Decision to sell citizenship stokes controversy in Egypt

New financing sources are needed to support Egypt's cash reserves, cut its trade deficit, and relieve pressure on the Egyptian pound. This is especially significant given the rise of the exchange rate, with a single dollar costing around 31 pounds.

The currency crisis was worsened by the reluctance of foreign investors to enter the Egyptian market, coming alongside a rise in the national import bill. At the same time, around $22 billion in what is known as foreign 'hot money' – a term for immediately available and quick-moving international funds – left the country, although some of it has since started to gradually return.

Since the announcement of the citizenship investment incentive in March, debate on it has raged across the country and all over social media.

Before the decision, nationality was not conferred not when financial conditons were met or after a certain period of residency, but as a sovereign act as an honour for worthy recipients.

Some welcomed the change, seeing the potential for a significant increase in national income in foreign currencies via investors who need citizenship to own real estate.

Others were concerned at the timing, as the global economy deteriorates, and the implications of population increase for stretched national resources with Egypt already the most populous country in the Arab world.

The policy is designed to secure foreign currency from people who are already in Egypt. That includes refugees from Libya, Syria, Yemen and Africa, among others. They are often people with businesses in Egypt but who have different nationality, leaving them exposed to residency problems.

Previous methods to raise funds have been less comprehensive and did not generate enough returns. The government used the movement of vehicles as a route to raise foreign currency. It exempted fees and customs duties for Egyptians living abroad and wishing to ship cars into the country, in exchange for a cash amount paid by the expat in foreign currency to the Egyptian Ministry of Finance.

Five years later, the owner would be able to recover the amount in Egyptian pounds at the exchange rate declared at the time of withdrawal.

High-interest investment certificates in US dollars were also issued, in an attempt to attract funds from expatriates.

Common global practice

Many Arabs move across borders and re-evaluate their lives in new countries. Some tend to buy citizenships. With wars and political turmoil scattering millions of refugees all over the world, many wealthy families opt for securing their future this way to set up in another country.

Some European countries grant citizenship through investment, while others, such as Greece and Portugal, offer residency only in exchange for investment.

Nations in the Caribbean also grant citizenship to investors in return for pumping money into the state treasury, a global procedure commonly known as Citizenship by Investment (CBI), carried out under legal frameworks regulated by the governments of the citizenship-granting countries.

This set of island countries -- St. Kitts, Nevis, Antigua and Barbuda, St. Lucia, The Dominican Republic, Grenada --  offer citizenship in return for payments starting at $100,000 and going up to between $2 million and $3 million.

Investors are eligible for citizenship within a period ranging from 6 to 12 months after taking one of the paths that qualify them to obtain citizenship: via purchasing government bonds, making a contribution to the state fund to be used to improve the country's economy, infrastructure, or develop certain sectors, or from investment in real estate. 

European and non-European countries that grant CBI provide to new investors all the advantages that their citizens enjoy. These naturalised citizens gain the privilege of wide markets, education and health services, and the possibility to travel to more than 130 countries with their new passport, according to the Dubai-based firm Citizenship Invest.

Setting the price and changing the law

In 2018, the Egyptian House of Representatives approved amendments to the Residence and Citizenship Law that allowed authorities to grant residence status to resident foreigners who make a deposit of no less than 7 million Egyptian pounds ($230,000 at current exchange rates) or its equivalent in foreign currency, offering Egyptian citizenship five years later.

More recently, the government issued Decree no. 876/2023 authorizing the Egyptian Prime Minister to grant citizenship to foreigners in return for buying real estate, investing, or depositing a refundable amount or a non-refundable deposit. A unit was established within the Council of Ministers to examine naturalisation applications.

Foreigners can now obtain citizenship by investing $300,000 in the purchase of a state-owned property instead of the $500,000 stipulated in the 2019 decree, with the possibility of the amount being paid in instalments within a year, during which the buyer obtains a tourist residence until the payment of the amount is completed.

They may also invest $350,000 in the capitals of investment projects instead of the previously required $400,000, provided that a non-refundable amount of $100,000 be deposited in the public treasury.

As for deposits, while the law previously required foreigners wishing to obtain the Egyptian citizenship to deposit $750,000 for a period of five years or $1 million for a period of three years, the new decree requires a three-year deposit of $500,000, to be recovered after three years without any interest and in Egyptian pounds at the exchange rate at that time.

To curb concerns, the government established its naturalization applications examination unit, which reports to the Prime Minister and includes representatives from the Ministries of Foreign Affairs, Interior, Investment and International Cooperation, and other concerned security authorities.

The unit examines applications and gives initial decision within three months from the date of applying for an Egyptian passport.

Opinion divided among experts

Amid the state's aspirations and the slow return of foreign investment and tourism to Egypt, conflicting opinions have emerged since the announcement of the law. Several experts surveyed by Al Majalla did not welcome the idea.

Dr. Fakhry Elfiky is professor of economics at  Cairo University and a former assistant executive director at the IMF, as well as head of the Parliament's Planning and Budget Committee. He said the special amendments to grant Egyptian citizenship to foreigners are not the solution to resolve Egypt's crisis.

"The targeted  outcome will not bear fruit as hoped by those who put forward this proposal, as global conditions and their repercussions on many countries are not conducive to attracting foreigners and Arabs to obtain Egyptian citizenship in light of the crushing crisis," he told Al Majalla. 

Elfiky pointed to laws in some Arab countries that do not allow dual citizenship, pointing out that Egypt has no choice but to improve the investment climate to attract direct foreign investments, from Arab neighbours and the wider world.

This would be the broadest and only gateway to obtaining tens of billions in foreign exchange through production and manufacturing for the purpose of export, in addition to further facilitations for the Egyptian, Arab, and foreign private sectors, he said.

Elfiky does not expect the amendments to the nationality law to have any positive effect at the present time. This is not a period of economic prosperity, after all, and foreigners will not find in Egypt an attractive opportunity.

He called instead for focusing on the added value provided by foreign investment, underlining the importance of the ambitious programme that the government presented, albeit late, to investors as part of its plans to list over 40 companies on the stock market, starting with Wataniya and Safi.

International lawyer and advisor to the head of the Suez Canal Authority, Khaled Abu Bakr, opposed the idea and wrote on his social media page: "I will always be against granting citizenship in exchange for money. Granting investors and their families permanent residency is sufficient."

Engineer Magdy Kaysar agreed with Abu Bakr, saying: "There is no advantage of Egyptian citizenship that is attractive to foreigners or Arabs, except for restricting freedom."

Yet others take the opposite view.

Salwa Stephan, 58, told Al Majalla: "Many peoples of the world, even those who enjoy a comfortable life in their countries, seek to obtain other citizenships. If any political tension occurs, wars break out, or their countries are exposed to any natural disasters, they can move to another country, not as refugees, but as citizens who enjoy their full rights."

She welcomed the step, which she considered an opportunity to inject new investments in the Egyptian economy with a focus on Arab businessmen residing in Egypt who own valued projects that provide job opportunities for many Egyptians.

Egyptian TV director Reda Shawky said that "obtaining the citizenship of another country is not an Egyptian novelty or invention: it exists in many other countries with attractive offerings to expatriates."

Al Majalla asked Shawky what exactly Egypt can offer to a foreigner to pay thousands of dollars to obtain citizenship. He answered: "Egypt has some significant sources of funding in foreign currencies, including tourism, archaeology, and an attractive environment for international filmmakers, which constantly faces refusal."

Syrian man clings to his nationality

Mohie Abdel Ghafour takes pride in his Syrian nationality, which means the world to him.

Despite living in Cairo since 1989, working as a manager of a Syrian shawarma restaurant in the suburb of Heliopolis, Abdel Ghafour ruled out the notion of obtaining a second nationality, saying he could have acquired Turkish citizenship easily but refused it.

He added that he has lived in Egypt for 34 years, owns real estate, and obtains residency every year without any obstacles, along with his wife and two children.

Abdel Ghafour considers Egypt the mother of the world, or "Um al-Dunya" as locals call it, so why would he need its citizenship? "It is the mother that opens its arms to all immigrants and refugees, treats them as citizens who have rights and duties, and offers them economic opportunities without any obstacles," he said. 

The controversy took hold on social media, where fierce attacks and waves of criticism were launched against the sale of citizenship, mostly by the Muslim Brotherhood and their sympathisers.