Egypt turns its face to the south in an effort to exploit region’s growth potential




The termination of profitable east European partnerships and the slow collapse of the Middle East peace process is behind Cairo’s moves to join the Africa club

By Mark Huband in Cairo

Financial Times, 19 August 1998

Egypt intends to join sub-Saharan Africa’s main economic and intergovernmental groupings as part of an expanded Africa policy intended to strengthen trade ties and raise its political profile on the continent.

Behind the new policy, Cairo analysts believe, is its growing need to find new markets and increase its exports by 11 per cent in order to achieve the 7-8 per cent GDP growth necessary to sustain its growing workforce.

But the government is now considering a detailed strategy for trade expansion, which it also intends to use to bolster its claim as a representative of Africa if the UN votes to create permanent regional Security Council seats.

Following extensive visits in the past year to key African countries by Amr Moussa, Egyptian foreign minister, Egypt now hopes to join East and Horn of Africa governments as a member of the Inter-Governmental Authority on Drought and Development (IGADD). It recently became a member of Comesa, the 21-member Common Market of East and Southern Africa and successor to the Preferential Trade Area (PTA). The bloc has a market of 288m consumers with $ 2.5bn of internal trade in 1996 projected to grow to $ 4bn in 2000 when tariff barriers are fully removed.

Since 1996, when a wide-ranging programme of economic liberalisation began to bear fruit and attract foreign investment, the government has been keen to capitalise economically on political links established largely by past Egyptian support for African independence movements.

The increasingly active Egyptian private sector has now encouraged the government to re-establish ties with sub-Saharan Africa in order to create new markets. Until it joined Comesa in June, Egypt was the only Organisation of African Unity member not attached to any African economic bloc.

The collapse of the Soviet Union and the termination of favourable trade partnerships with the countries of eastern Europe halved Egyptian exports to those countries during the early 1990s. They now account for a mere 6.9 per cent of Egyptian exports, compared with 27 per cent with the EU and 33 per cent with the US.

Meanwhile the slow collapse of the Middle East peace process, of which Egypt is an unofficial sponsor, is forcing strategists to contemplate the prospect of continuing instability in the Middle East and North Africa (Mena) region.

The abandonment of efforts by the World Economic Forum to assist in the integration of the Mena economies as part of the peace process, is a blow to prospects of regionally generated growth. Instead, the 4-5 per cent GDP growth of some African countries has helped turn Egyptian heads southwards.

Mohammed Shaaban, assistant foreign minister responsible for African affairs, said Egypt had always retained political links with the rest of Africa. Now it was pursuing a more active policy towards the region.

The cabinet is considering a detailed blueprint for Egypt’s strategy, which will identify specific export sectors ripe for expansion in the African market.

Pharmaceuticals and construction are expected to be two growth areas. Currently, 450 Egyptian-manufactured medicines are registered in 12 African countries, selling for as little as 20 per cent of the price of equivalent medicines imported from Europe.

“We have a strategy and a timetable,” Mr Shaaban said, predicting that Egypt’s trade with Comesa states could reach $ 750m by 2001. While increased trade is the immediate aim, Egypt hopes its more active policy will also improve its bilateral ties within the Nile basin to improve co-ordination of water management. In particularly Egypt hopes poor political relations with Ethiopia and Sudan, both members of Comesa, may improve if trade ties are strengthened.

Strengthening political ties is a parallel agenda. As the prospect grows of the creation of permanent regional membership of the UN Security Council, Egypt is keen to exploit its African identity as a cornerstone of a future role as an African representative.

The still vague notion of regional leadership has brought into focus the relative weight of Africa’s three largest economic powers – South Africa, Nigeria and Egypt. Nigeria’s plunge into political disarray has left the county with scant acceptance as a regional leader.

Consequently, Egypt and South Africa have been left in a two-nation race. But with South Africa emerging from years of isolation while facing an economic downturn and President Nelson Mandela’s retirement next year, and Egypt’s efforts at creating a new Africa policy only a year old, other states are wondering whether either really qualifies as a voice for the continent.

“Africa feels that Egyptians feel so powerful that they can get away with anything,” said a senior African diplomat in Cairo. “Egypt doesn’t really feel as if it’s part of Africa. The only time they are African is when they want the support of African countries.”

Aside from the issue of Security Council membership, that support is likely to be sought most assiduously when Egypt’s growing need to increase its share of the Nile waters leads to region-wide negotiations to increase its current annual quota.

“Egypt has a grand plan on security issues, particularly on water security,” said one analyst in Cairo. “So, it is turning its face to Africa and becoming African. If they want to mend fences [with Africa], that’s fine. But there are fences that have been broken. Egypt was not there for Africa. They were always Arab.”


© Financial Times