Egypt grows as an investment gateway to Africa
Hussein Abaza, CEO and managing director, Commercial International Bank, discusses how Egypt’s economic transformation plan has enabled the country to position itself as a trade and investment gateway to Africa.
Q: Egypt has been successful in increasing foreign direct investment in recent years. What are the factors that support Egypt’s status as a regional gateway for trade and investment?
Abaza: Egypt has long been a strategic partner for many countries in the Middle East and North Africa region. In recent years, it has also emerged as a gateway for trade and investment in Africa thanks to its geographic location, economic reforms, and regional integration efforts.
A strategic location at the crossroads of Africa, Asia, and Europe, and the Suez Canal (which connects the Mediterranean and the Red Sea) provide Egypt with a competitive advantage in terms of connectivity, logistics, and market access to consumers globally.
Moreover, Egypt has undertaken significant economic reforms in the past few years aimed at improving its macroeconomic stability, business environment, and investment climate. These reforms include fiscal consolidation, exchange rate liberalisation, energy subsidy reduction, tax reform, and structural reforms in various sectors.
A strategic location at the crossroads of Africa, Asia, and Europe, and the Suez Canal provide Egypt with a competitive advantage in terms of connectivity, logistics, and market access to consumers globally
In tandem, Egypt’s ambitious infrastructure development and modernisation plans aim to enhance its connectivity and competitiveness as a regional hub. On this front, the country has invested heavily in expanding and upgrading its ports, roads, railways, airports, energy facilities and industrial zones, as well as in developing new cities and economic zones, such as the Suez Canal Economic Zone (SCZone) and the New Administrative Capital.
Additionally, Egypt actively participates in regional integration schemes. Egypt is a founding member of the African Continental Free Trade Area (AfCFTA), which entered into force in 2019 and aims to create a single market of 1.3 billion people with a combined GDP of around $3.4 trillion.
It is also a member of the Common Market for Eastern and Southern Africa (COMESA), which covers 21 countries with a population of over 583 million and a GDP in excess of $800 billion.
Q: Which industry sectors have benefited from this?
Abaza: Several industry sectors have benefitted from Egypt’s status as a gateway for trade and investment in Africa, including:
Energy – Egypt is a regional energy hub thanks to its abundant natural gas resources, its strategic location along major energy routes, and its diversified energy mix that includes renewable sources.
The country has increased its gas production and exports - especially from the giant Zohr field - and has established partnerships with neighbouring countries such as Jordan, Iraq, Cyprus and Israel to enhance energy cooperation and integration. Egypt has also invested in expanding its electricity grid and interconnections with Sudan, Libya, Saudi Arabia and Europe.
Information and communication technology (ICT) – A vibrant ICT sector generates approximately 4% of total GDP. Egypt has a large pool of skilled and low-cost talent, a strong telecommunications infrastructure, and a supportive regulatory environment that fosters innovation and entrepreneurship. Egypt has also launched several initiatives to promote digital transformation across various sectors (such as e-government, e-commerce, e-learning and e-health) and aims to become a regional ICT hub that can serve the growing demand for digital solutions across Africa.
Manufacturing - A diversified manufacturing base accounts for about 15% of GDP and covers sectors such as textiles, chemicals, pharmaceuticals, food processing, automotive and engineering. Egypt has leveraged its access to regional markets through free trade agreements, its proximity to European consumers, its availability of natural resources and raw materials, and its competitive labour costs to attract local and foreign investment in manufacturing. The country also offers various industrial zones that provide incentives and facilities for investors.
Q: How is CIB helping support Egypt to become a trade and investment gateway?
Abaza: CIB is Egypt’s largest private sector bank in terms of assets, deposits, and market capitalisation. As the third largest bank nationwide, it has played a vital role in supporting Egypt’s economic transformation and regional integration agenda.
CIB offers a wide range of products and services across various sectors and segments including corporate banking, consumer banking, treasury services, and digital banking solutions. Moreover, through its comprehensive trade finance services, CIB helps clients gain more control over exports, improve cash flow, and effectively manage risks associated with international trade through its export finance facilities.
CIB provides financing solutions to facilitate cross-border trade flows between Egypt and other African countries and has also been expanding its presence and network across the continent through strategic partnerships with other leading banks and financial institutions. CIB’s acquisition of Kenya’s Mayfair Bank (now CIB Kenya Limited) will enable the bank to leverage its expertise and experience to serve the Kenyan market and beyond.