Nothing’s ever perfect but after the Egyptian government’s major economic reforms, under the supervision of the IMF, there is a sense that the country has turned the corner. In 2018, the economy grew by 5.3%, up from 4.2% in 2017. The recovery hasn’t been painless though, as the treatment included tax increases, currency devaluation and flotation, and cuts to energy subsidies. A major public investment plan compensated for the fall in private and foreign investments that resulted from the poor economic conditions of previous years. On the plus side, thanks to recent natural gas discoveries, the country is now a net exporter of hydrocarbons, which boosts its revenues.

While the economy is definitely perking up on a macro-level, there has been a price to pay and Egyptian consumers have been feeling it where it hurts: in their pockets. For the first time in decades, the country is seeing inflation exceed 30%, imported products running out of stock and consumer confidence levels stagnating at around 85 since 2018 (a score over 100 denotes optimism). Consumers have therefore adapted their shopping behaviour accordingly, with a bargain/promotion hunter approach and a zero-waste strategy. The latest Nielsen Shopper Trends Egypt revealed supermarket and hypermarket visits decreased by 25% and 50% respectively.

Egypt is also struggling to support its fast-growing population. Though it is decreasing, the country’s high birth rate brings with it several challenges, including unemployment, particularly among the youth, and the parallel rise in informal employment, as well as added pressure on natural resources. Social and public services, which suffer from small budgets and poor administration and governance, do little to remedy the situation.

The positive economic outlook seems to translate into business confidence though, even if the benefits of growth haven’t yet trickled down to every man and woman.

Egypt’s culture is making a comeback

The currency devaluation changed the purchasing habits of Egyptians. It impacted their choice of day-to-day food items and household products and encouraged their move away from expensive international and imported brands. This preference for local products is inspiring the country’s entrepreneurs and start-ups to launch home-grown brands. Local fashion designers incorporate Egyptian cultural and historical designs into everyday fashion.

This sense of pride also finds an echo with young artists, designers and photographers. Cafés and restaurants are providing them with space to display their collections. In the digital sphere too, designers and artists are finding platforms to display and interact with consumers. After starting out on Facebook or Instagram, many are turning into thriving brands and businesses.

“Made in Egypt” drive continues

The country is continuing to build its manufacturing capacity, particularly in the automotive sector. New plants are being opened and announced, with the promise of new jobs. So far, there are 12 automotive producers with assembly lines in Egypt but the government’s goal is to develop a local component industry. This is part of a wider trend that is seeing global brand owners manufacturing or packaging locally. It appears that Egyptian consumers see the benefit in switching to locally manufactured products, including cars. They now represent almost half of the total car sales, thanks to an 18% growth year-on-year in 2018.

A nation of builders

Manufacturers are not the only beneficiaries of economic reforms. The real estate and construction industries are in the middle of a boom that is transforming them into the two fastest growing sectors. While there is an imbalance between the growing supply and the local demand, developers are successfully attracting non-resident Egyptians who are working in neighbouring countries or further afield. The same imbalance, coupled with recent dips in the resale market, is creating favourable conditions for local home buyers too. It’s therefore no wonder that construction and real estate are the two most active advertising categories of 2018.

The media industry is changing… again

The media market has seen its fair share of changes in the last year or so. One of the most welcome is the 35% increase in overall media investments in 2018. The growth benefited TV the most, followed by digital and outdoor. It came from real estate advertisers promoting various developments, including the launch of the New Administrative Capital, and brands capitalizing on Egypt being in the FIFA World Cup for the first time in over 30 years.

There is hope that this growth will continue this year, even without the World Cup.  The key factor is the consolidation of the majority of private TV channels into a state-owned holding, Egyptian Media Group. The group has also launched its own VOD platform for Ramadan content, which is no longer available on YouTube. The aim is to regulate the industry in terms of content acquisition and advertising sales. The long-term impact on advertising rates has yet to be determined.

Light at the end of the research tunnel

Another major development in the health of Egypt’s media sector is the resuming of TV research after a two-year hiatus. In the absence of audience information, advertisers were forced to change their TV buying from a cost per rating point to a cost per spot method. Media agencies and advertisers trialled and tested different approaches to plan efficiently around channels and content. It’s now been announced that TV audience research has resumed, with the first wave covering April 2019. Ipsos will release nine waves this year. This will allow the market to function more optimally.

Digital and Arabic local content

With an internet penetration of 54%, Egypt has more internet users than any other Arab country. This figure is still growing thanks to improvements in infrastructure, an increase in mobile penetration and the reduction in the cost of smartphones. This rising penetration has led to major changes in media consumption habits and advertising trends. In 2018, an 20% of total advertising investments went to digital platforms. This is expected to reach 25% this year as advertisers found in digital a solution to the lack of TV measurability.

Another feather in digital’s cap is locally-made content. For Egyptians, if it’s not in their local dialect, then it’s not even in Arabic. The country’s legendary creative talent, which rose from cinema, will keep on thriving, moving to ever smaller screens. As the battle for Arabic content intensifies and newcomers challenge Egypt in other markets, now may be the best time for Egyptian talent to focus inwards and online.

E-commerce is slowly making its way into Egyptian homes

Despite the increase in digital penetration, e-commerce is still low compared to traditional retail or the size of the population. Only 8% of the country’s internet users transact online. The lack of official legal recognition of electronic contracts is one issue, the logistical hurdles in Northern governorates is another. The main one, online payment options, is actively being addressed.

Independent e-payment facilitators are emerging to help the 86% of the total population still unbanked. The government is encouraging banks to simplify the opening of new accounts and the granting of credit cards. With this, e-commerce volumes are expected to grow to $2.7 billion by 2020.

Data the coming challenge

As the Egyptian government strives to digitize its public sector and its economy, the volume of available data is increasing. The issue is that the vast majority of marketers have yet to embrace the digital transformation of their businesses. Last year, the turn-out to Egypt’s first data and e-commerce conference was overwhelming. Most of the attendees were from local companies looking to explore the latest digital trends and the data and technology landscape. If nothing else, it indicates a growing awareness of the opportunities that digitization and data bring to marketers.

 A growing eco-consciousness

Both consumers and brands have woken up to the need to act today for the sake of the future. The sustainability message is resonating with the population, as they embrace environmental initiatives in greater numbers. Clean-ups and plastic reducing campaigns have become hot topics on social media. New organizations, such as Greenish and Very Nile, have signed up large numbers of active volunteers and kept the debate going on social media.

Brands are paying attention to the trend and are embracing the cause. Many sponsor the organizations managing clean-ups and other events, and promote their support in social media. Considering the scale of the challenge, in Egypt and beyond, this can only be the beginning of a new consciousness and a redefinition of brands’ marketing strategies.

The shock therapy initiated in 2016 is starting to bear fruits and while they’re not yet evenly distributed, the benefits are starting a ripple effect. Ambition is returning and opportunities are increasing. It is by turning the country’s collective attention to the longer term that great things will be achieved.