On 1 January 2019, Egypt will adopt the presidency of the African Union for the first time.
Launched in 2002, the union aims to establish greater unity and economic integration across the African continent. Having put foreign investment at the heart of its own economic programme, Cairo intends to use its year at the helm of the African Union to push investment and cross-border trade in Africa.
Cairo’s run-up to its year at the head of the union saw two major continental events held in Egypt in December: the week-long Intra-Africa Trade Fair in Cairo and the Africa 2018 investor forum hosted in Sharm el-Sheikh by the Egyptian government and the Common Market for Eastern & Southern Africa Regional Investment Agency (Comesa Ria).
Africa 2018 provided an opportunity for Egypt’s President Abdul Fattah al-Sisi to shape his agenda for 2019 and focus on key issues such as regional integration, youth entrepreneurship, technology and empowering women in Africa.
With more than 1,000 attendees from government and business, the forum also saw about $3.5bn of agreements announced.
Cairo signed deals worth $1.9bn, including strategic partnerships to invest in infrastructure, information technology and renewable energy, and to foster entrepreneurship and private sector development in the country.
Egypt’s Minister of Investment and International Cooperation Sahar Nasr says Cairo’s objective during its year at the head of the African Union is to continue the continent’s transformation into a global economic powerhouse by responsibly capturing the full potential of its resources and capabilities.
“This can only happen through stronger collaboration and partnership between our countries,” she says. “Trade and investment within Africa must be increased if real economic transformation is to be achieved.”
Nasr says this will only be achieved through increased infrastructure investment, private sector reforms, and bilateral and multilateral agreements that eliminate borders and facilitate knowledge transfer.
“While cross-border investments have grown over the past decade, they still represent only 19 per cent of total investments into Africa,” she says. “We must work together to change that.
Nasr believes Egypt has an important role to play in Africa’s development. “Over the past four years, Egypt has been playing an increasingly active role in enhancing regional cooperation in the continent,” she says. “Egyptian investments in Africa exceed $10bn as of today, reflecting our strengthening relationship with our neighbours.”
She cites infrastructure development projects as one of the most important ways to support regional integration. During the Africa 2018 forum, President Al-Sisi said the establishment of the Cairo-Cape Town highway would be accelerated to facilitate intra-African trade.
He also announced efforts to boost entrepreneurship and regional integration in Africa, including the establishment of the first regional entrepreneurship hub in Egypt, and an initiative to train 10,000 young Africans as software and game developers over the next three years.
“Bridging the digital divide” to harness the potential of the fourth industrial revolution is a key priority,” says Egypt’s investment minister.
Sahar Nasr’s first cabinet post came in 2015, when she became Egypt’s minister of international cooperation. Her appointment coincided with a key moment in Egypt’s recent history, when, after several years of political and economic turbulence, Al-Sisi’s newly formed government was seeking to kick-start the giant Egyptian economy through an ambitious economic turnaround programme supported by the IMF that put private and foreign investment at the heart of Egypt’s growth plans.
Nasr quickly emerged as a leading figure in the new government and, in 2017, oversaw the merger of the Ministry of Investment and the Ministry of International Cooperation.
“The idea was to align private and public sector investments,” she says. “As we obtain financing from our development partners through the international cooperation arm, we can channel funds towards areas that foster private sector development. The same applies to capacity building efforts, as we collaborate with those partners to transfer know-how in the areas most needed by the private sector.”
“As we obtain funding for government projects in energy and road infrastructure, for example, we can enable more private investments to grow in needed fields,” she says.
“Moreover, as we work on increasing investments in marginalised areas, we can only do that with the necessary public services in place that support the creation of a capable and well-trained workforce in those areas, through investing in education, healthcare and so on. So, really, they go hand in hand.”
Nasr expects to see an increase in investment in Egypt in the coming years as a result of reforms introduced over the past two years, particularly in innovative industries.
“Egypt carried out five reforms to facilitate doing business in the past year, making it the highest number of reforms in a decade,” she says. “These include making it easier to start a business by establishing a one-stop shop, improving access to credit and making it easier to pay taxes and resolve insolvency.”
According to the minister, Egypt is the number one destination in Africa for foreign investment, with the number of established companies reaching 20,000 this year, a 29 per cent increase on the previous year. The value of issued capital is up by about 65 per cent, recording £E49bn compared with £E29.8bn in 2016/17.
“We expect to see more investment in innovative sectors thanks to legislative reform supporting areas such as riding-sharing and transportation, as well as fintech, e-learning, e-health and mobile banking,” says the minister.
“We want to take advantage of the creativity of our youth and support them in creating the jobs they’re seeking. We also expect more investment in our energy sector thanks to the liberalisation it has witnessed through legislative reform that accelerated private investments into the sector, bringing Egypt closer to its goal of becoming a regional energy hub.”
To support entrepreneurship, the Ministry of Investment & International Cooperation has established Egypt Ventures, an investment company that invests in early-stage funds, incubators and venture capital funds, as well as investing directly in early growth companies.
“Egypt Ventures already kick-started the first government-led accelerator, Falak Startups, which, since its inception in 2017, has invested in over 50 companies,” says Nasr.
Egypt’s investment minister does not expect tightening of the capital markets as a result of the end of Quantitative Easing (QE) and the low interest rate environment.
“I think the impact will be modest as the end of QE is happening gradually,” she says. “We are not concerned with investors exiting our debt market quickly, especially that they will be enjoying a much better risk profile.
“Our currency is also expected to appreciate by several global analysts, and this is a sign of economic strength,” she says. ”Appreciation of the pound will support many industries that depend on specific imports, which will make these sectors more attractive to investors. Additionally, I also predict the housing sector to experience growth in a low interest-rate environment.”
Ease of business
Nasr says Cairo will continue to drive its reform agenda in the months and years ahead. “We will see more reforms that will support financial inclusion as well as continued organisational restructuring that can streamline business processes to reduce time and cost for establishing a business,” she says. “We will also see more legislative reform that puts forward our goals towards more transparency and governance to create a conducive environment for local and foreign investors to operate.”
To promote investment in Egypt, the ministry is developing an electronic investment map to display all available investment opportunities in the country, as well as detailing all information and data that local and foreign investors require.
The investment map includes information on projects of all sizes, and indicates how close the projects are to key facilities (transport links, schools and hospitals). It aims to provide a platform for investors and government officials to connect. The map also indicates where ongoing development projects are located, enabling investors to plan ahead.
“The goal is to make investing in Egypt as easy as possible and ensure the investor is well informed before making a decision,” says Nasr.