Egyptian-African relations have flourished in recent years, experiencing significant advancements on all fronts. Egypt has successfully re-established its pioneering role in Africa, solidifying bilateral ties with various countries across the continent, particularly those in the Nile Basin. This comes as part of Egypt’s strategic vision of regaining its leadership in Africa and promoting stronger bilateral cooperation across the continent.
This article examines the features of Egypt’s economic ties with African countries and the importance of fostering economic interdependence and integration among African countries.
Characteristics of Egypt’s Economic Relations with African Countries
Egypt has demonstrated a strong commitment to economic cooperation with numerous African countries. This collaboration aims to achieve several key objectives, including expanding Egyptian investments, granting access to African markets for Egyptian goods, finalizing the African Continental Free Trade Area (AfCFTA) agreement, and contributing to infrastructural development across various African countries.
In this respect, EgyptAir signed a memorandum of understanding to establish a joint-investment Ghanaian national airline. Furthermore, Egyptian-African relations have witnessed remarkable development, as evidenced by Egypt’s pursuit of enhanced cooperation and communication with African countries across diverse sectors, including infrastructure, agriculture, and healthcare. This emphasis on collaboration with African countries reflects Egypt’s dedication to fostering development and addressing shared security concerns within a framework of cooperation and partnership. Infrastructure agreements signed between Egypt and African countries, such as those pertaining to electrical connectivity and railway projects, aim to bolster communication and trade flows throughout Africa.
Figure 1: Volume of trade between Egypt and Africa ($billions)
Source: Trade Map
In 2022, Egyptian exports to Africa reached $5.6 billion, a growth of $0.9 billion from $4.7 billion in 2021. Egyptian imports to the continent totaled $1.9 billion in 2022, with merchandise trade exchange between Egypt and African markets totaling approximately $2.117 billion in the first quarter of 2023. Based on data from the General Organization for Export and Import Control (GOEIC), Egyptian merchandise exports to Africa amounted to $1.6 billion, while Egyptian imports from Africa totaled $506 million. The GOEIC data shows that the top five countries that buy Egyptian goods are Libya ($317 million), Sudan ($226 million), Algeria ($217 million), Morocco ($191 million), and Tunisia ($86 million). In the first quarter of 2023, the main sectors driving Egyptian exports to Africa were building materials, valued at $422 million, and chemical products and fertilizers, valued at $358 million.
In 2022, Egypt was the largest recipient of foreign direct investment (FDI) in Africa. Egyptian investments in Africa also rose by $1.2 billion in 2021, bringing the total level of Egyptian investments in the continent to $10.2 billion. On the other hand, total African investments in Egypt amounted to approximately $2.8 billion.
Figure 2: Top African countries with FDI inflows in 2022 ($billion)
Source: UNCTAD’s World Investment Report 2023
Furthermore, a report by British multinational bank Standard Chartered on African economics and trade projected Africa’s total exports to reach a staggering $1 trillion by 2035. The report highlights that the achievement of this export value in Africa relies on the successful implementation of continental free trade agreements and the revitalization of intra-trade exchanges between countries on the continent. According to the report, the implementation of the African Continental Free Trade Area (AfCFTA) agreement by African countries will result in intra-African trade reaching $140 billion by 2035. This represents a 15% increase compared to the current total intra-continent trade.
The Standard Chartered report is basing its outlook on the current dynamism observed in African trade routes. This activity surpasses the average growth rate of 4.3% witnessed in trade routes across the globe, suggesting a promising trajectory for Africa by 2035.
Additionally, the report highlighted the East-West trade route, which is anticipated to persist and has an average growth rate of 7.1%.
Significance of Economic Integration and Interconnectedness among African Countries
Regional integration among African countries holds significant economic advantages due to the continent’s vast scale and resource endowment. Africa boasts a sprawling geographical area and a population exceeding 1.4 billion, creating a substantial market. Furthermore, with a gross domestic product surpassing $3.1 trillion in 2023, Africa represents a significant economic force. The continent’s wealth extends beyond its population and economic output, encompassing vast natural resources such as oil, gas, minerals, and fertile land. This confluence of a large market size and abundant resources positions Africa as a major production and consumption hub with immense potential for regional collaboration.
Furthermore, regional integration fosters robust and equitable economic growth by stimulating shared markets, facilitating economies of scale in production, lowering costs, promoting diversification, enhancing the quality of consumer goods, and broadening market opportunities. Looking at the Common Market for Eastern and Southern Africa (COMESA), we find it represents a significant economic force, with a population exceeding 583 million and an area that spans two-thirds of the continent. Since 2019, it has been actively endeavoring to provide assistance for infrastructure and information and communications technology initiatives, along with implementing an industrial transformation strategy. All of these factors qualify COMESA as one of the world’s largest markets if its full potential is realized.
Beyond its bilateral efforts, Egypt leverages its membership in two of Africa’s eight regional economic communities, namely COMESA and the Community of Sahel-Saharan States. Besides, the AfCFTA presents a significant opportunity for Egypt to expand its commercial presence in a wider range of African countries. Unlike previous regional agreements, AfCFTA facilitates the unrestricted access of Egyptian goods to all African countries. This opens the door for increased intra-regional trade, the utilization of raw materials and natural riches, and the enhancement of Egyptian products’ competitiveness by providing added value.
In this vein, Egypt has actively advanced joint infrastructure projects across the continent. Under the motto “One Continent, One River, Common Future,” a number of projects involving Egypt and African countries aim to improve regional and continental integration in the infrastructure domain and ease the flow of people and goods. These projects include the Cairo-Cape Town project and the Navigational Line between Lake Victoria and the Mediterranean Sea on the electrical and railway fronts. In addition, there has been collaboration with several Egyptian businesses, including The Arab Contractors, Orascom, Elsewedy Electric, and others, on a variety of infrastructure projects, including significant road construction, residential and health initiatives, the drilling of numerous subterranean wells, and the building of dams and power plants in African nations, such as Tanzania’s Rufiji Hydroelectric Power Station.
In conclusion, fostering Egyptian-African relations necessitates collaborative efforts and ongoing cooperation between Egypt and African countries. In order to deepen cooperation in different areas, it is necessary to strengthen dialogue and mutual understanding and to take advantage of mutual opportunities. In this vein, it is feasible to broaden diplomatic networks and fortify connections between governmental and non-governmental institutions and organizations in Egypt and other African countries. Furthermore, regional integration within Africa is widely seen as the primary means to achieve the social and economic development envisioned in Africa’s Agenda 2063, particularly through a bloc the size and significance of COMESA.
