Free Trade Pact Highlights Egypt’s Pivot Back towards Africa

On Wednesday, presidents and other leaders representing twenty-six African countries meeting at the Egyptian Red Sea resort of Sharm el-Sheikh signed an agreement to launch a “Cape to Cairo” free trade zone spanning the length of the continent. The Tripartite Free Trade Area (TFTA), as it will formally be known, will embrace three of Africa’s major economic blocs—the East Africa Community (EAC), the Southern African Development Community (SADC), and the Common Market for Eastern and Southern Africa (COMESA)—with a combined population of some 625 million people and an overall gross domestic product of more than $1 trillion. Before it goes into effect, the accord must still be ratified by the national parliaments of the countries involved and technical timelines to bring down trade barriers will have to be worked out. Nevertheless, the deal not only represents a landmark achievement in the process of Africa’s economic integration towards the long-term goal of a single common market—the benefits of reducing the cost of doing business across the hitherto overlapping trade regimes covering 60 percent of the continent’s GDP and over half its population are pretty obvious—but also a significant milestone in Egypt’s reengagement with its African neighbors which has taken place under President Abdel Fattah el-Sisi.

While Egypt played a prominent role in African affairs during the heady days of the independence era when its President Gamal Abdel Nasser, who served as the second chairperson of the Organization of African Unity, was a lodestar to many African leaders—Ghana’s Kwame Nkrumah even had Nasser arrange his marriage to the Egyptian Fathia Halim Roizah Rizk for him and the couple’s eldest son was named Gamal—the country’s relationship with the rest of the continent was largely neglected in recent years. Hosni Mubarak didn’t even bother to attend the twice-yearly summits of African heads of state and government during his last decade and a half in power. The longtime ruler’s disdain was reciprocated: by the time he gave up power in 2011, not even eighteen sub-Saharan African countries bothered to have embassies in Cairo (although, to its credit, Egypt kept diplomatic missions open in virtually all African capitals).

The de facto Egyptian withdrawal from Africa can be seen by a number of indicators. If African countries’ trade with each other is anemic at 10 to 12 percent of total volume compared with 70 percent in Europe or 55 percent of in Asia, until very recently Egypt’s trade with the rest of the continent was downright moribund at 3 percent of its total. Moreover, the longstanding dispute over the waters of the Nile River between Egypt (and, to a lesser extent, Sudan) and the upstream African countries further complicated relations, a nadir being reached in 2013 when, in response to Ethiopia’s continuing construction of Africa’s largest hydropower dam across the river’s main tributary, Egypt’s Islamist President Mohammed Morsi declared before hundreds of supporters that “all options are open” and threatened the use of force, “if a single drop of the Nile is lost, our blood will be the alternative.” Some members of his government went even further, openly discussing arming Ethiopian rebel groups.

Things have shifted dramatically since el-Sisi was sworn in as Egypt’s president just one year ago. Talks which had quietly begun in late 2013 not long after el-Sisi assumed power kicked into high gear over the course of the last year. The negotiations, facilitated by Sudan, the junior beneficiary with Egypt under previous agreements about the Nile, led to the historic agreement on principles between Egypt, Ethiopia, and Sudan that was signed in the Sudanese capital of Khartoum in March 2015, opening the way for broad regional cooperation on the use of the river’s waters. Immediately after signing the accord, el-Sisi traveled to the Ethiopian capital of Addis Ababa where he gave an unprecedented address to the Ethiopian parliament during which he told the lawmakers, “Egypt wants to turn the page in the history of relations between the two countries and establish a basis for mutual interest…Let’s put aside the issues we have with each other. We need to work on joint responsibility.”

In the meantime, Egypt has also been ramping up its cultural and security cooperation as well as its commercial relations with African countries. In fact, exchange can be said to help facilitate political conciliation, such as the case with the batch of agreements on education, technical training, trade cooperation, health, women affairs, and capacity building in diplomacy which Egyptian Foreign Minister Sameh Shoukry signed with his Ethiopian counterpart Tewodros Adhanom last November, several months before the Nile accord. Last year also marked the establishment of the Egyptian Agency of Development Partnerships (EADP), announced by President el-Sisi during his speech to the African Union’s annual summit. Building on its predecessor Egyptian Fund for Technical Cooperation with Africa, the EADP has the mandate to focus “on the support of major developmental projects in Africa and other developing states by focusing on key areas of development which Egypt has great experience in such as the fields of communication, transport, information technology, health services, agriculture and energy” by working in “partnership with the private, regional, and international funding institutions” and forging a “tripartite” approach with other agencies and countries. According to a fact sheet distributed by the Egyptian Embassy in Washington, the EADP already has provided scholarship or training programs in forty-five African countries.

Not surprisingly, Egypt, with a military that is ranked as Africa’s top in terms of the 2015 Global Firepower Index, plays a large role in peacekeeping on the continent, with some 2,134 military and police personnel deployed on eight United Nations missions across Africa as of the end of May. While the Egyptian Foreign Ministry’s Cairo Center for Conflict Resolution and Peacekeeping in Africa (CCCPA) has long been a hub for regional training, it recently partnered with the UN Development Program, with funding from Japan, on a yearlong initiative to enhance the capacities of African national and regional actors to combat radicalism and violent extremism. 

In contrast to $2.7 billion in total trade between Egypt and other African countries in all of 2013, the volume amounted to $977.2 million in just the first quarter of this year, according to Egypt’s Ministry of Trade and Industry. Minister of Industry and Trade Mounir Fakhry Abdel Nour predicts that with the TFTA, Egypt’s exports to the rest of Africa will increase to $5 billion within three years. Even before the continental free trade accord, the groundwork had been laid on bilateral bases. In January, for example, Egypt and Kenya agreed to form a joint business council to promote trade and investment. Already, an Egyptian firm, Qalaa Holdings, has a twenty-five-year concession to operate the 2,353-kilometer Rift Valley Railways (RVR) line from the Kenyan port of Mombasa into Uganda. The same company recently made a big entry into Ethiopia with a plant in the eastern city of Dire Dawa that will produce one million tons of clinker annually (clinker is the basic raw material used to make cement). Last month, the first land port on the Egyptian-Sudanese border was formally inaugurated at Qustul (it has been operating experimentally since August 2014).

Specific sectors have also been leveraged for their comparative advantages in this push. For example, last month Egypt’s Information Technology Industry Development Agency (ITIDA) hosted representatives of telecommunications companies, financial institutions, and ICT enterprises from six African countries as part of its “Africa Together” initiative, launched last year to encourage IT partnerships. The result of the May meeting was some thirty deals between fifteen Egyptian firms and seventeen African partners for collaboration on projects ranging from systems integration to mobile enterprise solutions to security.

In this overall context, the significance of Egypt’s playing a key role in efforts to forge the new TFTA goes well beyond the opportunity to increase what has been up to now the country’s somewhat limited trade with Africa. Belonging to what emerges as Africa’s largest free trade area to date will not only promote Egypt’s increasing economic engagement with one of the most dynamic regions in the world—the home to seven of the ten fastest growing economies this decade—but also help to ensure for the country going forward the strategic position and geopolitical influence commensurate with its millennial historical tradition on the continent.    

 J. Peter Pham is Director of the Atlantic Council’s Africa Center. Follow the Africa Center on Twitter at @ACAfricaCenter.

Related Experts: J. Peter Pham

Image: Ethiopian Prime Minister Hailemariam Desalegn (L) and Egyptian President Abdel Fattah el-Sisi (R) during a meeting in Addis Ababa, Ethiopia, to discuss the Grand Renaissance Dam project. Photo published March 25, 2015 by the State Information Service of the Egyptian government