A year ago, Egypt's economy had been crushed by political turmoil. The Arab Spring had culminated in a military takeover and the installation of the current president, Abdel Fattah Al-Sisi. There were curfews and scenes of violence on the streets of Cairo. In the words of one Egyptian businessman, "everyone was looking to send wire transfers out."
This fall, a far different picture is emerging as the country makes a surprisingly quick—and in the West, largely unnoticed—recovery.
Though major challenges remain, investment is flowing into the country again. The International Monetary Fund forecasts healthy gross domestic product growth next year. And in August, when Al-Sisi called for Egyptian citizens to finance a long-planned expansion of the Suez Canal, money poured in.
"It was hard to find a bank that had (certificates) to sell," said John Shehata, who focuses on Africa and the Middle East for San Francisco-based law firm Orrick. Many of his friends and peers purchased the certificates, which pay 12 percent annually and have a five-year maturity. "(Egyptians) are trying to help the country, but they're also investing in something that might explode in growth."
Within about two months, the country's central bank said Egyptians had purchased $8.5 billion worth of investment certificates, according to the Associated Press. This month, the government contracted with companies to begin dredging the expansion of one of the world's most important waterways.
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Whether the canal project meets its ambitious timeline—three years—and whether the Egyptian economy's surprising rebound continues are both open questions. GDP growth in 2015 is forecast at 3.5 percent, according to a report issued by the International Monetary Fund on Monday. That's up from 1.8 percent in 2011, 2.2 percent in 2012, 2.1 percent last year, and 2.2 percent this year.
But the prospects for medium-term growth remain "modest," the IMF said. Growth is hampered by high jobless rates among young people and women, as well as government debt.
In the short term, the rebound is coming in sectors including energy, infrastructure and health care, reflecting the country's huge population of more than 83 million, observers said.
Abraaj Group, an emerging markets private equity firm with $7.5 billion in assets under management and more than 25 offices around the globe, invested $200 million in Egyptian companies in the first half of this year, compared with none last year. One company it invested in was Integrated Diagnostics Holdings.
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However, investors, especially those in the West, walk a narrow tightrope in Egypt. On one hand, Al-Sisi wasn't democratically elected, so some investors are reluctant to embrace the government publicly. On the other hand, the ouster of democratically elected Mohammed Morsi resulted in a decline in turmoil—which meant life, including investment and growth, could go on as normal.
"The real reason for Egyptian growth is that the army ... is ruling the country with the due order," Shehata said.
Investors from oil-rich countries such as and the United Arab Emirates invest in Egypt because it's in their interest to maintain the country as an island of relative stability and because of its prospects for growth, said Ahmed El Alfi, who also runs a Cairo-based venture fund, Sawari Ventures. Both nations are predominantly Sunni as well.
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The technology sector is growing, too. El Alfi is also founder of a five-building tech campus and accelerator, formerly part of the American University campus, that houses 85 start-ups. News Corp purchased one of the start-ups, and Samsung Ventures just invested in another, he said.
One of the start-ups in the campus is SuperMama, a content site that offers Arabic language information for mothers. Yasmin El-Mehairy founded it in October 2011. After the unrest, only two advertisers were confident enough to book ads on her site.
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"There was also the problem of safety. We are a 90 percent women team. In the summer of 2012, the area around our office was completely unsafe because of the riots," she said. To keep the company afloat, "we had to beg, borrow and steal."
After this more stable year, the company, whose offices overlook Tahrir Square, started growing again. Now SuperMama has 1.35 million monthly visitors, a staff of 14, and is operating on a break-even basis.
"The point is, we've survived the hardest time in Egypt's economy and we're growing," she wrote to her venture investors recently. "Our small team is as dedicated and enthusiastic as ever."