New energy, historic relationships:Why Egypt is strengthening its African ties

By Karim Sadek

The warmth of the speeches by many African heads of State in Sharm el Sheikh during the recent Egyptian Economic Development Conference was a powerful reminder of the deep historical and cultural ties linking Egypt and many of its neighbours. It also revealed a shared belief in the urgency of accelerating future engagement.

After four years of turmoil following the 2011 Revolution, the conference – attended by over 3000 people from over 100 countries - sent a clear message that Egypt is finally engaging the world. Government and investors are confident in their ability to think and plan for the long term, and Egypt can rely on political and economic support from its partners around the world.

Sub-Saharan Africa and Egypt share many things in common. We are at a similar level of development to many African countries, with a massive young population which is highly aspirational and tech savvy. Like many sub-Saharan countries, Egypt also struggles to find productive employment for many of its young people, with youth unemployment at 38.9 percent as of 2013 according to the World Bank. Many countries across the region also have an abundance of natural resources, and our governments all have big visions for the future.

Furthermore, the private sector in Egypt - as in Kenya, Nigeria and South Africa – is growing. Local businesses are catching the eye of international investors looking for reputable and experienced local partners.

In recognition of these similarities, Egypt has been working proactively to bring new impetus and focus to its engagements in Africa, strengthening ties across all spheres – politically and commercially; bilaterally and multilaterally. The strong showing by African nations in Sharm el Sheikh demonstrated that such outreach is welcomed.

Egypt is also engaged in creating new forms of co-operation to advance the African Union’s (AU) Vision 2063 and last year, the Government established the Egyptian Agency of Partnership for Development (EAPD) to consolidate the efforts of the Government of Egypt in providing technical co-operation, developmental financing  and humanitarian assistance to African countries.

Our top level exchanges have also increased. Over the past year Egypt has been reaching out to African countries through visits and diplomatic missions – most recently to Addis Ababa and Nairobi - to build on historic relations and create new economic ties. Currently it is estimated that approximately $1bn has been deployed into the rest of Africa from Egypt. If news from the conference is anything to go by, this could be the start of much more to follow.

The free movement of goods and people across the Grand Free Trade Area (GFTA) - which envisages the combining of the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC), and the East African (EAC) regional blocs into one single market - may be significantly accelerated with the development of mega infrastructure projects such as the Suez Canal Zone project.

The Suez project is Egypt’s largest national public-private partnership, designed to turn the canal area into an international industrial and logistics hub. With over 100 square km dedicated to maritime and logistics facilities and over 400 square km earmarked for industrial development, the Suez canal’s historic status as a global trade artery, linking Asia and Africa to Europe and the USA, will be reimagined for the 21st century.

The decrease in crossing time for ships and tankers should facilitate trade to and from the Ports of Eastern and Southern Africa and enable African traders and countries to benefit from the logistics facilities to stock their produce such as tea, coffee and maize for trading globally.

Transportation and logistics infrastructure is a core investment area for Qalaa Holdings in Africa and we strongly believe that improving the efficacy of rail and river transport is the key to unlocking opportunities for greater cross-border trade. Our investment in Rift Valley Railways (RVR), which holds a 25 year concession to operate 2,352 kilometres of track from Kenya’s Mombasa port to neighbouring Uganda, is facilitating regional connectivity. In nearby South Sudan, our Nile Logistics investment, which in 2008 opened up trade links between Egypt, South Sudan and Sudan, will soon acquire additional handling equipment for its river-transport and marine-port businesses.

In order to realise the potential trade boost from strong transport networks, political engagement must also be prioritised. After two years of stalled negotiations, Egypt, Ethiopia and Sudan recently reached an agreement on the basis of assessing and mitigating any adverse risks of Ethiopia’s Grand Renaissance Dam. Long a source of tension between the two countries, this agreement paves the way for greater cooperation in the future.

The signs are encouraging. At the end of last year, the Egypt-Ethiopia Business Council announced greater levels of engagement between Egyptian investors and Ethiopian businesses. Qalaa Holdings, one of the first Egyptian firms to invest in the country, holds a long standing investment in mining and we have recently made a second entry in the same country this time in cement.

These investments will be the tip of the iceberg. The Sharm conference was a powerful reminder of how Egypt’s future growth and stability is tied to Africa’s. As the tens of billions of dollars announced in new investments moves from commitments on paper to actual execution over the coming months, the real prize will be in working out how to leverage this to drive wider trade and investment opportunities across the region as a whole.

The writer is Africa Managing Director at Qalaa Holdings, an African investment firm listed on the Cairo Stock Exchange and specialising in energy, cement, agrifoods, transport and logistics and mining.