Intellectual Property Rights: A Catalyst for FDI and Innovation in Egypt

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Egypt has been working to strengthen its intellectual property (IP) protection over the recent years, recognizing the impact that IP rights can have on a country's economic development and ability to attract foreign investment. The country has taken steps to modernize its IP system and elevate its standards, which is expected to drive innovation, creativity, and economic growth.

State of Innovation

IP protection is important for Egypt's information technology (IT) as it can contribute to promoting domestic innovation. Nirmeen El Sayyad, UN Women Project Manager at the American University in Cairo (AUC) and an economic expert, tells Arab Finance: “IP protection is a critical incentive for innovation and creativity, which in turn are keys to the United Nations Sustainable Development Goals (SDGs) success.”

“The way individual inventors, companies, and other organizations find solutions to social, economic, health, and environmental challenges is a powerful reminder of the collective capacity to achieve the SDGs and the role that IP rights play,” she adds.

By protecting the rights of creators and inventors, intellectual property (IP) laws can encourage them to invest in research and development, knowing that they will be able to reap the benefits of their work. This can lead to the creation of new products and services, which can help drive economic growth and development.

IP protection can also help attract foreign direct investment (FDI) to the IT sector in Egypt. Mohamed Hegazy, the legal advisor to the Chamber of Information Technology Industry and the former Head of the Intellectual Property Office, told Ahram Newspaper in 2022 that the Egyptian Patent Office issued 508 patents in 2021, 63 of which were for Egyptians at a rate of 12.4%, compared to 445 patents for foreigners at a rate of 87.6%.

The Trademarks and Industrial Designs Administration also issued 10,997 trademarks. This demonstrates the importance of protecting, preserving, and defending intellectual property rights to attract more foreign investments.

This comes as IP rights protect businesses from being breached. El Sayyad explains that “on the micro level, an individual or company that holds a patent has the right to prevent others from making, selling, retailing, or importing that technology. This creates opportunities for inventors to sell, trade, or license their patented technologies to others who may want to use them.”

Legal Frames and EAIP Establishment

In September 2022, Prime Minister Mostafa Madbouly launched Egypt’s National IP Strategy, which aims to harmonize and integrate the country's IP ecosystem and promote domestic innovation. This strategy is set to identify institutional structure and governance in regards to IP via creating a national system for IP and enhancing digital transformation.

In August 2023, Egyptian President Abdel Fattah El-Sisi signed Law No. 163 of 2023 on establishing the Egyptian Authority for Intellectual Property (EAIP), which is set to work on a comprehensive review of all IP-related legislation.

"The new agency will be exclusively mandated with supervising all forms of intellectual property in Egypt in line with the constitution and international conventions and standards," according to a report prepared by the Education and Scientific Research Committee at Parliament in June 2023.

The report further explained that the EAIP will be responsible for enhancing human creativity and advancing technological innovation, as well as scientific research and cultural development.

IP Protection Boosts Economic Growth

IP protection can be an important driver of economic growth. This comes as it encourages investors to do business in Egypt, which in turn offers job opportunities and boosts foreign investments. Hélène Syed, Executive Director at ESLSCA Research Center of Excellence (ERCE), ESLSCA University in Egypt, tells Arab Finance: "IP protection acts as a magnet for FDI by assuring investors that their intellectual assets are secure, incentivizing innovation and technology transfer, and facilitating market access. This, in turn, can contribute to economic growth and development in the host country."

El Sayyad agrees, stating that IP rights protection "has a vital role in growing the economies of developed and developing countries, spurring innovation, giving large and small firms a range of tools to help drive their success, and in benefiting consumers and society through a continuous stream of innovative, competitive products and services, as well as an expansion of society’s overall state of knowledge.”

IP rights protection can further “enable businesses to commercialize their intellectual assets and generate revenue, which benefits both the company and its employees. For example, a patented technology can generate income through licensing or product sales, supporting company growth and job creation,” according to Syed.

Accordingly, by protecting IP rights, Egypt can attract foreign investment and reward local innovation and creativity. The country's focus on enhancing IP protection and cultivating a knowledge-driven economy through the effective utilization of intellectual capital is expected to boost economic growth by enhancing collaboration and creativity.