Egypt Looks To Africa For Investments

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Egypt’s President Abdel Fattah el-Sisi is steadily turning inward to Africa to stimulate investment, trade and development. In June of last year, Egypt signed a tripartite agreement between three regional organizations (COMESA, SADC, and the EAC) to create an integrated market of 26 countries with a cumulative GDP that’s more than 50% of the continent income. Egypt will be hosting the Africa 2016 Forum this weekend February 20-21 in Sharm el-Sheikh. The aim of this forum is a potential game changer as it aims to boost political and economic ties throughout the continent.

Egypt’s march towards Africa integration

Historically Egypt’s largest and most vital foreign aid donors and trade partners have been the West and the Gulf States. According to the U.S. State Government 2013-2015 Foreign Assistance report, $1.3 billion of $1.5 billion received by Egypt was used for military-related activities. The European Commission has reported that since 2004, EU-Egypt bilateral trade has more than doubled and reached its highest level ever in 2012 (from €11.8 billion in 2004 to €23.9 billion in 2012).

Despite the decline in oil prices, the Gulf States continue to pour billions of dollars into Egypt in the form of aid and investments. During last year’s Economic Development Conference, Egypt’s Prime Minister announced:

“Egypt received $12.5 billion in support from the Gulf States, which will be directed at projects carried out within a year or two; this is in addition to $5.2 billion in loans and funds with the Ministry of International Cooperation.”

The recent shift in Egypt’s policy towards “intra-Africa trade” to spur on Africa integration should not come as a surprise. Ahmed Farouk Ghoneim Professor of Economics at Cairo University states:

“Egypt’s trade policy has been shaped over many years, driven primarily by political and economic objectives. Over time, changing domestic, regional and international circumstances have had a significant impact on trade policy in Egypt.”

Egypt’s realized the way forward is to work towards strengthening its ties politically, commercially, bilaterally and multilaterally across the continent to tackle common challenges like high youth unemployment, illegal migration, and poverty. Egypt shares positive commonalities with the rest of Africa including ample natural resources and has skilled resources in technology – an upside it shares with Kenya, Nigeria, South Africa and other sub-Sahara Africa counterparts.

In recognition of these similarities, Egypt has demonstrated a willingness to cooperate during the ratification of the building for the new Grand Ethiopian Renaissance Dam on the Blue Nile in Ethiopia. The construction of the dam was/is a serious concern to Egypt’s government, which cite potential threats to its water and electric supply. After years of disputing over the dam’s construction, all three African leaders from Egypt, Ethiopia, and Sudan opted for a diplomatic solution and signed a cooperation deal in 2015.

The significance of the cooperation deal was it did away with the outdated colonial treaties of 1929 and 1959 which granted Egypt virtual monopoly over the Nile regardless of the aspirations of the other nine riparian countries. The cooperation deal also helped avert a regional resource conflict while ensuring greater cooperation and trade between Egypt and sub-Saharan African states via the tripartite agreement signed in mid-2015.

Furthermore, in 2014, Egypt’s government developed a new platform for cooperation in an effort to advance the African Union’s (AU) vision 2053 under the Egyptian Agency of Partnership for Development (EAPD). The aim of the EAPD is to provide technical assistance in developmental financing and humanitarian assistance to African countries.

Expectations and going forward

As delegates and heads of state convene this weekend in Sharm el-Sheikh for the Africa 2016 Forum to showcase opportunities and strategies to encourage intra-Africa trade we can expect a litany of action plans and discussion pertaining to pressing issues of the continent. Amongst the topics covered will be B2B interaction, developing strategic public and private partnerships and regulatory harmonization towards strengthening business environments across the continent.

After years of upheaval via the Arab spring and the – ousting of former presidents Hosni Mubarak in 2011 and Mohamed Morsi in 2013, Egypt has finally stabilized under President Sisi. Political stability in Egypt does not mean all divisions in the nation are resolved. The continued crack down on journalist, activists, and academics that are targeted as anti-government under the anti-terrorism law along with food and energy security remain major concerns. The bottom line is Egypt’s long-term growth and stability is linked to Africa, the success of the forum can only be measured on the actual execution of projects and the agency it instilled in its citizens.