Yahoo! Inc. (NASDAQ:YHOO) is pulling out of Egypt, and while it claims that security issues don’t play a role in its decision, it follows a broad trend of foreign investment leaving the country in the wake of violent protests, a military coup, and ongoing unrest with no clear endgame. Yahoo will beef up its offices in Dubai and Oman, both countries untouched by the Arab Spring, to help manage Middle Eastern markets, the Middle East Monitor reports.
Yahoo’s business in Cairo
“Cairo was a good market for Yahoo! Inc. (NASDAQ:YHOO),” the company said in a statement. “We have established a diligent and professional team, to whom we’ll propose appropriate financial compensation in return for terminating their employment and the closure of our office.”
Egypt was the third-largest auto manufacturer in Africa last year behind South Africa and Morocco, but General Motors Company (NYSE:GM), Toyota Motor Corporation (ADR) (NYSE:TM), and SUZUKI MOTOR CORP (OTCMKTS:SZKMY) (TYO:7269) shut down operations for fear of their employees’ safety. Royal Dutch Shell plc (ADR) (NYSE:RDS.A) (NYSE:RDS.B) and BASF SE (ADR) (OTCMKTS:BASFY) (ETR:BAS) (FRA:BAS) also left citing concerns about violence, and even if Yahoo! Inc. (NASDAQ:YHOO) didn’t mention the security situation, it’s hard to believe that it didn’t play a role in the company’s decision.
Tourism in Egypt
Tourism in Egypt, one of the main sources of hard currency along with fees from the Suez Canal, took another big hit this summer. Numbers fell sharply after the protests that brought down Mubarak, and started to increase again in 2012, but now travel firms like Thomas Cook say that it’s hard to convince tourists that it is safe to visit Egypt. Increasing street fights and attacks in Sinai (mostly targeting police), keep Egypt in the news and continue to reinforce the notion that it is unsafe.
The most recent unrest began on June 30 when millions of protestors took to the streets calling for then president Mohamed Morsi to step down. When Defense Minister Abdel Fattah El-Sisi took Morsi insto custody and installed a new government, Morsi’s Muslim Brotherhood supporters started a counter-protest that was put down in mid-August in a bloody crackdown. Since then there has been steady, low-level violence and increased uncertainty about the country’s future. Both Egyptian business elites and foreign workers have left in large numbers.