Leveraging trade agreements and strategic investments to enhance intra-African commerce.
Egypt’s strategic geographical position and proactive participation in multiple agreements have positioned it as a pivotal player in African commerce. By engaging in various multilateral accords, Egypt is set to capitalize on the vast African market, fostering economic growth and regional integration.
Diverse Agreements Enhancing Market Access
Egypt’s involvement in numerous trade agreements underscores its commitment to economic integration. The nation is a member of the Common Market for Eastern and Southern Africa (COMESA), the Agadir Free Trade Agreement linking North African countries and Jordan, the Greater Arab Free Trade Area Agreement, and the European Union-Egypt Free Trade Agreement. Additionally, Egypt benefits from preferential access to the U.S. through the Qualifying Industrial Zones scheme. In 2021, Egypt expanded its trade horizons by joining the African Continental Free Trade Area (AfCFTA), granting access to a market of 1.5 billion people. This extensive network of agreements facilitates tariff reductions and regulatory harmonization, encouraging Egyptian enterprises to explore opportunities across the continent.
Strategic Investments in Key African Sectors
Egyptian industries have proactively ventured into sub-Saharan African markets, with significant investments in construction and pharmaceuticals. “Egypt’s construction sector has made significant inroads in markets such as Kenya, with Egyptian firms participating in major infrastructure and housing projects,” notes Islam Zekry, Group Chief Financial Officer and Executive Board Member at Egypt’s Commercial International Bank (CIB). The pharmaceutical industry has also expanded its footprint, supplying high-quality, cost-effective medicines to African markets where healthcare demand is rising. Financial institutions, including CIB, play a crucial role in enabling this expansion by providing finance and facilitating smoother cross-border transactions.
Financial Sector’s Role in Facilitating Trade
The Egyptian banking sector, exemplified by CIB, has been instrumental in supporting cross-border investments and trade. CIB’s entry into the Kenyan and Ethiopian markets exemplifies this strategy. “Egyptian businesses looking to expand into East Africa now have a financial partner that understands both markets, ensuring that trade flows remain seamless and efficient,” says Zekry. Kenya’s status as a regional financial hub provides a strategic gateway to East and Central Africa, making CIB’s presence in the market a valuable asset for Egyptian enterprises.
Challenges and Prospects for Intra-African Trade
Despite the progress, challenges such as logistics bottlenecks, trade financing gaps, and regulatory complexities have impeded the pace of growth. “Greater investment is required in trade infrastructure, supply chain networks, and financial instruments that support exporters,” Zekry emphasizes. The full implementation of AfCFTA is anticipated to address these issues by removing 90% of tariffs in its first phase and aiming for 97% tariff liberalization by 2034. This comprehensive framework not only covers goods and services but also encompasses dispute settlement, investment, intellectual property rights, competition policy, and electronic commerce, offering a robust platform for economic cooperation.
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This article is based on insights from the AGBI report “Bolstering Egypt’s Trade with Africa,” authored by Paul Cochrane.