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Egypt sets its sights south.

The Africa 2016 Forum in February in Sharm el-Sheikh, Egypt, brought together private sector and government leaders. There was a recurring message: there is a huge African opportunity--but it will take trust, confidence and courage to be fully realised.

Egypt's leadership is sending clear signals to the rest of the continent: it is committed to Africa and wants greater engagement with the continent. Egypt's President, Abdel Fattah el-Sisi, has taken it upon himself to make this happen.

In June 2015, the President hosted the signing of the tripartite agreement that brought together three regional economic communities--the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern African Development Community (SADC)--to create a free trade area comprising all 26 countries.

El-Sisi has travelled throughout the continent, making state visits to Ethiopia, Algeria and Sudan, and has hosted a number of his counterparts back home. Meanwhile, his ministries have been instructed to increase bilateral agreements and initiatives between Egypt and the region, developing greater business and investment ties.

Indeed, after what could have been considered a fractious relationship between the President's predecessor, Hosni Mubarak, with countries in the Nile Basin, the tone between Egypt and its neighbours has changed to one of reconciliation and a shared agenda --evident at the Africa 2016 Forum in February in Sharm el-Sheikh.

In a speech at the Forum by Ethiopia's Prime Min ister, Hailemariam Desalegn, the message was one of inclusiveness and of working in the interests of the region: "Today, in our globalised world, no country can achieve development in isolation," he said.

Hazem Fahmy, Secretary General of the Egyptian Agency of Partnership for Development (EAPD), which operates in the Ministry of Foreign Affairs, one of the Forum's main conveners, reiterated Desalegn's point: "One hand alone cannot clap."

Building trust

Less than two years since el-Sisi became President of Egypt, the country appears to be on the right path. A recent IMF report lauded the country for developments it has made in enacting structural reforms as well as improvements made to streamline legal and investment codes in the country.

As reform continues, multibillion-dollar projects have been announced, including the building of a new capital city 45 km east of Cairo, and a drive to develop special economic zones at the Suez Canal to boost trade and investment in the region.

From the President's perspective, Egypt offers logistical benefits to the wider region. Education, capacity building and healthcare were also identified as areas where Egypt could make a valuable contribution to the region's development.

But throughout the Forum, it was acknowledged that there is still considerable room for greater collaboration and cooperation between African businesses and states. For instance, intra-African trade in Africa is still low, hovering between 10-15% of total trade values. There are many reasons for this: firstly, Africa doesn't produce the goods and services that its people consume, and ultimately infrastructure deficits mean that it is cheaper getting goods from abroad than it is from one African country into another.

However, sentiment at the Forum pointed to greater trust as the key enabler for collaboration and cooperation. Greater trust would not only result in Africans taking advantage of the African opportunity but would also result in a more cohesive and peaceful continent.

His Highness the Aga Khan, Chairman of the Aga Khan Development Network, highlighted this at the Forum by pointing out the dangers of fear: "My enthusiasm today is especially strong because of the message which is at the heart of this Forum. And that message is, quite simply, that Africa's moment has come.

"[But we need to] address a problem that has long plagued the human race. I refer to the fear we so often have that our environment will be controlled by others--to the point where we distance ourselves from potential worthy partners ... A difference that can lead to fragmentation of society.... and conflict," he concluded.

Tough times ahead?

Ultimately, the Africa 2016 Forum was to encourage investment--not only within Egypt but throughout Africa. But in tapping into the African opportunity, it is clear that there are plenty of headwinds to deal with.

Economies have shown resilience within the global economic context, but there is arguably less room for manoeuvre now than during the global credit crunch in 2009. Fiscal positions are much tighter than they were and debt levels need to be managed to remain sustainable. For Carlos Lopes, the executive secretary of the Economic Commission for Africa, any transformation on the continent will require concentrating on two pillars: improving agricultural productivity and building manufacturing capacity.

Agriculture may employ 70% of the people of the continent but it only contributes 10% to the continent's GDP. If anything value addition and industrialisation are receding. Part of the transformation will also have to centre on growing the formal economy and tax base. Regarding the tax base, Africa has a fiscalisation rate of 17%, less than half the global average at 35%.

But the President of the African Development Bank, Akinwumi Adesina, was more upbeat. Adesina set out his agenda for the continent as the High 5s--five major priorities for the continent--including Light Up and Power Africa; Feed Africa; Industrialise Africa; Integrate Africa; and Improve the Quality of Life for Africans. "The Africa Rising story is not over," said Adesina, stating that Africa's growth is projected at 4.4% this year and will strengthen to 5% for 2017. "Africa is still the best place to invest."

Africa 2016 was organised by the government of Egypt, namely the Egyptian Agency of Partnership for Development (EAPD), part of the Ministry of Foreign Affairs, the General Authority for Investment and Free Zones (GAFI), that operates under the Ministry of Investment, and the COMESA Regional Investment Agency (COMESA RIA). It was attended by 1,800 participants from the public and private sectors.

Teodoro Obiang, President of Equatorial Guinea, Hailemariam Desalegn, Prime Minister of Ethiopia, Ali Bongo Ondimba, President of the Gabonese Republic, Muhammadu Buhari, President of Nigeria, Omar al-Bashir, President of Sudan and President Abdel Fattah el-Sisi--were present as well as a number of special guests including Dr Benedict Oramah, President of the Afreximbank and Cheick Modibo Diarra, former Prime Minister of Mali.
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Title Annotation:Events
Publication:African Business
Geographic Code:7EGYP
Date:Mar 1, 2016
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