Arab Diaspora Business Communities in Egypt

The Syrian diaspora business community in Egypt demonstrates the importance of both financial capital and social capital—social networks, norms, values, and beliefs held by individuals—for economic survival and growth in a complex political economy environment. Syrian businesspeople first moved to Egypt in the 1960s, but most arrived en masse following the outbreak of the Syrian conflict in 2011. Around 15,000 Syrian business owners moved to Egypt by 2016, the overall number rising to 30,000 by 2023. By 2018, the Syrian diaspora in Egypt had invested an estimated $800 million to $1 billion, most notably in the food and beverage, textile, and furniture sectors. The rapid growth of this diasporic business community has naturally thrown up both challenges and opportunities, which have impacted large and small businesses in often divergent ways. But although businesses owned by Syrians and other non-nationals in Egypt may face operating conditions that are specific to them, more striking is the extent to which their experience matches that of Egyptian private business actors of equivalent size. In all cases, it sheds light on the functioning of Egypt’s political economy, which is heavily reliant on private knowledge, interpersonal trust, and relationships embedded in a semi-formal market for conducting business.

On the one hand, entrepreneurship—defined as the ability to recognize market opportunities and to raise the capital needed to make new investments—is a key determinant of success or failure for Syrian business owners in Egyptian markets. But on the other hand, social ties are almost equally important for economic survival and development; this is illustrated by the extent to which Syrian businesspeople have had to use their social networks and behaviors originally acquired in Syria—including clientelism and nepotism—to navigate Egypt’s complex political economy and vague migration policies and to penetrate their markets. Moreover, differences in social capital help explain variations in the trajectories of smaller and larger Syrian diaspora businesses. Larger Syrian-owned businesses have access to social capital within both Syrian and Egyptian communities, including legal experts, government officials, and Egyptian business networks that enable them to obtain legal advice, secure assistance from government authorities, and tap into Egyptian markets. Smaller Syrian businesses survive because they, too, have access to social capital, but theirs is primarily found within the local Syrian community; thus, they cater to a clientele that is mostly Syrian and very narrow.

These differences have acquired added significance since the fall of the regime of former Syrian president Bashar al-Assad in December 2024. The incentives to return to a Syria still facing political and economic uncertainty are higher for small business owners, who already function under precarious rules of registration and market circumstances in Egypt, whereas larger businesses may prove reluctant to take similar risks and prefer continued integration in the Egyptian economy.

Navigating Uncertainty

Syrian businesspeople in Egypt generally find themselves in a state of legal limbo due to unclear administrative regulations and political uncertainty. Egypt presented economic opportunities for Syrian businesses immediately following the outbreak of war in Syria, but an initially welcoming migration policy was reversed following the change of Egypt’s regime in July 2013; after this time, Syrians came under increasing scrutiny and faced significant protection challenges. Since then, government authorities have adopted what scholar Kelsey Norman describes as an “ambivalent migration policy” toward Syrian registered and unregistered refugees—a population that comprises a majority of the estimated 1.5 million Syrians in Egypt. According to her, this policy has allowed the government to make “economic gains through refugees’ participation in the informal economy, remittances that are spent locally, aid from international organizations, and international credibility for refraining from deporting refugees.”

By comparison, Syrians who obtain investor visas enjoy distinct advantages, but they also have had to learn how to operate under unclear regulations and formal requirements and to cope with de facto impediments affecting entry to various business sectors. They have been unable to access the pharmaceutical sector, for example, where they are being crowded out by Egyptian business elites partnered with military companies. A businessman from Aleppo claims that Syrians who previously owned businesses in Syria’s pharmaceutical industry were unable to obtain the required permits to establish themselves in this sector in Egypt for over ten years.¹ And while this specific case shows that Egyptian counterparts who lack politically powerful partners face some of the same obstacles, including in other sectors, official measures targeting non-Egyptian businesses have at times raised the entry barriers for Syrian businesses, such as the new requirement issued in 2018 for obtaining security clearance in order to establish companies in the information technology sector.

As a result of these complications, many Syrian business owners in Egypt went through a process of trial and error before finally setting up their businesses—in some cases not until several years after moving to the country. Indeed, many Syrians started out as employees in other enterprises, not only because their circumstances made it difficult to mobilize financial capital immediately, but also because of the uncertainty of operating in Egypt’s complex political economy. Obtaining, and maintaining, legal residence poses an additional challenge: this was highlighted following the “abrupt cessation of tourist visa renewals in late June 2024,” to which some Syrians have resorted so as to remain in Egypt, forcing “many to leave the country and re-enter through a costly security approval.”

Legal ambivalence and political uncertainty have had contradictory effects. On the one hand, Syrians with refugee status or educational visas, who are not allowed to undertake business activity, set up small businesses that they could avoid registering officially. On the other hand, larger Syrian business owners perceived an opportunity in the same investment environment that their Egyptian counterparts considered risky in 2015–2016, when an economic crisis led to the negotiation of a loan with the International Monetary Fund. The crisis resulted in a devaluation of the Egyptian currency in 2016 by 48 percent and a high inflation rate. The Egyptian government had to introduce market reforms, which made it easier for Syrians to register businesses formally. Even so, Syrian business owners have routinely turned to social networks with both Egyptians and Syrians to help them navigate unwritten policies and access reliable information on legal and administrative requirements for operating in Egyptian markets.

Mobilizing Inherited Social Capital

Syrian businesses in Egypt initially relied for the most part on their existing or inherited social capital, based on relations with family, friends, and other members of the Syrian diaspora community and on former business networks previously established in Syria. For example, a businessman from Aleppo was able to replicate his Syrian manufacturing and trading company in Egypt thanks to social capital he had previously built in Syria.² This process included two stages: acting as a sales representative in Egypt for a former client he previously worked for in Syria—now focusing primarily on the Syrian diaspora market in Egypt, which formed 80 percent of his clientele—and then establishing businesses in his own name in order to expand into the wider Egyptian market. Interviews with Syrian grocery store owners reveal a similar path of doing business in “the Syrian way” to attract Syrian customers and thus achieve sufficient growth to expand.³ The Syrian way has additionally enabled Syrian businesses to reach non-Syrian clienteles as well. Indeed, researchers Mazen Hassan, Sarah Mansour, Stefan Voigt, and May Gadallah have found that Syrian social capital not only generates trust in business transactions between fellow Syrians in Egypt, but can also lead to Egyptian counterparts showing more favorable treatment toward Syrian businesses than they do toward Egyptian ones.

Crucially, social capital originally acquired in Syria helped Syrian businesspeople navigate complex legal and regulatory frameworks in Egypt, especially as official policies became more restrictive after the 2013 regime change. This navigation was key to growth. The inherited social capital enabled Syrian business owners to adapt to what political economist Amr Adly has called Egypt’s “baladi capitalism” or “familiarized markets,” characterized by low degrees of differentiation between social and economic ties. Egyptian small and medium-sized businesses routinely use social networks to lower transaction costs by obtaining market information that facilitates the conduct of business and raises competitiveness in a context of legal ambiguity. Central to business transactions are trust, solidarity, and recommendation (tawsiyya) or intermediation (wasta), which are often routinized in the form of clientelism.

Syrian businesspeople have similarly drawn on their past familiarity with clientelism in the Syrian political economy before 2011 in order to access work opportunities, favors, information, and other resources in Egypt. This inherited social capital has made their integration into Egypt’s familiarized markets relatively easy, allowing them to navigate the legal landscape and utilize loopholes. According to a corporate lawyer, for example, Syrian business owners rely on Egyptian intermediaries in a position to use tawsiyya, wasta, and bribes to circumvent official requirements and to capitalize on gray areas in Egyptian legal and regulatory frameworks and on de facto practices.⁴ Syrian businesspeople who cannot afford to register companies under an investor visa might seek nonetheless to comply with some legal requirements, while leaving others pending. Inherited social capital has enabled selective formality of this sort. In general, the importance of social capital increases with the size of business enterprises—measured by their working capital and turnover—underlining that social ties rather than the price of products may be the main determinant of relations with other market actors.

Practicing Selective Formality

These practices and forms of social networking are familiar for Syrian businesses. But as Adly also noted, shared affective ties and common interests that “can make access to economic opportunities possible, however imperfectly . . . make it impossible for those who are socially excluded.”⁵ This distinction helps explain the differing trajectories and fortunes of small versus medium or large Syrian businesses in Egypt since 2011. It also explains why even larger businesses face limitations in their ability to grow or diversify. After all, Syrian business owners do not benefit equally from connections with Egyptian state authorities or lawyers. Additionally, at the most basic level, whether or not to pursue formal registration depends on the size of the business and its prospects for growth. Smaller Syrian businesses tend to remain unregistered, operating informally and limiting their prospects of growth. In this respect, many have become part of Egypt’s large informal sector, which was estimated to account for 62.5 percent of employment in 2018.

Larger Syrian businesses arguably face a more complex set of choices, as they maneuver through different forms of business registration in order to operate in the context of a wider Egyptian economy that is best described as semiformal. Lacking trust in official administrative rules and regulations that Syrian businesspeople describe as opaque and often applied on a discretionary basis, they resort to a strategy of “selective” or “twisted” formality, which Adly defines as a business mode that combines formal features with occasional informal ones. Those who succeed in growing their businesses often follow the example of Egyptians in falling back on informal social networks to deal with gray areas within the Egyptian legal ecosystem and to augment their varying levels of access to information. Registering companies under the names of Egyptian friends or partners is one way to operate legally while bypassing legal requirements that are difficult to meet. For example, a Syrian entrepreneur who started an informal home-based food and beverage business followed an alternative path by registering a food production company and supermarket chain in partnership with an established Syrian businessman who had migrated to Egypt in the 1980s and who had acquired Egyptian nationality and connections with Egyptian officials. ⁶

The trajectory followed by the Aleppo businessman mentioned previously reveals that companies owned by non-Egyptians deploy both financial and social capital to move between the formal, the gray, and the informal zones. He complied with legal regulations to register a manufacturing company because he had the required $35,000 starting investment to do so. But he took advantage of the regulatory gray zone by creating an additional export company under the name of Egyptian friends, as only Egyptian nationals are allowed to own businesses exporting manufacturing goods. Selective formality enabled this businessman both to avoid paying considerable registration costs for his trading company and to maintain his original business model used in Syria, in order to export industrial parts outside Egypt.  

Conclusion

Thanks to their social capital, as well as business acumen, Syrian businesspeople have been able to re-establish themselves economically and socially in Egypt and to become competitive in domestic markets. But their market integration varies by size and formal status, and so the implications of the fall of the Assad regime in December 2024 may vary accordingly. The prospect of return to Syria, once remote, has become imaginable for all, although political and economic uncertainty remain a disincentive for many. Predictably, the highest rate of intended return is among Syrian refugees registered with the UNHCR, at 42 percent as of January 2025. This might not apply to the same extent to other categories of Syrians in Egypt, but as small businesses in the informal sector are the least integrated, they are most likely to repatriate as soon as conditions in Syria allow. Conversely, arger businesses, having invested so much in securing legal status and brand recognition, are more likely to remain in Egypt and continue contributing to its economy.

Since the war that erupted in Sudan in April 2023, some 1.2 million Sudanese civilians have sought refuge in Egypt, joining the 4 million Sudanese people already residing there. Many of these recently displaced people run their own businesses. However, their experiences have been markedly divergent, shaped largely by their level of preexisting financial and social capital. Established medium and large Sudanese businesses have demonstrated remarkable adaptability, proving able to transfer their businesses to Egypt and expand there, thanks to their substantial financial capital, offshore bank accounts, and transnational business networks. Their story is one of continuity, presenting a long-term strategic opportunity for business expansion and geographical diversification. Conversely, micro and small Sudanese businesses, which have limited financial resources and business networks and no offshore bank accounts, have been pushed into Egypt’s informal sector and therefore face persistent uncertainty and regulatory challenges. Their story is one of survival and represents a short-term strategy for maintaining activity, while larger firms are better endowed to pursue investment-oriented approaches.

The trajectories of these Sudanese businesses have also been strongly impacted by the unprecedented tightening of Egypt’s migration policy toward Sudan after the outbreak of war. Until then, Sudanese citizens had enjoyed visa-free entry and reciprocal rights of residence, work, and property, reflecting the unique and long-standing—albeit fluctuating—relationship between the two countries. But starting in 2023, the Egyptian authorities tightened entry and residence requirements for all Sudanese people and introduced obstacles to the registration of new businesses. These decisions hit small businesses particularly hard, as illustrated by the trajectory of many Sudanese newcomers who settled in Faysal, a densely populated neighborhood of Cairo that is a migratory hub both for foreign communities and for rural Egyptians due to its central location and relative affordability. Although Egyptian authorities have declared that they still wish to attract Sudanese investment, their policies since 2023 have fluctuated, mainly benefiting medium and large entrepreneurs.

Micro and Small Informal Businesses in Faysal

Many displaced Sudanese people operate small and micro businesses in Faysal, with some businesspeople resuming the same trades they previously undertook in Sudan while others shift to new industries. All have to contend with the same limitations as the large number of Egyptian micro and small enterprises operating in the country’s informal “baladi market,” which was estimated to represent approximately 50 percent of Egypt’s GDP in 2022 according to the Egyptian Ministry of Planning and Economic Development.¹ Like these Egyptian businesses and many of the Sudanese businesses that settled in Faysal before the war, the recent Sudanese businesses are predominantly unregistered, operating outside the official tax and regulatory systems. But the newly displaced Sudanese civilians face additional heightened vulnerabilities. Chief among these are the challenges of securing residency, which restrict mobility and increase the risk of deportation; a sharp decline in purchasing power since the war; and limited familiarity with Egypt’s market conditions.

Many Sudanese businesspeople settled in Faysal in 2023 because of its affordability and their prewar connections with Sudanese people already living there and owning apartments. Early newcomers had the financial means to afford rent for residential and commercial spaces, but the drastic depreciation of the Sudanese pound since the beginning of the war reduced the value of savings, whether held in cash or in Sudanese banks. At the same time, the increasing number of Sudanese civilians arriving in Cairo in the space of a few months and urgently looking for accommodation led to rent inflation that has disproportionately affected later arrivals from Sudan. Numerous Sudanese-run businesses have nonetheless persevered—such as restaurants and cafes, grocery stores, and beauty salons—catering to a mainly Sudanese clientele. Generally family-run, they rarely employ more than two or three workers and stock Sudanese products that are mostly imported to Egypt illegally from Chad, Sudan, or the United Arab Emirates (UAE). They contribute to a sense of belonging and identity and to a process of homemaking in a foreign environment, but their concentration in a single neighborhood also fuels competition between them.

Sudanese micro and small businesses must clear several hurdles. Foremost is their limited access to liquidity and bank credit, exacerbated by the collapse of Sudan’s banking system and the widespread lack of bank accounts among Sudanese people in Egypt. Those who already hold accounts with the Bank of Khartoum or Faysal Bank—both Sudanese institutions—convert their Sudanese savings into Egyptian pounds through Bankak, the only functional Sudanese digital application. Exchanging money outside the formal banking system is considered illegal, and digital applications such as Fawry are not accessible for non-Egyptians, and so conversion is often done through informal Sudanese brokers (samasirah) working out of their homes or shops. These brokers may additionally provide money transfer services between Sudan and Egypt in order to supplement their income. Sudanese individuals who can afford the initial deposit of $1,000 (50,000 Egyptian pounds) may open an investment bank account, which is required to register businesses under Egypt’s 2017 investment law. However, according to our interviews, many avoid engaging with the formal financial sector, either because they distrust the banking system or because they may have to justify the source and purpose of deposits to Egyptian authorities.

Further complicating matters for newly arrived Sudanese civilians is the requirement to obtain official residency in Egypt to be eligible for formal banking. Those Sudanese individuals registered with the United Nations High Commissioner for Refugees (UNHCR)—a population group that has grown by 955 percent since the start of the war, in part due to the severe tightening of official entry and residence regulations—are excluded from the banking system entirely. The UNHCR and affiliated community-based organizations offer small grants to help refugees start businesses, but these are limited in their amounts and oversubscribed. Thus Sudanese people in Egypt cannot rely on official aid or mainstream credit options. Those of them who hold tourist visas, must renew them every few months, making it difficult for them to open bank accounts.² In parallel, Egyptian authorities have imposed stricter checks on new businesses, while the security clearance process that business owners must undergo has become more opaque and complex.  

Sudanese entrepreneurs that operate informally and have a precarious legal status are also more vulnerable to police crackdown, demands for bribes, sudden closures, and sometimes even deportation from Egypt. Moreover, business owners often depend on informal networks of family, friends, and fellow migrants for loans, shared resources, and labor. This form of social capital creates a pool of trusted suppliers and customers, reducing dependence on formal institutions. Indeed, remaining informal can itself be a survival strategy, enabling Sudanese entrepreneurs to navigate a precarious regulatory environment. But although this approach provides a measure of resilience, it also perpetuates vulnerability and uncertainty, as Sudanese micro and small businesses must continue to interact with Egyptian migration authorities and law enforcement agencies. These multiple intersections drive the Sudanese businesses further into the large informal sector of Egypt’s political economy—unregistered yet under the eyes of the state. The instability in Sudan further complicates any attempt at long-term planning, as most entrepreneurs still hope to return home. Many entrepreneurs in neighborhoods such as Faysal, feel trapped due to the near impossibility of travel, the lack of meaningful opportunities for expansion, and the precariousness of their legal and economic status.

Medium and Large Businesses with International and Egyptian Connections

Operating conditions differ sharply for medium and large Sudanese enterprises—defined as having twenty employees or more—that relocated to Egypt after the war. Many have been able to reestablish themselves in Egypt by transferring or expanding existing businesses from Sudan, drawing on savings and business accounts they already held, and deploying their prewar know-how and connections in both Egyptian and international markets. Crucially, they have benefitted from a welcoming regulatory framework that afforded them long-term investment visas—allowing them to travel to third countries and return freely—and facilitated partnerships with Egyptian counterparts. According to informal discussions, the Egyptian authorities abruptly stopped issuing investment visas to Sudanese citizens at the beginning of 2025, the status of which remained unclear as of April.³

Rather than starting anew, many of these displaced Sudanese enterprises continued in the same line of business, transferring capital, goods, and expertise to Egypt, or opening local branches there while maintaining operations in Sudan to the extent possible. For example, according to one owner of a large business,⁴ although the war raised shipping costs, this did not prevent him from importing crops from Sudan and he was able to leverage extensive prewar business networks in Egypt and elsewhere, as well as his family business reputation, to weather the disruption with minimal loss. For him, as for others, prewar savings and international economic networks—including in Egypt—gave them access to market information and to local contacts who could facilitate bureaucratic processes such as business registration. Extensive fieldwork and interviews show that, since relocating to Egypt, larger Sudanese business owners have invested in diverse sectors including food production, external trade in crops and livestock, engineering consultancy music production, and online delivery services, mostly operating from middle-class neighborhoods such as Nasr City, Dokki, and Mohandessin in Cairo.

Liquidity and access to credit have greatly facilitated the registration and reestablishment of Sudanese businesses in Egypt. A considerable number already held foreign-currency accounts outside Sudan, often in the UAE, protecting them from Sudan’s currency volatility before the war and from the collapse of the Sudanese banking system following the war. Holding offshore accounts additionally made it easier to cope with the effects of international sanctions imposed on Sudan by the United Nations, United States, and European Union in the 1990s and 2000s, which have included asset freezes and travel bans. Businesspeople with international accounts could obtain residency in the UAE, thus enabling their freedom of movement, particularly to Egypt. In fact, many already owned apartments (mainly in Cairo and Alexandria), held accounts in Egyptian banks, and were familiar with local market conditions. Therefore, for medium and large Sudanese businesses, operating in Egypt has been about continuity rather than survival. The fact that chambers of commerce in Sudan and the Sudanese embassy in Cairo have continued to function has further assisted the businesses’ reestablishment.

Freedom of travel has been fundamental to the success of relocated larger Sudanese businesses. Smaller Sudanese business owners, conversely, are effectively stuck in Egypt: refugees and holders of tourist short-term visas can leave, but must pay $2,500-$3,000 for one-month tourist visas in order to re-enter the country. The Egyptian authorities moreover appear to have stopped issuing new visas to Sudanese citizens since 2023, even if this not a formal practice, and so owners of smaller businesses are hit hard. Conversely, larger business owners who have been able to provide proof of minimum capital or shareholding have obtained investment visas valid for up to five years that allow them to reside and conduct business in Egypt and reenter the country freely. The application process for investment visas was not easy, even before their reported suspension at the beginning of 2025. But businesspeople seek them because the travel mobility they afford allows them to connect to global markets, broaden their customer base, and facilitate partnerships with Egyptian and international counterparts.

The strategies of larger Sudanese businesses in Egypt differ markedly from those of their smaller counterparts in Faysal. They invest heavily in marketing and branding, using social media platforms such as Instagram extensively to target a middle- and upper-income customer base that is not exclusively Sudanese. These businesses boast professional websites and stylish business cards and offer new services such as online ordering and shipping within Egypt and abroad (which was uncommon in Sudan before the war). Some also organize huge commercial bazaars—a largely imported practice from Sudan—at which Sudanese vendors register to sell food, cosmetics, and other consumer products (in this case to mainly Sudanese customers). Larger businesses moreover participate in government-sponsored events such as the Sudanese Business Forum hosted by the General Authority for Investment and Free Zones, which seeks to promote commercial exchanges and enhance networking.

They additionally benefit from partnerships with Egyptian entrepreneurs, notably in the flourishing Sudanese music and catering industries, as our interviews show. Others subcontract Egyptian manufacturers or form joint ventures with them—for example, to process raw materials imported from Sudan and then sell finished products in Egypt and abroad. Besides enhancing commercial viability, partnerships function as a protective measure against sudden closures or regulatory hurdles. Although larger Sudanese businesses do not have to deal with many of the hurdles that smaller, informal businesses face—and the business models of medium and large companies align more closely with the development model Egyptian authorities seek to promote—these enterprises still grapple with broader landscape challenges. Among these constraints are the sudden changes in commercial regulations and laws; the cumbersome nature of bureaucracy (which entrepreneurs often contrast with the great ease of procedures in the UAE); the gap between formal rules and their application; and the opacity of decisions, as illustrated by the recent ceasing of investment visas for Sudanese citizens and continuing complexity around security clearance processes.

Distinct Trajectories Among Sudanese Businesses Displaced to Egypt

This analysis of two distinct Sudanese business milieus—whose interactions are minimal—demonstrates that Sudanese enterprises are operating under many of the same conditions as their Egyptian counterparts, but they are also dealing with unique constraints. Like micro and small Egyptian businesses in the baladi market, smaller Sudanese businesses operate amid uncertain, hostile regulatory frameworks—an environment that encourages informality and discourages long-term investments. However, contrary to Egyptians, Sudanese people have a precarious legal status that exposes them to deportation, and their limited market knowledge further compounds their economic vulnerability. This situation is worse for newly displaced Sudanese people because of the increasingly stringent residency requirements and diminishing purchasing power in Egypt. Conversely, larger enterprises continue to benefit from stable partnerships, secure assets, and expansive networks that enable long-term strategic planning, much like Egyptian medium and large businesses that rely on strong political connections. Some of these Sudanese business owners were already settled in Egypt prior to the war, while others had apartments and bank accounts there and possessed both knowledge of local markets and contacts among Egyptian counterparts. However, even these enterprises are not immune from the constantly evolving migration laws affecting Sudanese nationals.

Looking forward, the rapid shifts in the Sudanese context—exemplified by the takeover of the Sudan capital Khartoum by the Sudanese Army Forces in early 2025—are likely to impact smaller and larger businesses differently; while many small enterprises may return to Sudan, medium and large enterprises are expected to remain in Egypt. For the former, inflation and rising rent prices, combined with competition between small businesses, depress profit margins, with little prospect of future improvement. Larger business in Egypt can better afford to wait for stabilization in Sudan thanks to their established market advantages and to their success in maintaining a transnational presence to support their long-term investment.

The Egyptian market has long been attractive to Yemeni entrepreneurs, reflecting the two countries’ cultural and linguistic similarities and strong political and commercial ties. For decades, Yemenis could reside in Egypt without residence permits, enabling Yemini entrepreneurs to establish companies in sectors such as domestic trade, import and export, and food service. And while, in recent years, Egyptian authorities have modified entry and residence regulations for all non-Egyptians—partly in response to the influx of thousands of Yemenis fleeing their country’s civil war—Egypt still offers numerous comparative advantages: large domestic markets, political stability, improvements in business registration for some categories of enterprises, laws protecting foreign investment, tax and administrative incentives, and customs exemptions.

Yet access to these advantages is not even for all entrepreneurs. Egypt’s shifting migration policies and entrenched structural inequalities have shaped the experiences of the Yemeni diaspora community profoundly. The result is a bifurcated Yemeni expatriate business community: holders of financial capital among Yemeni newcomers are more easily able to join the established business community and find investment opportunities, whereas those with lesser means—a large majority—experience difficulty accessing private and public services, obtaining foreign exchange, or finding work, and face dwindling financial resources. Social capital, in the form of solidarity networks and community-based organizations, is therefore playing a crucial role in facilitating business opportunities for capital holders and ensuring survival for the rest.

The Role of Social Capital in Meeting Challenges

Despite the opportunities available to them, Yemeni investors in Egypt face challenges that hinder investment and undermine financial security. Interviews for this essay indicate that the government’s legal and regulatory reforms, introduced since 2017 to improve the investment environment, have also added complexity.¹ Smaller Yemeni entrepreneurs face restrictions on business registration, protracted administrative procedures, and the requirement to obtain security clearances. Compliance means increased project costs and longer implementation time frames. The head of a Yemeni community association in Egypt, Omar Babtain, argues that larger enterprises can hire lawyers and certified public accountants to obtain licenses from the relevant authorities and meet financial reporting obligations, but smaller investors may lack adequate understanding of the licensing and security clearance procedures. Challenges to the Egyptian banking system and financial market have reduced banking loan services and limited access to credit, especially for small and medium enterprises and start-ups.

Thus, many new Yemeni entrepreneurs in Egypt in general have to rely heavily on social capital in determining their investment decisions, just like their counterparts in the Egyptian private sector do. Personal ties and networked relationships facilitate successful navigation of both formal procedures and informal practices. Social capital builds trust and facilitates the exchange of information between private businessmen, government officials, and customers. This exchange has enabled Yemeni investors arriving after the Yemeni civil war began in 2014 to capitalize on the experience and market knowledge of the Yemeni business community already present in Egypt, further enhancing their integration into the Egyptian market and helping them expand their businesses. Thus, social capital not only offers a support network, but also plays a crucial part in shaping the trajectory of Yemeni investment in Egypt by helping to identify target sectors, facilitate commercial operations, and overcome obstacles.

Legacy Enterprises

Established commercial ties and personal relationships prior to the war’s outbreak helped Yemeni investors with the decision to enter the Egyptian market and then with adapting to relevant laws and regulations and building reliable partnerships. Formation of the Yemeni Business Council in May 2021 also helped Yemeni businesses explore opportunities for investment and expansion. This council, along with the Council of Yemeni Community Dignitaries, helped formalize networks in the food, catering, textile, and real estate sectors. Some investors have extended existing businesses from Yemen, establishing new branches in Egypt, while other investors have drawn on their in-depth knowledge of the domestic market and its needs in order to partner with overseas companies.

For the period 2001 to 2021, Yemeni investments reportedly totaled a cumulative $12 billion (amount cited by the State Information Service). These investments were distributed across numerous areas: general retail and wholesale trade, import and export (particularly of food and consumer goods), poultry production, computer programming, garment production, tea production, air freight, carton manufacturing, restaurants and cafes, schools and medical centers, real estate, and media production. Yemeni investments in real estate alone were estimated at over $4.5 billion for the period 2014 to 2019, with Egypt’s New Administrative Capital receiving approximately $200 million by mid-2024. A considerable share of these assets belonged to the total number of Yemeni-owned large enterprises, whose number stood at forty-five in 2024.² Some of the enterprises would likely have transferred their registration, regulation, and import and export licensing from the Ministry of Trade and Industry to the General Authority for Investment and Free Zones, established by Investment Law No. 72 of 2017, which offers various tax exemptions and customs advantages to non-Egyptian companies mainly operating in designated investment or free zones.

The influx of more affluent Yemenis since 2014 has coincided with emerging trends among the Egyptian upper–middle class and wealthy elites. Historically, the Yemeni expatriate business community has been mainly concentrated in the Dokki Faisal and Manial neighborhoods of central Cairo, but in recent years, there has been a marked transfer  to affluent suburbs and satellite cities such as New Cairo, Sheikh Zayed, and 6th of October. Yet many middle-class families still face challenges in accessing private and even public services and “struggle to maintain their social status as their assets have declined in the context of forced expatriation.” Indeed, Alya Mohammed al-Mahdi, a researcher at the American University in Cairo, argues that “as their financial situation worsens over time, they may eventually fall into the third category [of Yemenis from lower socioeconomic backgrounds], requiring external financial assistance due to the hardships of finding work and the financial restrictions associated with their residency permit.” Egyptian authorities’ closing of three private Yemeni schools in early 2025 increases these difficulties, as Yemeni Ambassador Khaled Mahfoudh Bahah confirmed. The issue is of particular concern to middle-class families that seek to place their children in private fee-paying schools.

Medium, Small, and Micro Enterprises

Middle-class and wealthy Yemenis probably formed a majority of the diaspora community in Egypt up to 2014, which was estimated to number between 70,000  and 100,000  at that time. But Yemenis of limited income now form a much broader swathe of the community that grew severalfold after 2014. Recent estimates of the diaspora population in Egypt have varied widely. In early 2025, the Yemen embassy’s press officer, Baligh al-Mikhlafi, claimed that there were only 100,000 registered residents and some 150,000 “visitors .” But in 2020, he and other sources pointed to a total diaspora ranging from 500,000 to 700,000, while the Yemen News Agency (Saba) claimed 1.5 million. Only a tiny portion are registered with the United Nations High Commissioner for Refugees—8,255 Yemenis out of 941,625 registered refugees and asylum seekers  as of March 31, 2025—meaning that the vast majority of Yemenis living in Egypt are tourists, students, medical patients, or other temporary residents or others who have formally registered medium or small businesses.

Medium-sized Yemeni enterprises generally avoid registering with the General Authority for Investment and Free Zones due to bureaucratic complexities, unaffordable fees, and associated costs. Instead, they register under one of the company classifications  that allow for much lower starting paid-in capital. This is also the case for small and micro businesses, which face considerably more challenging conditions. Even then, the cost of starting a business amounted to 20.3 percent of per capita income in 2020, according to the World Bank. 

Not surprisingly, a major obstacle is therefore the lack of capital and severely limited access to commercial lending, limiting growth prospects and sustainability. Transfers from abroad play a significant role, as they do across the Egyptian economy in general; remittances constituted 4.9 percent of GDP in 2023, according to the World Bank. In general, lack of financing makes it harder to meet the requirements for formal registration. This in turn limits access to sources of credit for medium-sized enterprises, as well as increases their legal vulnerability in case of nonregistration. Micro enterprises—defined as having paid-in starting capital of less than EP50,000 (around $1,000) and fewer than five employees—are far less likely to register at all.

Conditions for Yemeni small and micro enterprises mirror those for their Egyptian counterparts. Indeed, the two overlap spatially with other lower-income segments of migrant communities, especially in Cairo neighborhoods such as Faisal, Dokki, Manial, Ard El Lewa, and El Behouth. According to the Central Agency for Public Mobilization and Statistics, 89 percent of 3.7 million economic establishments in Egypt in 2017 had fewer than five employees, with another 10 percent falling in the category of small enterprises. According to a paper published by the Economic Research Forum in Egypt in 2014, the majority of micro and small enterprises “operate informally, which in the context of such enterprises means that many fail to fully comply with legal requirements for businesses, such as licensing, registration and tax payments.” It further states that “operating informally has proved to have a negative effect on the[ir] productivity . . . and to reduce the likelihood of the enterprise’s owner moving out of poverty.” A study by the Organisation for Economic Co-operation and Development in 2025 noted that small and micro enterprises in Egypt have an advantage in avoiding the same financial and administrative costs associated with regulatory compliance for larger companies. But it also noted their exclusion from the banking sector, and underlined that a “significant portion of new business creation in Egypt appears to be driven by necessity rather than opportunity . . . due to a scarcity of job opportunities.”

The solution for many Yemeni enterprises, and for Egyptian counterparts, is to turn to the Micro, Small and Medium Enterprises Development Agency. Established in 2017 and then expanded as part of Law No. 152 of 2020 and its implementation statutes issued in 2021, the agency has thirty-one regional offices, 890 civil society organizations, and 1,900 bank branches associated with it, making it accessible to a wide beneficiary pool. It has become an ideal option for Yemeni investors, as it requires significantly less start-up capital and has much simpler registration requirements and bureaucratic procedures than the General Authority for Investment and Free Zones does for larger enterprises. Additional support comes through donor-funded programs such as the EU-funded Masar Egaby project, which helps Yemeni (and other migrant) entrepreneurs establish private businesses through life and business training and the provision of seed funding.

The opportunity to operate within a legal structure, at a reasonable cost, is important. But the broader difficulties of navigating Egyptian bureaucracy “are significantly exacerbated for migrants” in comparison to Egyptian nationals. Consequently, “access to essential services, from residency permits to passports or medical care, often hinges on the ability to leverage social connections.” Social capital, in short, plays a crucial role in helping Yemeni investors comply with administrative and legal requirements and bypass bureaucratic obstacles. In addition to facilitating their entry into the Egyptian market, it provides both financial resources and moral support.

Unregistered micro and small businesses rely heavily on social capital to compensate for their lack of commercial registration or access to formal channels for obtaining licenses or financing. They also rely on it to reach customers. This is typical of home-based micro enterprises, often run by women who sell services such as hairdressing; food preparation and delivery; handicrafts such as jewelry, baskets, and small bags; and perfumes and incense. These enterprises sometimes take online orders, but, generally, their operations are irregular and prone to interruption. Even small and medium-sized enterprises depend heavily on “productive family” bazaars sponsored by the embassy or youth and women associations from the community to sell their products. Yemeni community-based organizations that provide psychosocial support and job training—sometimes in tandem with assistance from international humanitarian organizations—complement social capital, but they, too, face significant challenges, “including the complexities of legal registration, which lead to financial constraints, administrative and operational challenges, and tensions with both the host and displaced communities.”

Conclusion

In addition to dealing with the war conditions and capital flight in Yemen since 2014, Yemeni investors in Egypt have also had to contend like everyone else with the fallout of the COVID-19 pandemic and Russia-Ukraine war. Not merely temporal, both events have severely affected the Egyptian host economy; they have impacted the very nature of Yemeni enterprises, the scale of the risks they face, their financing patterns, and their ability to expand or even survive. Yemeni investors of all sizes have faced new challenges, including the increasing costs and administrative requirements of obtaining legal residency, the restriction of opportunities for market expansion, the tightening official oversight of financial transfers, and the declining purchasing power of their customers. Social capital, whether exercised within the Yemeni diaspora community or among Egyptian counterparts and officials, increasingly appears insufficient to overcome bureaucratic and legal obstacles to business.

Consequently, while a significant portion of the Yemeni community has remained in Egypt, a number of entrepreneurs have returned to Yemen in the past few years, attracted by the relative stability of some parts of the country or by the significant growth of the real estate market in Houthi-controlled areas where there are restrictions on capital outflows due to international sanctions and banking restrictions. The future of the Yemeni business community in Egypt will remain linked to political stability and security in Yemen, developments in the Egyptian economy, and the flexibility of Egypt’s regulatory environment as it applies to foreigners. At least for today, the community is neither passive nor merely reactive—it continually seeks sustainable strategies for survival or repatriation, rather than simply making do with temporary residency or small-scale investment projects.

The head of a Libyan multinational company operating in Egypt since the 1990s recently said, “Egypt is a natural extension for Libyans. We’ve been doing business together for centuries. We’ve got mutual interests.”¹ Egypt’s market faces significant economic challenges, but it offers relative stability. It is especially attractive to Libyan investors given persistent political instability, insecurity, and institutional fragmentation in their own country. The businessman’s comment moreover conveys not only the central role that the Libyan business community in Egypt plays in forging cross-border links, but also the way in which its transnational activities are intertwined with the bilateral interests of the two states.

Most striking about Libyan business projects and investments in Egypt, however, is that they primarily emanate from Libya’s public sector, not its private sector. In fact, the Libyan business community in Egypt maintains close links with the Libyan public sector to secure its economic interests. These close ties are based on privileged relations with government political structures, enabling members of the business community to extend their influence by obtaining strategic contracts, gaining access to key institutional positions and facilitating public-private partnerships in Libya and abroad. As significantly, this business community does not form an entrepreneurial diaspora in Egypt, so much as a transnational business community with longstanding market activities in Libya, Egypt, and other countries in the region. Indeed, compared to Libyan private businesspeople who have sought to operate in Egypt since the Arab Spring in 2011, only the transnational Libyan large businesses have maintained a lasting and significant presence in the Egyptian market, by being able to cope with the strong presence of Egyptian state-owned enterprises and foreign competitors.

A Hobbled Libyan Private Sector

The Libyan private sector has remained underdeveloped, despite a policy of relative economic liberalization (infitah) that began in the early 1990s. Before this liberalization process was initiated, a state economic model prevailed, characterized by the predominance of the public sector over the majority of the country’s business sectors, with a strong concentration on the hydrocarbon industry. Unlike in most developing economies, where the private sector generally accounts for more than half of national economic activity, in Libya its weight has never exceeded 5 percent. Due to the regime’s banning private-owned property from 1978 until a gradual opening up in the early 1990s, private sector entrepreneurs were forced to develop mainly within the informal economy or leave the country to pursue their activities elsewhere in the Middle East and North Africa region or in Europe. For example, the Libyan tycoon Hassan Tatanaki started his entrepreneurial activities from abroad, particularly from Egypt, where his family had fled in the 1970s. He bought the multinational group Challenger Limited in 1991 and became its chairman, specializing in oil service and drilling, before eventually returning to Libya to expand his activities between the two countries.

Affected by the international economic sanctions imposed on its economy, the Libyan regime began a transition toward partial economic liberalization in the late 1980s and early 1990s. Thus, like Tatanaki, some Libyan businesspeople who previously based their activities abroad began to return to Libya and develop their activities within a transnational framework. One of the regime’s objectives in allowing certain businesspeople to return to Libya to further develop their businesses was to exploit their international networks to circumvent the financial restrictions imposed by the freezing of Libyan assets. The regime mobilized these businesspeople as intermediaries, particularly to facilitate the transfer of funds abroad. Collusion between the private sector and the state guaranteed economic advantages for political and business elites while enabling the ruling elites to consolidate a “political economy of obedience.” By allowing the privatization of certain sectors and offering investment opportunities, the regime strengthened its support base among elite economic players, who became dependent on the government to maintain their privileges in the country.

Public Versus Private: Libyan Investment in Egypt

Public sector dominance in Libya’s domestic economy continues to be reflected in Libyan investments abroad, which are made primarily through the country’s sovereign wealth fund. Created in 2006, the Libyan Investment Authority (LIA) was designed to capitalize on surplus revenues from hydrocarbon exports: Libya has the largest gas and oil reserves in Africa, accounting in 2023 for 60 percent of its GDP, 90 percent of budget revenue, and 95 percent of export value. The Libyan Foreign Investment Company carries out most LIA activities in Egypt, in the form of shareholding or investments. However, while the public sector appears to be maintaining its dominance, it is very difficult to identify “who’s who” because Tripoli’s state investment strategies are implemented through a multitude of institutional structures that jointly finance various subsidiaries with opaque ownership and complex financial set-ups.

In Egypt, an estimated 1,165 companies specializing in tourism, real estate, finance, and agriculture are reportedly affiliated with Libya. For example, some Libyan institutions hold shares in Egyptian entities. Libya’s investment share in Egypt’s banking sector is particularly lucrative: the Libyan Foreign Bank holds substantial stakes in Egyptian banks, notably 38.76 percent of the Arab International Bank and 27.71 percent of the Suez Canal Bank. Another example state investment strategy is the development of public-private partnerships through, for instance, injecting Libyan public funding into joint stock companies with fairly flexible statutes and participating in the financing and managing of projects in urban development or real estate. The One Ninety project launched in 2018 in New Cairo involves a partnership between the Egyptian private company Landmark Sabbour and the Libyan Foreign Investment Company’s subsidiary Lakeside for Real Estate and Touristic Investments.

The nature of Libyan state investment in the Egyptian market has been complicated by the misappropriation of public funds used for this purpose in Libya. Before 2011, individuals close to Libyan leader Muammar Gadhafi reportedly used state funds to invest in Egypt’s real estate, hospitality, and other sectors, establishing complex financial schemes for their private enrichment. Some fled to Egypt after the fall of the Libyan regime in 2011, and still maintain their business activities there. Consequently, acquiring control of the investment of national wealth, both within and beyond Libya’s borders, has been a primary objective for rival political factions in the country.

Predictably, the principal vehicles for Libyan state investment in Egypt have also witnessed such factional struggle, especially following the emergence of two rival governments in 2014, based in Tripoli (west) and Benghazi (east) respectively. This prompted competition for control over the LIA headquarters in Egypt and over the appointment of staff. In addition, the kleptocratic privatization of Libya’s public funds has paved the way for political actors in government and their networks to use the funds as a source of enrichment and economic opportunity—for instance, using public office to capture state funds, whether by selling off state assets or by awarding preferential contracts.

The importance of capturing state funds and public procurement contract has prompted private business entrepreneurs increasingly to become involved in Libyan politics. Most notably, several members of the Libyan transnational business community in Egypt stood in Libya’s presidential election, which was scheduled for December 2021 but ultimately canceled. This trend extends the dynamics of kleptocratic privatization, in which additional economic actors seek entry to the political domain in order to gain strategic influence in the management of public funds and contracts—and therefore of state investments abroad—thus optimizing their transnational business activities.

The Libyan Private Sector’s Difficult Renewal

In theory, neighboring post-2011 Egypt should offer the Libyan private sector a viable alternative, given the Egyptian government’s efforts to attract foreign investment and its support from the International Monetary Fund and other international financial institutions. Mega real estate projects initiated by the administration of Egyptian President Abdel Fattah el-Sisi offer long-term investment opportunities, as do diverse sectors including financial services, energy, and tourism. However, this potential is not easily realized, as the Egyptian market presents considerable barriers to Libyan private companies seeking to operate there. The strong presence of local and foreign companies, largely specialized and well-established in various Egyptian economic sectors, makes it difficult for underdeveloped Libyan private sector businesses to compete. Libyan private companies generally lack a competitive edge over Egyptian companies that possess both the necessary expertise for development projects and the requisite skilled labor. Indeed, if the private sector’s share of Egypt’s GDP reached nearly 70 percent in 2019, the obstacles in the Egyptian business environment are difficult for small and medium-sized enterprises to overcome. This business environment, which appears either saturated or very exclusive, does not seem to be conducive to the renewal of the Libyan private sector in general.

It is especially hard for new Libyan players to set up businesses in Egypt. As noted, most Egyptian private sector activities—as well as established Libyan transnational business activities—are facilitated by long-standing connections with powerful state agencies and leading businesspeople. Egypt’s military, in particular, favors Egyptian private companies to deliver major public works that it manages—all while maintaining its own significant businesses that benefit from tax exemptions, privileged access to public contracts, and partnerships with private investors.

Thus, the post-2011 economic environment in Egypt appears to merely support a continuation of the past; in other words, the main Libyan business actors in Egypt are still those that constitute the decades-old transnational business community. In the 1980s and 1990s, these actors consolidated their influence by taking their business outside Libya. At that time, the lack of economic opportunities in Libya—combined with the economic liberalization already underway in Egypt since the 1970s and accentuated by structural adjustment reforms in 1991—provided a favorable environment for these entrepreneurs to develop their activities, first from abroad and then between the two countries. Their long-term presence in the Egyptian market has enabled them to expand their operations and found and run large companies and even multinational conglomerates. Today, their activities extend to diversified and strategic sectors such as hydrocarbons, real estate, construction, services, tourism, and the manufacturing industry.

These well-connected businesspeople have sustained their businesses partly by diversifying their operating methods: they invest capital by acquiring shares or stakes in projects, while they continue to develop their own companies or subsidiaries that produce goods and services. For example, the Ghrghar Group, founded in Libya in 1993, has an office in Cairo and operates in Egypt through its subsidiaries, such as Ghrghar Construction and Ready Mix. The Group also has its own projects in Egypt, such as the Acacus restaurant chain on one side and the Raghad Tower development on the other, including the construction of commercial spaces in the Nasr City district, estimated at 41.2 million dollars and scheduled for completion in 2027.

Additionally, major Libyan businesses operating in Egypt tend to establish their main activities

in a broader transnational context, operating across Egypt, Libya, and the United Arab Emirates (UAE). Libyan businesspeople and private economic actors seem to find the UAE a more attractive destination for investment than Egypt.² The UAE business environment has a streamlined bureaucracy and substantial tax advantages, offering a more favorable operational framework. In addition, the Emirates do not have the same economic challenges as Egypt, most notably its chronic shortage of foreign currency and rampant inflation. The Ghrghar Group, Challenger Limited, and Alada, which are all large companies, have their headquarters in the UAE, as well as offices in Cairo and Libya. Moreover, actors of the transnational business community hold several citizenships and regularly travel between these three countries, where they temporarily reside to conduct their business. This transnational strategy allows this established business community to benefit from the stability and advantages offered by the UAE while maintaining a presence in Egypt.

The Influence of Geopolitics on the Business Environment

Egypt has established itself as a strategic hub for prominent Libyan business players, particularly those promoting a liberal politico-ideological vision and moderate Islam. Some players in the transnational business community have invested in both the Egyptian and Libyan media sectors to promote this vision and counter the influence of political Islam in the region. One notable businessman is Tatanaki, who invested 15 million Egyptian pounds ($2.73 million) in 2009 to launch the Egyptian Azhari television channel. The aim of this initiative was to promote the vision of a moderate and non-political Islam in line with the precepts of Al-Azhar, in opposition to the discourse of the Muslim Brotherhood and its media outlets, such as Al Jazeera. With Sisi taking power, Egypt has remained a favorable environment for transnational business community players committed to the same ideological line as those Egyptian power actors with whom they have close ties.

Some elite Libyan businesspeople have invested in the media sector to also promote their stance on developments in the conflict in Libya. In 2011, Tatanaki launched the Cairo-based Libya Awalan television channel, known for its opposition to the Muslim Brotherhood and Islamist political players active in Libya. In a similar vein, Mahmoud Shammam, former minister of information and spokesperson for the Libyan National Transitional Council, founded the Alwasat Media group in Cairo in 2013. This group includes a print newspaper, a radio channel, and a digital platform aimed at covering Libyan news while reflecting a critical view of the Islamist actors involved in the Libyan conflict. Specifically, this Libyan business community involved in the media held the same line as the Egyptians and Emiratis by supporting the authorities in eastern Libya and the armed forces led by Field Marshal Khalifa Haftar in their fight against terrorism and groups linked to political Islam—while also trying to thwart the influence of the government in Tripoli supported by Islamist militias and backed by Türkiye and Qatar.

Geopolitical Realignments and New Economic Opportunities for Libyan Private Actors

Since the October 2020 ceasefire agreement in Libya, the political and geopolitical divisions of the past have begun giving way to joint economic opportunities with Egypt. As one Egyptian businessman noted, “Political Libya is no longer at the heart of the issues. Today, we talk about Libya to do business there.”³ Indeed, a reconfiguration of ties between the two states has led to a mutually beneficial partnership between Cairo and Tripoli authorities—replacing the previous alignment of Egypt with the Benghazi authorities. The Tripoli and Cairo chambers of commerce have met several times within the framework of the Libyan-Egyptian Joint Higher Committee or the association of Libyan-Egyptian Business Entrepreneurs. This led to agreements in 2022 to strengthen trade relations, diversify investments, and establish joint free trade zones. For its part, Egypt is actively increasing its role in the Libyan market, both in the west and the east. Since 2021, Egyptian companies have recently been awarded significant reconstruction contracts by the Tripoli and Benghazi authorities, which are estimated to be worth $110 billion over ten years and will offer employment opportunities for up to three million Egyptian workers.

Changing political relationships are unlikely to usher in any major changes in the business model or composition of the Libyan private sector in Egypt, however. Libyan authorities have yet to leverage their newfound potential in order to improve access for underdeveloped Libyan private sector actors in the Egyptian market. The growth of mutual economic interests between the two countries is reinforcing the predominance of Libyan state investment in Egypt, and therefore the continuing quest of private actors to capture Libyan state resources. These dynamics promise to sustain the primacy of the already well-established Libyan transnational business community.