents, remittances constituted between 26 per cent and 50 per cent of total household income. For 9 per cent of respondents, remittances represented between 51 per cent and 75 per cent of household income. For 10 per cent of respondents, remittances constituted between 75 per cent and 100 per cent of total income.

noted a sense of guilt or shame when this question arose. In other words, parents might not have wanted to admit that they are financially dependent upon their children abroad, even if they were.


The spending and potential investment of remittances is not largely based on unilateral decisions made by the migrants abroad. In fact,

only in 11 per cent of cases did the migrant who sent the money decided how it was to be used. It appeared mostly that the decision-making regarding spending and investing remittances is a process involving mutual consultation, with a great deal of autonomy enjoyed by the heads of households receiving the remittances. The finding of this study is consistent with Khalaf’s (2009) study of Lebanese wives whose husbands worked abroad.

Overall, 42 per cent of the respondents revealed that the migrant abroad advises them (not decides) as to how the

remittances that they are sending home should be spent. Approximately 66 per cent of respondents also reported that they always inform the migrant how the money is spent. When asked what kind of advice the migrants give regarding the use of money in the household, respondents gave multiple answers. The largest proportion of them (25 per cent) was advised to save. A further 23.8 per cent was advised to spend the money on daily living expenses, 13.8 per cent were told to invest in real estate, and 5 per cent were advised to invest in capital. So, in total, 18.8 per cent were asked to invest in either capital or land. The following table shows a breakdown of the other forms of advice given by the migrants.

9. Household Investment Decision-Making

ResponsesAdvice of Migrants to their Families on the Use of Remittances

Frequency Percentage Percentage of Cases

Savings 20 25.0% 37.7%

General household expenses 19 23.8% 35.8%

Property investment 11 13.8% 20.8%

Education 5 6.2% 9.4%

Family expenses 5 6.2% 9.4%

Capital investment 4 5.0% 7.5%

Health care 4 5.0% 7.5%

To finance a marriage 4 5.0% 7.5%

Personal items 2 2.5% 3.8%

Emergencies 1 1.2% 1.9%Remittances are an insignificant addition

1 1.2% 1.9%

Rent 1 1.2% 1.9%


Zakat 2 2.5% 3.8%

Total 80 100.0% 150.9%

Table 11: Migrant’s advice on spending remittances

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In terms of the actual decision-making about spending the remittances, 41 per cent of the heads of households interviewed reported making the decisions independently. Among the wives of the migrants who acted as heads of the household, 52 per cent said that they made the decisions themselves; 36 per cent said that they made the decisions along with their husbands abroad; and 11 per cent said it was a family decision. Only one of the wives at home said their husbands abroad made all the decisions. It is important to note that the data collected during the research only indicated the decision-making and spending pattern while the migrant is abroad. Thus, it does not give information about whether these decision-making procedures were any different from when the migrants were at home.

When it came to the respondents who were parents of the migrant, 37 per cent said that they made the decisions themselves on how to spend or invest their child’s remittances; 23 per cent said that they made the decisions jointly with their migrant child; 21 per cent said it was the migrant’s decision; and 7 per cent said it was a family decision.

In all governorates, the majority of respondents reported that migrant remittances were not invested. Overall, the proportion of income spent on investment was reported to be low, compared to other household expenditures and total household income.

The following sections of this study will explore both the patterns of investment of the households interviewed, as well as their reasons for relatively low levels of investment.

Figure 15: Investment compared to other household expenditures and total household income (in EGP)


Around 20 per cent (N=40) of the migrants or migrant families in the survey said that they invest. However, the survey did not find any

significant differences in characteristics between the migrants who invest and those who do not. There were no differences in marital status, age, education, occupation, or remittances as a proportion of the household income. Some differences, however, are worth mentioning, although because of the relatively small number of migrant investors in the sample (40 out of 200), they should not be seen as indicative of entrepreneurial features. For example, slightly more investors owned their own homes than non-investors (83% compared to 77%); a higher proportion of investors than non-investors had spent 17 or more years abroad (25% compared to 12%); five out of the six migrants in Italy were investors; a higher percentage of respondents from Cairo invested (38% compared to 22% in all other governorates combined).

Overall, 20 per cent of all respondents in the sample do invest some part of their income, which is somewhat closer to the percentage of people who stated that they were advised to invest by the migrant. In Cairo, 31 per cent of households receiving remittances invested at least part of what they received. In Menofeya and Sharkia, 20 per cent of the remittance-receiving households invested. Fayoum had the lowest proportion of households that invested (11%).

The relationship between household heads and their migrant counterparts seems to play an important role in investment decisions. More than half (54%) of those who invested are the spouses of the migrants, followed by the parents of the migrants (28%). On average, however, only 20 per cent of all spouses in the sample and 19 per cent of the parents in the sample invested remitted money. Interestingly, of the in-laws and the siblings represented in the sample, a third (33%) reported to be investing the remittances (for details, see Appendix 10). Having children also seems to play a role in the decision to invest. Twenty-nine per cent of respondents without children invested, compared to 20 per cent of those who

10. How Migrant Households Invest

had children (N=186).

The age of the investing head of household seems to be a factor as well. Among those who invested, 18 per cent belonged to the 21-35 age group, 24 per cent belonged to the 36-50 age group, 33 per cent belonged to the 51-55 age group, 13 per cent belonged to the 56-60 age group and 19 per cent belonged to the 61-65 age group. The investment rate peaked again (33%) for the 66-70 year age group. In general, it seems that the older the heads of migrant households, the more investment they undertake (with the exception of few older groups as seen above).

Among those who invested, the largest proportion (39%) invested in real estate, followed by 22 per cent who invested in small private businesses employing fewer than five people. Eleven per cent of respondents invested in an agricultural activity, 9 per cent invested in stock market/financial instruments, 6 per cent invested in medium private businesses employing fewer than 20 people, 4 per cent invested in retail and a further 4 per cent invested in transportation activities. The remaining 5 per cent of respondents includes those who reported participation in a group saving scheme as an investment (2%) and those investing in industrial activities and services (3%, N=54).

A difference can be observed in the primary investment activity as reported by respondents in different governorates. In Cairo and Fayoum, small and private businesses were the most represented investment activity (40% and 60%, respectively). In Menofeya and Sharkia, the primary investment activity was reported to be real estate (50% and 60%, respectively) (N=42).

After exploring the investment strategies of different household heads, it is clear that the spouses and parents of migrants preferred investing in real estate (43% and 36% respectively). The siblings who head migrant households appear to almost equally prefer investing in real estate, small private business and medium private business.

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27 Other reasons mentioned included the following: their particular choice of investment entailed low or no risk (5%), the chosen investment seemed the most feasible at the time (5%), personal preference (5%), or expected ease (4%) and stability (5%) in executing the project. The remaining 16 per cent of answers include, in small proportions, reasons such the expected effortlessness of starting the chosen project, high demand for that particular activity in the respondent’s area and religious legitimacy of the investment (halal).

When asked why they chose their particular kind of investment, the respondents listed a variety of reasons. Overall, the highest percentage (28%) of responses was “having an experience in that area of activity.”

Table 12: Reasons for decisions to invest

Responses Percentage of CasesReason for Investment Choice Frequency Percentage

Experience 71 27.6% 39.7%

Profitable 47 18.3% 26.3%

Safe 37 14.4% 20.7%

High demand 14 5.4% 7.8%

Low/no risk 13 5.1% 7.3%

Personal preference 13 5.1% 7.3%

Only feasible 12 4.7% 6.7%

Stable 12 4.7% 6.7%

Ease 10 3.9% 5.6%

Migrantʼs decision 7 2.7% 3.9%

Effortless 6 2.3% 3.4%

Religiously legitimate 6 2.3% 3.4%

Provides employment opportunities

2 0.8% 1.1%

Specialization 2 0.8% 1.1% Education 1 0.4% 0.6% Liquid 1 0.4% 0.6% Low cost 1 0.4% 0.6% Non-seasonal 1 0.4% 0.6% Seasonal 1 0.4% 0.6%

Total 257 100.0% 143.6%

Furthermore, 18 per cent of the respondents stated that they expected their investment to be profitable, and 14 per cent chose their investment because they felt it was a safe venture (N=257, multiple answers per respondent).27

While examining the primary reasons for investment choices in individual governorates, noticeable differences emerge between the respondents from Cairo and those from the other three governorates. While Cairo respondents seem to put an emphasis on the safety of their investment when making an investment decision (35% of all primary responses from Cairo), the respondents from other governorates appear to prioritize having an experience in

the chosen field of investment (42% of primary responses in Fayoum, 40% in Menofeya and 36% in Sharkia). One possible explanation for this could be that, on one hand, Cairo provides greater investment opportunities than other governorates and, on the other hand, the insecurity of investment is perceived to be greater in Cairo than in the other three governorates. Several respondents indicated that this is because Cairo is perceived as the


28 Other advantages mentioned included having experience in the particular chosen activity (5%), low risk of the activity (5%), low cost (5%), ease of the chosen project (3%), personal preference (3%) and proximity of the business to home (1%).

governorate most removed from the traditional rules of conduct which to some extent still govern the other three rural communities, rules that call for fairness, justice, and honesty, among others. It may be argued that while the market in Cairo offers more opportunities, it is also a more competitive environment which makes investment risky. However, the narratives of respondents outside Cairo seemed to indicate that the risk from competition is just as strong there because the market demand for goods and services is far more limited in the other governorates. Nevertheless, in the more traditional communities, people know each other and are more aware of who to trust and what is unsafe. Hence, losing their money through unsafe investment is not their primary concern. In Cairo, where anonymity is greater, people have to rely on a formal

system of justice that they do not entirely trust (corruption in various forms was cited as one of the primary reasons for not investing in Cairo).

Finally, when asked about the advantages and the disadvantages associated with their investment choices, respondents provided some insight into what benefits and what hinders their investment activity. The most frequently stated advantage (31%) was, as one would expect, the profitability of their investment. Furthermore, echoing the primary reasons for investing, 19 per cent said the advantage of their investment was its safety and for 9 per cent, it was its stability (N=193, multiple answers).28

Table 13: Advantages of investment choice

Responses Percentage of Cases Advantages of Investment Choice Frequency Percentage Profitable 59 30.6% 44.4% Safe 36 18.7% 27.1% Stable 17 8.8% 12.8% Provide employment opportunities 11 5.7% 8.3% Only feasible 9 4.7% 6.8% Experience 9 4.7% 6.8% Low/no risk 9 4.7% 6.8% Effortless 8 4.1% 6.0% High demand 8 4.1% 6.0% Social development 7 3.6% 5.3%

Ease 6 3.1% 4.5% Personal preference 5 2.6% 3.8% Religiously legitimate 3 1.6% 2.3% Liquid 2 1.0% 1.5% Proximity to home 1 0.5% 0.8% Swift 1 0.5% 0.8% Low cost 1 0.5% 0.8% Seasonal 1 0.5% 0.8%Total 193 100.0% 145.1%

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When asked about the disadvantages of their investment choices, respondents cited instability (17%), followed by low profits (11%), high costs of maintaining the investment (11%), high risks involved in the investment (9%), changing demand and supply conditions (9%) and bureaucratic obstacles (7%) (N=140, multiple answers). A further 36 per cent of answers varied widely, with none of the answers accounting for a significant share of

the overall response. These answers include credit risk (3%) and investment not being fully in line with religious beliefs (1%). Thus, it seems that perceived disadvantages referred mostly to market conditions and, to a much lesser extent, to the bureaucratic red tape.

Table 14: Disadvantages of investment choice

Responses Percentage of Cases Disadvantage of Investment Choice Frequency Percentage

Instability 24 17.1% 21.4%

High cost 16 11.4% 14.3%

Low profit 15 10.7% 13.4%

High risk 12 8.6% 10.7%

Subject to market forces 12 8.6% 10.7%

Large capital requirement 10 7.1% 8.9%

Effort 10 7.1% 8.9%

Red tape 10 7.1% 8.9%

Taxes 6 4.3% 5.4%

Competition 5 3.6% 4.5%

Credit risk 4 2.9% 3.6%

Decentralization of the authorities 3 2.1% 2.7%

Seasonal 2 1.4% 1.8%

Licensing 2 1.4% 1.8%

Limited 2 1.4% 1.8%

Not profitable 2 1.4% 1.8%

Religiously questionable 2 1.4% 1.8%

Unsafe 1 0.7% 0.9%

Low demand 1 0.7% 0.9%

No experience 1 0.7% 0.9%

Total 140 100.0% 125.0%


11. Why Most Migrant Households Do Not Invest

The majority (79%) of migrant-sending families do not invest. When asked why, the respondents offered a variety of reasons. The largest proportion

(28%) of answers related to financial difficulties or economic constraints which households face. A further 20 per cent of responses echo the previously stated desire for safety, arguing that investment in Egypt is too risky, and 11 per cent related to having no access to cash or credit. Furthermore, 10 per cent of respondents did not know how or where to start the process. Seven per cent revealed that they were already too busy with their daily duties and activities; hence, they were unable to engage in investment-related activities (N=207, multiple answers).29

29 The remaining quarter (approximately 24%) gave multiple reasons, such as investment is against their religious beliefs and that dealing with the bureaucratic obstacles is not worth it. With regard to the former, respondents were most likely referring to interest-bearing financial products. They also cited corruption, lack of information, high taxes, or lack of trustworthy business partners.30 The remaining 28 per cent of answers included interest in investing in health care, industrial services, Islamic banking, transportation and stocks or other financial instruments.

The lack of investment activities, though, does not seem to stem from any absence of creative ideas or lack of understanding that investing can be advantageous. When asked in what area they would like invest if they were to begin to invest, the respondents gave a wide range of responses. One quarter (25%) of all responses accounted for a desire to open a private business and provide services. Seventeen per cent expressed a desire to invest in real estate. Sixteen per cent of the respondents firmly believed that savings is a positive form of investment and mentioned their wish to increase their current level of savings. Finally, 14 per cent stated an interest in investing in a private firm or agricultural project (N=246, multiple answers).30

Table 15: Areas of desired investment

Responses Percentage of Cases Areas of Desired Investment Frequency Percentage Private business/service 61 24.8% 33.5% Real estate 42 17.1% 23.1%

Savings 39 15.9% 21.4% Private business/agriculture 34 13.8% 18.7% Retail 21 8.5% 11.5% Business partnership 14 5.7% 7.7% Private business/manufacturing 10 4.1% 5.5% Personal health care 6 2.4% 3.3% Industrial services 5 2.0% 2.7% Islamic banking 4 1.6% 2.2% Stock market - other financial instrument 3 1.2% 1.6% Transportation 3 1.2% 1.6% Create youth employment opportunities 1 0.4% 0.5% Purchase of foodstuffs 1 0.4% 0.5% No desire to invest 1 0.4% 0.5% Real estate broker 1 0.4% 0.5%Total 246 100.0% 135.2%

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The investment ideas varied according to the areas in which the respondents resided. Appendix 11 gives an elaborate description of these ideas. The primary answers about investment ideas given by the respondents reveal patterns of preferences in individual governorates:

- Forty-four per cent of respondents from Cairo expressed a wish to increase their savings as a form of investment, compared to only 5 per cent of respondents from Fayoum, 17 per cent from Menofeya and 12 per cent from Sharkia.

- Almost half of respondents from Fayoum (47%) expressed interest in investing in private businesses providing services, compared to 13 per cent of those from Menofeya, 38 per cent from Sharkia and 20 per cent from Cairo.

- The most represented investment interest of those from Menofeya (27%) was in the area of agriculture.

Approximately 26 per cent of respondents in Fayoum, 10 per cent in Sharkia and 7 per cent in Cairo also expressed interest in investing in agriculture.

- In Sharkia, the most frequently cited investment interest concerned services (38%).

While the respondents had numerous ideas about possible investment, when asked whether their area is suitable for starting a business, overall more than half of all respondents (63%) replied “no” (N=192). In particular, 88 per cent of respondents from Menofeya and 74 per cent of those from Sharkia believed that they are living in areas unsuitable for business. The respondents from Cairo and Fayoum seemed less pessimistic with regard to the overall investment outlook of their governorates. Sixty per cent of respondents from Cairo and 51 per cent respondents from Fayoum believed that their respective governorates had an environment that was conducive to business.

Table 16: Is your area conducive to profitable business?

Is your area conducive to profitable business?

Total

Yes No

CairoFrequency 29 19 48% within governorate 60.4% 39.6% 100.0%% within area conducive 40.3% 15.8% 25.0%% of Total 15.1% 9.9% 25.0%

Fayoum

Frequency 25 24 49% within governorate 51.0% 49.0% 100.0%% within area conducive 34.7% 20.0% 25.5%% of Total 13.0% 12.5% 25.5%

Menofeya

Frequency 6 43 49% within governorate 12.2% 87.8% 100.0%% within area conductive 8.3% 35.8% 25.5%% of Total 3.1% 22.4% 25.5%

Sharkia


Total



The reasons for scepticism and the listed disincentives to invest in their area, especially those from Menofeya and Sharkia, were wide-ranging, from a lack of resources with which to invest to a perceived lack of investment security. The perceptions about the role of government are not uniform across the governorates. Half of the respondents from Cairo believed that government rules and regulations do not create obstacles to their investment plans and activities. On the contrary, 85 per cent of respondents from Fayoum, 91 per cent of respondents from Menofeya and 75 per cent of respondents from Sharkia stated that the government rules and procedures do play a role in increasing or decreasing the difficulties in their investment plans and hopes. This might be due to the fact that most

government services for investors are concentrated in the capital (Cairo). Among the government rules and procedures, the most cited obstacles towards investment was bureaucratic red tape (26%), followed by high tax levels (17%), corruption (14%), complex licensing procedures (11%) and an increase in prices of goods and services (5%, respondents provided multiple answers).31

Table 17: Do government rules and regulations create unfavourable conditions for investment?

Do government rules and regulations create

unfavourable conditions for investment?

Total

Yes NoGovernorate Cairo Frequency 21 21 42

% within governorate 50.0% 50.0% 100.0%% within obstacles 14.9% 47.7% 22.7%% of Total 11.4% 11.4% 22.7%

Fayoum Frequency 40 7 47% within governorate 85.1% 14.9% 100.0%% within obstacles 28.4% 15.9% 25.4%% of Total 21.6% 3.8% 25.4%

Menofeya Frequency 44 4 48% within governorate 91.7% 8.3% 100.0%% within obstacles 31.2% 9.1% 25.9%% of Total 23.8% 2.2% 25.9%

Sharkia Frequency 36 12 48% within governorate 75.0% 25.0% 100.0%% within obstacles 25.5% 27.3% 25.9%% of Total 19.5% 6.5% 25.9%

Total

Frequency 141 44 185% within governorate 76.2% 23.8% 100.0%% within obstacles 100.0% 100.0% 100.0%% of Total 76.2% 23.8% 100.0%

31 The remaining 27 per cent of answers were diverse and included lack of seeds, fertilizers, pesticides and lack of adequate facilitation and support from the government towards particular forms of agricultural investment. Some respondents also mentioned that they feel that the government sometimes intervenes a bit too much, thus, negatively affecting investment and related activities.

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Table 18: Obstacles to investing

Responses Percentage of CasesTypes of Obstacles to Investment Frequency Percentage

Red tape 51 25.5% 37.2%

Taxes 34 17.0% 24.8%

Corruption 27 13.5% 19.7%

Licensing 21 10.5% 15.3%

Lack of seeds, fertilizers, pesticides 16 8.0% 11.7%

Increase in prices 9 4.5% 6.6%

Government does not facilitate 7 3.5% 5.1%

Government facilitates 7 3.5% 5.1%

Decentralization of the authorities 4 2.0% 2.9%

Government ban on informal sector 3 1.5% 2.2%

Lack of information and guidelines 3 1.5% 2.2%

Reclaiming cultivated land 2 1.0% 1.5%

Does not provide employment opportunities

2 1.0% 1.5%

Industrial safety 2 1.0% 1.5%

Insurance 2 1.0% 1.5%

Social insurance 2 1.0% 1.5%

Access to credit liquidity 1 0.5% 0.7%

Convoys 1 0.5% 0.7%

Copyrights 1 0.5% 0.7%

Environmental requirements 1 0.5% 0.7%

Increase in property tax 1 0.5% 0.7%

Low interest rates 1 0.5% 0.7%

Recession 1 0.5% 0.7%


Total 200 100.0% 146.0%

The perception of obstacles to investment varies depending on the governorate of residence of the respondent. Corruption was cited as the primary obstacle to investment in Cairo (26%), high taxes was the most represented primary obstacle for respondents from Fayoum (33%), and bureaucratic red tape troubled those most interested in investing in Menofeya (39%) and Sharkia (43%).

The previously discussed attempts of the GOE and

various agencies to raise awareness and encourage investment do not seem to have trickled down to small investors, especially rural ones. Overall, the majority (92%) of all respondents said that they are not aware of any programmes that encourage opportunities to invest remittances in Egypt. Nevertheless, the level of awareness seems to be highest in the Cairo governorate and lowest in the Menofeya governorate (see Appendix 12 for details).


Lastly, attention was paid to the transnational collective investment in development, that is, to transfers made by migrant organizations/hometown associations. When asked about the social projects being financed by migrant associations, more than half of all respondents (61%) said that they have never heard about such projects in their community (N=191). Nonetheless, some of the respondents (39%) believed that their area could benefit

from social projects financed by migrant associations/groups (N=91). Among this 39 per cent of respondents, 23 per cent suggested funding projects in their communities that will utilize the local manufacturing capacity, 11 per cent suggested projects that will focus specifically on education, 9 per cent suggested projects targeting agriculture and another 9 per cent suggested promoting transportation projects.32

32 A further 48 per cent of answers were very diverse and included: providing employment opportunities, enabling export of agricultural products, improving health care, creating and improving overall services in the area.

Table 19: Suggested areas for social projects

Responses Percentage of Cases Areas/fields that could benefit from social projects financed by migrants

Frequency Percentage

Manufacturing 17 17.3% 24.6%

Education 14 14.3% 20.3%

Services 11 11.2% 15.9%

Health care 9 9.2% 13.0%

Food and beverage 7 7.1% 10.1%

Orphanages 7 7.1% 10.1%

Transportation 6 6.1% 8.7%

Charitable organization 5 5.1% 7.2%

Access to credit 3 3.1% 4.3%

Nursing home 3 3.1% 4.3%

Sewage system 3 3.1% 4.3%

Agriculture 2 2.0% 2.9%

Retail 2 2.0% 2.9%

Garbage collection 2 2.0% 2.9%

Real estate investment 1 1.0% 1.4%

Mosques 1 1.0% 1.4%

Provide employment opportunities 1 1.0% 1.4%

Export agricultural products 1 1.0% 1.4%

Bread distribution 1 1.0% 1.4%

Eliminate red tape 1 1.0% 1.4%

NGOs 1 1.0% 1.4%

Total 98 100.0% 142.0%

56

12. Conclusions and Recommendations

12.1 Conclusions

While there is a considerable geographical dispersion of Egyptian emigrants abroad, by far the largest proportion resides in KSA. However, the US is the largest supplier of remittances from a smaller but wealthier stock of Egyptian migrants in that country. Therefore, in terms of migrant numbers and the value of remittances, it would seem that these are the two main countries that would need the attention of policymakers who seek to channel remittances into productive investments in Egypt. With respect to this study, the migrant households researched mainly had migrants to KSA.

The level of remittances contributing to Egyptian household income is significant, averaging 43 per cent for the households surveyed. Thus, while macro-economic analyses focus on remittances as a major source of foreign currency earnings at the national level in relation to trade balances and GDP, they are also crucial at the individual household and community levels. This study offers some contribution to the contemporary circumstances of migrant-sending and remittance-receiving families in the four governorates of Egypt. It confirms that the primary interest of these households is the contribution of remittances to their everyday essential expenses while at the same time helping them (21%) to invest in various activities. A sizeable part of the remittance income (13%-18%) was saved by migrant households in three governorates (Cairo, Menofeya and Sharkia).33 A large proportion of the research respondents (including those who do not currently invest) expressed their interest in investment. Nevertheless, they pointed out several crucial factors that impede them from engaging in productive investment. As discussed in this study, the GOE has taken several positive steps, including changing and amending several laws and opening up one-stop-malls to improve the investment climate in Egypt. Previously, there

were mainly policies and provisions aiding large-scale investors/investment activities. However, in recent years, the GOE has addressed this bias in service provision and created special provisions establishing NILEX to help SMEs access greater financial capital.

Despite all these changes in laws and policies, there are still some existing laws whose amendments will lead to creating a more favourable investment and business climate for small-scale investors, such as migrant households or returnee migrants. Another important aspect is to disseminate such facilities and services to all the different governorates of the country. The respondents of the study from the three governorates (except for Cairo) were less aware about the government programmes designed to help them invest their remittances.

While the proportion of highly educated Egyptian emigrants was over-represented in this study, they are an important remittance-sending group. In some cases, it was seen that those educated migrants who were unable to find employment in Egypt were able to find good job opportunities abroad. The overall migration experience of the migrants and their households from these four study areas depicts a positive experience for the migrant, their households and the overall Egyptian economy.

Egyptian migration is mainly a male phenomenon and generates strong changes in the family dynamics particularly when viewed through the lens of gender. During the pre-migration stage, the households are usually headed by the male migrant (husband/father). Once the male head of the household engages in international labour migration, the female household member (spouse/mother) becomes the head of the household. This means an increase in the women’s responsibilities. While this ultimately generates an extra burden for women, it may also represent a subtle but positive shift in gender capacities that deserves more detailed investigation.

33 The exception is the Fayoum governorate where savings is reported to be only 2 per cent.


12.2 Recommendations

The following sets of recommendations are made in light of the findings from this study:

1) To improve investment, the GOE needs to have specific programmes in different governorates to provide business and investment advice to migrant families and the migrants themselves. Moreover, awareness-raising campaigns promoting these programmes need to actively reach migrant households within the different governorates.

2) As the study revealed, migrants spend a considerable amount of time preparing for their travel abroad, including getting in order all the essential documents. Therefore, information on formal channels for sending remittances and ways to invest them could be disseminated through the government offices that potential migrants are required to visit to arrange for their travel papers, passports, visas, etc. Pre-departure training of the migrants could also include information about how to securely send remittances and how to direct them towards productive and profitable business opportunities in Egypt. As the study showed, respondents from different governorates had different worries and concerns regarding investing in their respective governorates. Hence, one-size-fits-all approaches will not be as effective. Policymakers need to design programmes addressing the specific concerns of particular migrant communities (governorate).

3) As there are no financial products that explicitly target Egyptian emigrants, banking sectors need to be encouraged to start packages targeting emigrants. Successful examples from countries such as the Philippines could be considered before designing such products and packages.

4) The fact that a significant number of respondents in the governorates of Menofeya and Sharkia believe that their areas were not suitable for business investment requires further investigation and examination. For instance, the GOE needs to investigate to see if there are specific factors, such as sub-optimal infrastructure or a lack of essential business amenities, that impede investment projects in these governorates.

5) The GOE needs to devise policies that will work as incentives for investing in the different governorates of the country. The policies and programmes would be more effective if they are decentralized and take into consideration the particular conditions of each particular governorate.

6) While the study found some differences between governorates in terms of destination countries and other demographic features, the large bulk of Egyptian emigrants are living and working in KSA. Thus, among the Arab countries, KSA should be one of the prime focuses for GOE policies and initiatives to enhance remittance inflows and remittance investment through advice and assistance to migrants and their families. Additionally, there is some suggestion that Egyptians in Europe (specifically Italy) and other developed countries such as the US, Canada and Australia are investment-oriented, and hence should also be targeted.

7) From this study it is evident that the wives (and parents) of migrants play a critical role in remittance spending and investment. Thus, gender responsive- and family-specific programmes should be developed to educate and assist with information to improve levels of financial literacy and capacities to better manage investment.

8) While the banking and financial sector needs to provide special migrant-category products and services, perhaps the government could also give special consideration to migrants abroad for their contributions to the Egyptian economy. The example of the Philippines may be instructive, whereby overseas filipino workers (OFWs) are given the status of “new heroes” because of their collective contributions to the nation in terms of both financial and social remittances. The Philippine government also provides training programmes through their embassies in various countries for the skills-upgrading of their nationals abroad. These training programmes, in turn, provide opportunities to discuss remittance and investment options with migrants.

9) Information on recent legislative and administrative changes should be better disseminated to the Egyptian diaspora using the consular network, information desks at airport and events that are likely to be attended by

58

Egyptian migrants both abroad and while in Egypt during their holidays. Specifically, initiatives like the one-stop shop at GAFI and the possibilities to obtain microcredit and business counselling at SFD should be promoted.

10) Many respondents of this study described the investment climate in Egypt as unsafe and insecure. A common factor is a lack of trust in government programmes and policies, as well as prevailing market conditions such as lack of competition. The GOE needs to undertake specific programmes to improve their image and build trust among the migrant communities. Ensuring more transparency and accountability would be essential elements in gaining and fostering such trust. Investors must be assured that they can access and receive justice in the event that they are exploited or misled in business. Providing a secure and stable investment climate will attract both migrant communities as well as foreign investors to invest in Egypt.


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64

Appendix 1: Prior migration experiences

Responses Percentage of Cases

Frequency Percentage

Prior migration experience (a) Algeria 1 1.7% 2.8% France 1 1.7% 2.8% Greece 1 1.7% 2.8% Netherlands 2 3.4% 5.6% Italy 3 5.2% 8.3% Jordan 6 10.3% 16.7% Kingdom of Saudi Arabia 13 22.4% 36.1% Kuwait 2 3.4% 5.6% Libya 4 6.9% 11.1% Oman 2 3.4% 5.6% Qatar 2 3.4% 5.6% USA 2 3.4% 5.6% Austria 3 5.2% 8.3% China 1 1.7% 2.8% Denmark 1 1.7% 2.8% Iraq 5 8.6% 13.9% Japan 1 1.7% 2.8% Congo 1 1.7% 2.8% South Africa 1 1.7% 2.8% Sudan 1 1.7% 2.8% Switzerland 2 3.4% 5.6% Syria 2 3.4% 5.6% Yugoslavia 1 1.7% 2.8%

Total 58 100.0% 161.1%

* Note that for Congo and Yugoslavia, the migrant referred to the country’s former names at the time of their migration experience.

Appendices


Appendix 2: Year of leaving Egypt


Valid 1970 1 0.5 0.5 0.5

1980 4 2.0 2.1 2.6

1981 1 0.5 0.5 3.1

1982 1 0.5 0.5 3.6

1983 1 0.5 0.5 4.1

1984 3 1.5 1.5 5.6

1985 1 0.5 0.5 6.2

1986 4 2.0 2.1 8.2

1987 1 0.5 0.5 8.7

1989 5 2.5 2.6 11.3

1990 4 2.0 2.1 13.3

1991 2 1.0 1.0 14.4

1992 1 0.5 0.5 14.9

1994 8 4.0 4.1 19.0

1995 5 2.5 2.6 21.5

1996 1 0.5 0.5 22.1

1999 10 5.0 5.1 27.2

2000 7 3.5 3.6 30.8

2001 5 2.5 2.6 33.3

2002 8 4.0 4.1 37.4

2003 14 7.0 7.2 44.6

2004 16 8.0 8.2 52.8

2005 19 9.5 9.7 62.6

2006 21 10.5 10.8 73.3

2007 21 10.5 10.8 84.1

2008 27 13.5 13.8 97.9

2009 4 2.0 2.1 100.0

Total 195 97.5 100.0


Total 200 100.0

66

Appendix 3: How are remittances received?

Cross-tabulation: Governorate & How Are Remittances Received

How are remittances received?

Bank transfer

Migrantʼs employerʼs

Cairo branch of office

Debit card

Friend or

relative visiting

Money transfer services

Post office

Western Union

Total

Governorate Cairo Frequency 24 0 1 11 5 6 2 49

% within governorate 49.0 0.0 2.0 22.4 10.2 12.2 4.1 100.0% within how are remittances received 18.8 0.0 100.0 22.4 50.0 75.0 100.0 24.6

Fayoum Frequency 24 0 0 23 3 0 0 50


Menofeya Frequency 35 1 0 12 2 0 0 50


Sharkia Frequency 45 0 0 3 0 2 0 50


Total Frequency 128 1 1 49 10 8 2 199



Appendix 4: Are remittances used for emergencies?

Emergencies


Valid Yes 141 70.5 71.2 71.2

No 57 28.5 28.8 100.0

Total 198 99.0 100.0


Total 200 100.0

Appendix 5: Are remittances used for health care?

Health care


Valid Yes 120 60.0 60.6 60.6

No 78 39.0 39.4 100.0

Total 198 99.0 100.0


Total 200 100.0

Appendix 6: Are remittances used for education?

Education


Valid Yes 96 48.0 48.7 48.7

No 101 50.5 51.3 100.0

Total 197 98.5 100.0


Total 200 100.0

68

Appendix 7: Governorates: Use of remittances for emergenciesCross-tabulation: Governorate & Are remittances used for emergencies?

Are remittances used

for emergencies?Total

Yes No

Governorate of respondent Cairo Frequency 42 7 49

% within governorate of respondent

85.7 14.3 100.0

% within are remittances used for emergencies

29.8 12.3 24.7

% of Total 21.2 3.5 24.7

Fayoum Frequency 40 10 50


80.0 20.0 100.0


28.4 17.5 25.3

% of Total 20.2 5.1 25.3

Menofeya Frequency 33 16 49


67.3 32.7 100.0


23.4 28.1 24.7

% of Total 16.7 8.1 24.7

Sharkia Frequency 26 24 50


52.0 48.0 100.0


18.4 42.1 25.3

% of Total 13.1 12.1 25.3

Total Frequency 141 57 198

% within governorate of respondent 71.2 28.8 100.0


100.0 100.0 100.0

% of Total 71.2 28.8 100.0


Appendix 8: Governorates: Use of remittances for health careCross-tabulation: Governorate & Are remittances used for health care?

Do you spend remittances

on health care?Total

Yes No



65.3 34.7 100.0

% within do you spend remittances on health care

26.7 21.8 24.7

% of Total 16.2 8.6 24.7



80.0 20.0 100.0


33.3 12.8 25.3

% of Total 20.2 5.1 25.3



55.1 44.9 100.0


22.5 28.2 24.7

% of Total 13.6 11.1 24.7



42.0 58.0 100.0


17.5 37.2 25.3

% of Total 10.6 14.6 25.3




100.0 100.0 100.0

% of Total 60.6 39.4 100.0

70

Appendix 9: Governorates: Use of remittances for education

Do you spend remittances on children’s education?

Total

Yes No



60.4 39.6 100.0

% within do you spend remittances on childrens education

30.2 18.8 24.4

% of Total 14.7 9.6 24.4



51.0 49.0 100.0


26.0 23.8 24.9

% of Total 12.7 12.2 24.9



44.0 56.0 100.0


22.9 27.7 25.4

% of Total 11.2 14.2 25.4



40.0 60.0 100.0


20.8 29.7 25.4

% of Total 10.2 15.2 25.4



48.7 51.3 100.0


100.0 100.0 100.0

% of Total 48.7 51.3 100.0


Appendix 10: Who invests remittances?

Do you invest remittances?

Total

Yes No

Head of Household Child Frequency 0 4 4

% within head of household 0.0 100.0 100.0

% within do you invest remittances 0.0 2.6 2.1

% of Total 0.0 2.1 2.1

Grandparent Frequency 0 1 1



% of Total 0.0 0.5 0.5

In-laws Frequency 2 4 6



% of Total 1.0 2.1 3.1

Parent Frequency 11 48 59



% of Total 5.7 24.9 30.6

Sibling Frequency 5 10 15



% of Total 2.6 5.2 7.8

Spouse Frequency 21 86 107



% of Total 10.9 44.6 55.4

Uncle Frequency 0 1 1



% of Total 0.0 0.5 0.5




% of Total 20.2 79.8 100.0

72

Appendix 11: Governorates: In what areas/fields would respondents invest?

Cross-tabulation: Governorate & Would you invest?

If given the opportunity, the respondent would invest in:

Tota

l

Savi

ngs

Rea

l est

ate

Ret

ail

No

desir

e

Bus.

Part

ners

hip

Agr

icul

ture

Man

ufac

turi

ng

Priv

. ser

vice

Stoc

k m

arke

t - o

ther

fin

. ins

trum

ents

Gov

erno

rate

Cai

ro

Frequency 18 6 2 0 3 3 1 8 0 41

% governorate 43.9 14.6 4.9 0.0 7.3 7.3 2.4 19.5 0.0 100.0

% would invest 52.9 16.7 66.7 0.0 25.0 9.4 12.5 15.1 0.0 22.5

% of Total 9.9 3.3 1.1 0.0 1.6 1.6 0.5 4.4 0.0 22.5

Fayo

um

Frequency 2 8 0 0 0 11 2 20 0 43

% governorate 4.7 18.6 0.0 0.0 0.0 25.6 4.7 46.5 0.0 100.0

% would invest 5.9 22.2 0.0 0.0 0.0 34.4 25.0 37.7 0.0 23.6

% of Total 1.1 4.4 0.0 0.0 0.0 6.0 1.1 11.0 0.0 23.6

Men

ofey

a

Frequency 8 7 1 1 8 13 1 6 3 48

% governorate 16.7 14.6 2.1 2.1 16.7 27.1 2.1 12.5 6.3 100.0

% would invest 23.5 19.4 33.3 100.0 66.7 40.6 12.5 11.3 100.0 26.4

% of Total 4.4 3.8 0.5 0.5 4.4 7.1 0.5 3.3 1.6 26.4

Shar

kia

Frequency 6 15 0 0 1 5 4 19 0 50

% governorate 12.0 30.0 0.0 0.0 2.0 10.0 8.0 38.0 0.0 100.0

% would invest 17.6 41.7 0.0 0.0 8.3 15.6 50.0 35.8 0.0 27.5

% of Total 3.3 8.2 0.0 0.0 0.5 2.7 2.2 10.4 0.0 27.5

Total

Frequency 34 36 3 1 12 32 8 53 3 182

% governorate 18.7 19.8 1.6 0.5 6.6 17.6 4.4 29.1 1.6 100.0

% would invest 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

% of Total 18.7 19.8 1.6 0.5 6.6 17.6 4.4 29.1 1.6 100.0


Appendix 12: Governorates: Awareness of programmes encouraging investment

Are you aware of any programmes which

encourage investment of remittances?

Total

Yes No

Governorate Cairo Frequency 6 39 45

% within governorate of respondent 13.3 86.7 100.0 % within are you aware of any

programmes which encourage investment of remittances

40.0 22.0 23.4

% of Total 3.1 20.3 23.4



% within are you aware of any programmes which encourage investment of remittances

26.7 24.9 25.0

% of Total 2.1 22.9 25.0



% within are you aware of any programmes which encourage investment of remittances

13.3 27.1 26.0

% of Total 1.0 25.0 26.0

Sharkia Count 3 46 49

% within governorate of respondent 6.1 93.9 100.0 % within are you aware of any

programmes which encourage investment of remittances

20.0 26.0 25.5

% of Total 1.6 24.0 25.5

Frequency 15 177 192

% within governorate of respondent 7.8 92.2 100.0 Total % within are you aware of any programmes

which encourage investment of remittances100.0 100.0 100.0

% of Total 7.8 92.2 100.0

74

Appendix 13

14.1 Migrant Remittances Questionnaire

*(Note to interviewer: Let them know you’ll be asking them questions pertaining to the advantages and disadvantages of the kind of investments they have made. Reassure the respondent that all answers are anonymous and private.)

Demographics of respondent

1. Name of Respondent __________________________________(This is optional, but we need to look for the current head of the household.)

2. Governorate of residence __________________________________3. Age4. Sex of respondent: □M □F5. Current Marital Status

□ Never Married□ Married□ Divorced□ Widowed

6. Do you have children? □ Yes□ No

7. How many? _______Gender (ask the sex of each child) Age(s)/Sex______,_______,_________

8. Occupation (s) of respondent __________________________9. Household location

□ Urban□ Rural

10. Household composition (other than respondent)—ask in detail who lives in the household.

11. How many people are currently abroad for work from this household?_______12. What is the respondent’s relationship to migrant(s) abroad? ___________________ 13. Current Marital Status of Migrant(s)

□ Never Married□ Engaged□ Married□ Divorced□ Widowed

1.

2.

3.

4.

5.

6.

7.


14. Does the migrant have children? (If yes, proceed to question 15)□ Yes□ No

15. How many children does the migrant have? ___________16. If the migrant is married, where is the spouse? _______________________________17. If migrant has children, where are they? ____________________________________

18. Age(s) of migrant/migrants ______________, ____________, ______________19. Sex of migrant(s)

□ Male□ Female

20. Last certificate degree of migrantQ: What is the migrant’s last certificate degree?

□ None (illiterate, did not complete primary school)□ Some primary school□ Completed primary school□ Some secondary school□ Completed secondary school□ Some undergraduate university□ Completed undergraduate university□ Some graduate university□ Graduate university□ Other□ Don’t know

21. When did the migrant leave Egypt? _____________________________22. Why did he/she decide to emigrate? (What are the reasons? Get the story.)________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________23. Where is the migrant currently residing? 24. What is his/her current occupation in country of current residence? 25. Did the migrant obtain a work visa in order to work abroad?

□ Yes□ No (How did he/she manage to go? Please explain.)

____________________________________________________________________________________________________________________________________________________________

Pertaining to Information of Family Member Abroad Sending Money

Migration History*Note to interviewer: Please understand some of these questions are rather sensitive. Please reassure the

respondent that they have complete anonymity and are safe to talk about these answers with you.

76

26. How many years has he/she been working abroad?27. What is the status in the country of migration?

□ Regular (temporary residence)□ Regular (permanent residence)□ Irregular

28. Place of residence before leaving (governorate and village)□ With household interviewed and in current location□ With household interviewed but in different location□ Other (please specify)

29. What was his/her previous occupation?30. Did she/he have any previous migration experience(s)?

□ Yes□ No

31. If yes, which country/countries did he/she migrate to before the current migration experience? 1. 2. 3. 4.

32. Did he/she ever return to Egypt after leaving the first time? □ Yes (Proceed to question 33.) □ No (Why? Please explain.)

____________________________________________________________________________________________________________________________________________________________33. What was reason for returning?

□ Termination of employment□ Loss of residency status□ Personal consideration□ Job offer elsewhere□ Other (please explain) __________________________________________

34. How often does the migrant come back to visit? _______________________________________

Questions on Migrant Remittances

35. How often do you receive money from your relative?□ Weekly□ Once a month□ Every few months□ Yearly□ Other (Please state)_________□ Variable

36. On average, how much do you receive (in EGP): Monthly____________

37. Remittances represent what percentage of your family income?(Get percentage. Help calculate if you have to.) ____________________38. If you did not receive remittances, would you still have enough to live on?

□ Yes


□ No (Please explain why.)________________________________________________________________________________________________________________________________________________________________________________________________________________________39. How do you receive the money? Tick all that apply. If there is more than one method, then ask which one is used more frequently

□ Friend/relative travelling home□ Post□ Bank transfer□ Money transmitting service□ Western Union□ Money Gram□ Money transfers□ Debit card□ Other ________________________________________________________

40. Which is the most used way of receiving the money? _________________________41. Do you receive remittances in a non-financial form, such as gold, appliances, etc.?

□ Yes (What kind? Please explain below.)□ No__________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

42. Does the migrant send gifts home?□ Yes (For which occasions? Please explain below.)□ No_____________________________________________

43. In what currency is the money sent?□ EGP□ Euro□ US dollar□ Other

44. In what Currency did you receive this money?□ EGP□ Euro□ US dollar□ Other

45. What is the cost of sending money to you from your relative (migrant)? (Ask if they have a record from the last time money was sent to them)

EGP _____□ Don’t know

46. What is the cost of receiving money transfers each time from your relative (migrant)?EGP ______□ Don’t know

47. Do you prefer one particular method of receiving cash over another? □ Yes □ No

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48. Tick the preference(s) for receiving remittances. There may be more than one. □ Friend/relative travelling home □ Post □ Bank transfer □ Money transmitting service □ Other (please explain)

49. Why do you prefer the chosen methods? You can probe by asking, “For example, is it easier to receive money via bank transfer rather than using a money transmitting service like Western Union?” _________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________50. Do you know how much you spend each month on living expenses? Can you tell me how much you spend each month (or whatever period they are familiar with) on the following items:

Rent • __________EGPUtilities (electricity, gas, water)• _________EGPFood• _________EGPFamily expenses (clothing, etc.) • ________EGPHealth care• ________EGPEducation (private tutoring for kids) • ________EGPIndividual/Personal(cigarettes, makeup) • ________EGP Investments • __________EGP Real estate (Purchases, upkeep, taxes, agriculture, etc.) • _________EGPZakat • __________EGPSavings• __________EGP

*Depending on which items received the highest level of importance, the interviewer can probe the respondent as to why they chose particular items with a level of importance over others.

51. Do you own your own home?□ Yes (Go to question 52.)□ No (Go to question 51.)

52. Are you building a house?□ Yes□ No

53. Do you get an income from renting property to others? □ Yes (Please tell how much on the line below and then proceed to question 55.)□ No (Go to question 54)

______________________________________________________________ 54. Are you planning on getting an income from renting property to others?

□ Yes □ No

55. Where is the property located? ___________________________56. How much money do you expect to receive from renting property? ____________________EGP


57. Can you tell me what you spend the remittances on? Can you distinguish? __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________58. Has money been received specifically in order to help finance another family member to emigrate abroad?

□ Yes□ No

59. Do you tell the family member overseas (migrant) what you spend it on? □ Yes□ No

60. Do they (migrant(s)) tell you what it is to be spent on?□ Yes (Please explain what they tell you.) □ No __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

61. How do you decide how to spend the remittance money? Is it a family decision? Who makes the decision?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________62. Do you use the remittance money on education for your children or any other children in your extended family? (Ask only if the question applies to them.)

□ Yes□ No

63. How much does it cost to send them to school yearly? ________________________________________64. What type of school are they going to? Private, primary, secondary, high school?

University?_________________________________________65. Who are you sending to school (if any) (*Note to interviewer—find out if money is being spent more on one

child than the other. Is it the son? The daughter? ) ________________________________________________________________________________________________________________________________________________________________________________________________________________________66. Do you spend any of the remittances on health care?

□ Yes□ No

67. If so, what kind? ________________________________________________________________________________________________________________________________________________________________________________________________________________________68. Do you buy more goods that are imported (for example, foodstuffs, household items, clothing) because you receive this money?

□ Yes (Please explain.) □ No

__________________________________________________________________________________________

Questions Regarding Remittances and Investment

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______________________________________________________________________________________________________________________________ 69. What special things do you do with the remittance money? For example, do you do anything special like going out to the cinema or restaurant or inviting people over for dinners?________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________70. Do you help out other relatives when they are in need?

□ Yes (How? Please explain.) □ No __________________________________________________________________________________________________________________________________

71. Are the remittances used for these emergencies?□ Yes□ No

72. In emergencies, do you ask the migrant to send more money?□ Yes□ No

73. Do you put a specific amount of the remittances away for future emergencies?□ Yes (How much?) _______________________□ No

74. Do you invest? *Note to the interviewer-Explain what is meant by investment. Do you use the remittance money to generate an income? Examples: To invest money means to spend it on something that then gives you more money (shop, agricultural land, real estate, employing someone to do/make something for you)

□ Yes (Proceed to question 75.)□ No (Go to question 78.)

75. If so, what is the kind of investment? Make sure to get details. (If they don’t invest, go to question 78.) A. Developing a business. Please mark what kind of business it is (numbers indicate the number of people employed)

□ Small (less than 5)□ Medium (less than 20)□ Large (more than 20)

What sector?□ Agriculture□ Manufacturing□ ServicesB. Shares in someone else’s business C. Stocks and other financial instruments (insurances, mutual funds, Islamic finance, etc.) Explain what kind.D. Real estateE. Other ________________________________________________________

76. If you are an employer, how many people are employed in your business?__________________________77. What is the business? ____________________________________________________________________________________________________________________________________

□ Agriculture, mining, fishing□ Manufacturing


□ Service industry78. If you do not invest your money, what is the reason? EXAMPLES:

□ Financial difficulty/Economic constraints□ Legal constraints□ Against religious beliefs□ Too risky□ Do not have enough information □ It is more profitable to invest in country of migration (destination) □ Lack of profitable opportunities in my area□ Don’t know how and where to start□ Would be too risky□ Would not be profitable□ Bureaucratic hassles □ No access to credit □ Taxes and official fees are too high□ Corruption□ Other (Please explain)_________________________________________________________________

79. What kind of investment would you choose if you had the possibility to do so or if you wanted to? □ A. Developing a business (In what sector?)

□ Agriculture □ Manufacturing □ Services

□ B. Shares in someone else’s business (what kind?)____________________________________________________________□ C. Stocks and other financial instruments (insurances, mutual funds, Islamic finance, etc.) __________________________________________________________________□ D. Real estate (What kind?) ________________________________________________________________________□ E. Savings of various kinds (What kind?) ________________________________________________________________________□ Other (Please explain.)

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________80. Are you the one who manages the investment?

□ Yes□ No (If no, who manages the investment? Please tick the appropriate box below.)

□ Respondent□ Siblings or parents of migrant□ Children□ The migrant□ Spouse of the migrant□ Business partner (non family member)

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□ Other ____________________________________81. Why have you chosen the particular kind of investment ? Please explain. (When they answer, if they give more than one reason, prompt them for why those are important to them).________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________82. Are you using the money you receive as remittances towards the development of your community?

□ Yes (If yes, please explain below.)□ No

If yes, give specific examples? (Examples of this may be helping to pool money for a relative or friend in order to start a business, or pooling money in order to make a larger purchase for the use of the whole community) ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________83. In your opinion, what are the advantages of investing remittances in the way that you have? ______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________84. In your opinion, what are the disadvantages of investing the remittances the way that you have?______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________85. Are you aware of any programmes which encourage financial investment opportunities for remittances in Egypt?

□ Yes (If yes, what are they?)□ No

________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________86. Whether you invest or not, does the government play a role in encouraging you to invest? Please explain your answer. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________87. Whether you invest or not, does the government play a role in creating obstacles for you to invest? Please explain your answer.


____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________88. Do you think the area you live in is a suitable environment to start a profitable business? Please explain why.____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________89. Do you think that the area you live in could benefit from social projects financed by a group or cooperative of migrants? Please explain why. ____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________90. Have you heard anything on social projects financed by others abroad in your community?___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________91. Do you know of anything that could be done? Please explain.______________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Thank you for your participation in filling out this questionnaire. If you would be willing to be contacted for follow-up information, please write your contact information in the space below.

Name: _______________________________________

Phone: _______________________________________

Do you know anyone willing to take part in another interview like this one? Please feel free to leave us his/her contact information.

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14.2 Follow up Questions for Migrant Investors

1. (If the person invests) Can you tell me more about the business you currently own? a) How long have you had this business?b) How did you come up with the idea?c) How many people do you have employed in your business (es)?d) Is this your only business or do you have other projects, or other branches?e) Are you the sole owner of your business? If not, how many other partners do you have and what is their relation to you?

2. What was the process like for you to start your business/investment project? a) How long did it take to legally register your business?b) Did you have to take out any loans in order to purchase the equipment, land or building location for your business?c) Follow-up: If so, what kind of loan did you receive?d) Follow-up: What is the process of attaining credit like? *Probe, is it difficult or relatively easy? What are the steps?e) Are you aware of any community or governmental organizations here where you can get financial advice on starting your own business? If so, who are they and did you seek their help?f) Follow-up: What kinds of advice did they offer?g) Follow-up: Was it useful? Do people tend to trust these sources of information/help?h) In your opinion, what needs to be done in order to minimize the difficulties in forming one’s own business?i) What kinds of advantages have come from developing your own business?j) Did you receive tax exemptions from the government?k) Did you receive any special incentives from the government to return and start your own business? If so, what?l) How did the legal aspects regarding the creation of your business affect you?m) Were there any difficulties gathering necessary paperwork or in the initial planning of your business? If so, what? For example, did you encounter any bureaucratic procedures that made it difficult to establish your business?n) In your opinion, are the legal policies surrounding the formation of SMEs generally helpful for prospective Egyptian entrepreneurs?

3. Do the remittances you receive go into supporting your business? If so, how? 4. Do you still rely on receiving remittances outside of the income your business generates? If so, to what degree do you rely on remittances?5. How often are you still receiving remittances? Weekly, monthly, yearly, etc.?6. Who sends them?7. How much do you receive? In what currency?8. How do you receive the remittances? Hand-delivered, Western Union, other?9. Has your business helped encourage other families in your community who receive remittances to invest in establishing their own business?10. If you do not rely on remittances as much due to the success of your business, would you mind sharing financial details regarding the income generated from your business?11. If so, how much profit would you say your business generates per month?


12. If you had the chance, would you create more branches of your business? (Assuming respondent answered “no” to question 1d)..13. What can be done to encourage the promotion and development of other SMEs in your community?

14.3 Interview Questions-Stake Holders-Migrant Remittances Project

1. How does your organization view the impact of the financial crisis on migrant remittances being sent to Egypt?2. What is the effect on the local Egyptian economy amidst the financial crisis? 3. Can you tell me more about the investment projects your organization is involved with?4. Does your organization encourage Egyptian families who are receiving remittances to invest? 5. If so, how?6. (Follow-up question): Are these useful? Have you been able to show that these have been successful?7. Are there any specific communities (rural or urban) you target to work with and if so, what are these communities? 8. How do you advertise your services within the communities you work with?9. Have you been involved in any development projects that draw on migrant remittances and investment?10. If so, what are these projects?11. How were these projects envisioned initially? 12. What population of Egyptians did you work with?13. Were they successful?14. What kinds of projects are you involved with that draw on the strengthening of SMEs in Egypt?15. Are these useful?16. What are the characteristics of SMEs in Egypt?17. Are there ways in which communities are strengthened from investing remittances? If so, what are they?18. Pertaining to remittances, what areas of economic development does your organization seek to promote? Example: health, education, or entrepreneurial endeavours – housing, nutrition, land acquisition, savings, other form of investment.19. What kinds of SMEs are being developed from migrant remittances?20. What are the difficulties Egyptians experiences in trying to invest or start SMEs?21. What are the advantages Egyptians experience in trying to create SMEs?22. What are the obstacles faced by policymakers, migrants and local communities concerning the role of remittances being channelled towards investment?23. Do Egyptians who wish to invest in their own business face problems accessing formal modes of credit? 24. In what ways do the laws concerning investment in Egypt positively and negatively affect Egyptians who wish to participate in the development of their economy?25. How does your organization target legal policy on the issue of Egyptian investment? 26. (Follow-up) Has this been useful?27. What is the role development plays in further encouraging Egyptians to invest?

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