Egypt Poised for Leadership Role in the African Continental Free Trade Area

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[ACCI-CAVIE] With the implementation of the African Continental Free Trade Area (AfCFTA) agreement gaining momentum, two recent expert reports highlight Egypt’s potential to emerge as a key player in the region.

The Organization for Economic Cooperation and Development (OECD) and the Trade Law Center (tralac) in South Africa have released reports emphasizing Egypt’s favorable position to leverage the AfCFTA. These reports coincide with significant economic support received by Egypt, including a $7 billion World Bank deal in 2021, a new $5 billion loan program with the International Monetary Fund (IMF), and a $35 billion accord with the Emirati sovereign wealth fund ADQ. The additional $3 billion from the World Bank further underscores the positive outlook for Egypt.

Egypt’s participation in the Guided Trade Initiative (GTI) as part of the AfCFTA, along with seven other countries, demonstrates its commitment to the agreement. While at least 24 other countries are expected to join the GTI soon, insiders suggest the number could exceed 30. Furthermore, Egypt hosted the third Intra-African Trade Fair in November, showcasing its capabilities and commitment to regional cooperation.

Egypt’s private sector has shown enthusiasm for the AfCFTA, with companies like BPC Banking Technologies actively supporting its implementation. The government’s official position is to ensure seamless implementation, indicating a strong commitment to maximizing the benefits of the agreement.

Despite optimism, challenges remain. Intra-regional trade in Africa currently stands at 15%, significantly lower than Europe (61%) and Asia (59%). Factors contributing to this include non-tariff barriers, gradual tariff reductions until 2035, and logistical challenges, particularly the Saharan Desert. However, progress is being made on administrative, legislative, and diplomatic fronts, and the long-term potential of the AfCFTA remains significant.

Reports from the OECD, tralac, and the World Economic Forum highlight sectors that align with both the AfCFTA’s priorities and Egypt’s industrial policy. These sectors include renewable energy, pharmaceuticals, logistics and transportation, clothing, textiles, and apparel (CLT), and agribusiness and processed foods. Egypt’s existing participation in global value chains, such as CLT, oil and gas, automobile manufacturing, and renewable energy, further positions it as a potential leader under the AfCFTA.

Egypt’s strategic location, advanced industrial centres, and trade hub status make it a promising candidate to play a leadership role in the AfCFTA. Supported by expert reports, economic partnerships, and government commitment, Egypt’s potential to benefit from the agreement and contribute to its success is evident. By leveraging its supply chain experience and fostering collaboration with other African countries, Egypt can strengthen its position and drive economic growth within the continent.

The Editor with Global Finance News