Using an Agent or Distributor in Egypt

An Expert's View about Agents, Sales Rep in Egypt

Last updated: 13 Mar 2011

Egyptian law concerning commercial agency agreements is among the most liberal in the Middle East. The law is neutral concerning exclusivity, compensation is not required to cancel an agency, and there is no minimum notification period for cancellation. There is no requirement that the agent authorize the import of the foreign principal's products into Egypt, or that the importation take place through the agent. Importers of any product must be separately registered, under another law. Commercial agents must register the existence of their agency with the Ministry of Trade and Industry’s Commercial Registry Department, giving basic facts about the agreement, including the amount of commission to be received on sales. The foreign firm itself faces no local registration requirement. The commercial agency law is also neutral about dispute settlement procedures leaving this to the parties to decide, preferably in writing at the time of appointment of the agent, and in advance of a dispute and on the amount of commission due an agent.

 

Commission rates vary according to the type of product or service, volume of sales, and effort needed by the agent. The larger the volume of sales is, the smaller the commission. For commodities such as rice, wheat, sugar, lumber or cotton, the commission ranges between 1-3%; for chemicals and foodstuffs 3-5%; for medical equipment, earthmoving equipment, office/business equipment, about 10%; and for expensive laboratory and scientific equipment 15%. For major projects such as a complete civil engineering project, the commission is typically 1-3%. In tenders, the commission is calculated in the quoted bid. If a bidder reduces the bid price, the agent typically is asked to share in the reduction. Commission rates must be reported in bid packages for government tenders, with the government reserving the right to reduce any commission it deems extravagant. Commission rates also must be noted in the Ministry of Trade and Industry’s Commercial Registry documents signed by the Egyptian agent. Agent exclusivity is not required by law; the majority of U.S. firms have one or two Egyptian agents for different products, although a few have more.

 

Agencies can be split geographically and/or by product, although this is generally avoided in a country like Egypt, where activity is centralized around the capital city of Cairo. If there is a geographic split, it is generally Alexandria with or without the Delta cities on one hand, and Cairo and the Nile valley on the other. Agencies also can be split between private and public customers, with one agent specializing in tenders and others handling private sector customers. Agents often appoint subagents to cover smaller cities.

 

The U.S. Commercial Service offers the Gold Key and International Partner Search programs that are designed to assist U.S. companies identify local agents/distributors for their products. For further information, U.S. business representatives should contact the nearest Department of Commerce Export Assistance Center in the United States or the Commerce Department's Trade Information Center at 1-800-USA-TRADE (1-800-872- 8723)

 

Recommended business networks in Egypt include the American Chamber of Commerce in Egypt and various associations of Egyptian entrepreneurs including the Egyptian Businessmen's Association, the Egyptian Junior Business Association, the Alexandria Business Association, the Federation of Egyptian Industries, and the Egyptian Exporters Association. There are investor committees in the large industrial cities of Tenth of Ramadan, Sixth of October, Borg El Arab, and a chamber in Ismailia promoting projects in the Sinai.

 

 

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Posted: 07 June 2010, last updated 13 March 2011

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Using an Agent or Distributor in Egypt   By U.S. Commercial Service Egypt