CIB Egypt Special Report: Bolstering Egypt’s trade with Africa

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Egypt has a significant trade advantage over the rest of Africa. Its geographical position in the far northeast of the continent makes it an outlier, but when it comes to multilateral trade agreements, Egypt has been a participant in more accords than any other African or Arab nation. 

The country is part of, among others, the Common Market for Eastern and Southern Africa (Comesa); the Agadir Free Trade Agreement, which links North African countries and Jordan; the Greater Arab Free Trade Area Agreement and the European Union-Egypt FTA. It also has preferential access to the US through the Qualifying Industrial Zones scheme. 

In 2021 Egypt joined its largest free trade agreement yet, the African Continental Free Trade Area (AfCFTA), which gives access to a market of 1.5 billion people. 

Although in its early stages, the AfCFTA offers huge potential for increased investment and trade in the medium to long term.

The AfCFTA started at an inauspicious time during the Covid pandemic and global economic slowdown. Yet despite the slow start, African countries have pushed ahead while the Egyptian public and private sectors have started to seize the potential.

Egypt’s top 20 trade partners

“The removal of tariffs on intra-African trade and the streamlining of regulatory frameworks have encouraged more Egyptian firms to explore opportunities across the continent,” says Islam Zekry, group chief financial officer and executive board member at Egypt’s Commercial International Bank (CIB).

Egyptian industrial enterprises have been launched in numerous sub-Saharan African countries, while banks such as CIB have entered the Kenyan and Ethiopian markets and intend to expand further. 

Developing these operations is essential for trade and infrastructure financing. At the commercial level, providing loans and services enables the launch and expansion of small and medium-sized enterprises, which form the backbone of any successful economy.

“Egypt’s construction sector has made significant inroads in markets such as Kenya, with Egyptian firms participating in major infrastructure and housing projects,” says Zekry. 

“The pharmaceuticals industry has also expanded its footprint, supplying high-quality, cost-effective medicines to African markets where healthcare demand is rising. 

“Financial institutions, including CIB, are playing a crucial role in enabling this expansion by providing trade finance and facilitating smoother cross-border transactions,” he says.

Supplied by CIB

Some trade agreements are focused solely on goods. The AfCFTA also covers trade in services, dispute settlement, investment, intellectual property rights, competition policy and electronic commerce. 

By including services, the pact provides advantages beyond trade and commerce. Egypt is a regional services powerhouse thanks to its banking and finance industry, its growing IT and digital sector and its diversified economy.

The AfCFTA’s first phase is focused on goods and services, removing 90 percent of tariffs. Phase 2, which is under negotiation, covers intellectual property rights, investment rules and competition policy. Phase 3 covers e-commerce and women and youth in trade. The aim is to achieve tariff liberalisation of 97 percent of goods by 2034. 

As one of the largest African economies, Egypt stands to benefit if it is able to capitalise on its strengths and if the AfCFTA is fully implemented. 

Based on current forecasts for the Egyptian economy, membership of the agreement could translate into 5.7 percent additional growth – equivalent to $48.2 billion – by 2047, according to African Union Development Agency forecasts. 

Egyptian trade with the rest of the African continent is on an upward trajectory. It grew by 11.4 percent in 2023 to $8.3 billion – equivalent to 4.3 percent of total intra-African trade – according to a 2024 report by the African Export-Import Bank.

The Egyptian government has set a target for such trade to roughly double to $15 billion by year-end. 

Egypt’s trade with Mena and sub-Saharan Africa

“While progress has been made, challenges such as logistics bottlenecks, trade financing gaps and regulatory complexities have slowed the pace of growth,” says Zekry. 

“Greater investment is required in trade infrastructure, supply chain networks and financial instruments that support exporters.”

Much will depend on sub-Saharan countries implementing the agreement in full, and their commitment to economic growth to lift more people out of poverty and create a larger middle class. 

In the world’s poorest continent, purchasing power needs to increase and to develop beyond being the relatively low-value mass market it currently is. Africa accounts for 18 percent of the world’s population, much of it young, but it only generates about 3 percent of global GDP. 

African economies have typically skewed towards exporting resources rather than buying and selling within the continent. Only 15 percent of trade is intra-Africa, compared to 54 percent within Asia and 68 percent within Europe in 2023, according to African Export-Import Bank figures. 

It took decades for the EU to reach this level of integration and Europe did not face some of the obstacles that Africa does, from conflict and instability to low levels of industrialisation and infrastructure development. 

 Unsplash/Josue Isai Ramos Figueroa

However inroads are being made – literally. Large road networks are being built, including one from Egypt through Libya to Chad, which can act as conduits to the rest of the Sahel and further south. 

Hub-and-spoke models increase the efficiency of resource use and make for better distribution, as China has done with its Belt & Road Initiative linking Asia to Europe and beyond. 

In addition to roads, railways are being expanded and a long-running plan for a Cape Town to Cairo network may one day be realised. 

In aviation, 23 African countries – roughly half – signed up in 2018 to the Single African Air Transport Market, an open-skies agreement to liberalise air travel on the continent. 

Egypt is aware it faces competition from other global players – China, India, the EU – in Africa, so it is focusing on specific sectors to create mutually beneficial trade partnerships, says Zekry. 

“Egyptian construction and infrastructure firms are well-positioned to collaborate with African governments on large-scale projects.

“Similarly, fintech and banking solutions developed in Egypt can integrate with Africa’s digital economy, creating seamless financial ecosystems that support trade and investment,” he says.

Egypt’s expansion into Africa will complement the country’s existing trade agreements, such as the Qualifying Industrial Zones scheme that allows for tax-free access to the US if 10.5 percent of a component is manufactured or sourced from Israel. 

Qualifying Industrial Zones exports have grown strongly in recent years – up 17 percent in 2024 to $1.2 billion  – due to Egypt’s manufacturing competitiveness, but also due to a trend for diversifying sourcing markets. 

With trade wars heating up between the US and China and elsewhere, foreign manufacturers are investing in Egypt to take advantage of tax-free access to the US. 

The US African Growth and Opportunity Act, which allows goods to enter duty-free from 38 sub-Saharan countries, has prompted Egyptian companies to establish, for instance, textile and garment manufacturing facilities in Ethiopia. 

This model, though affected of late by instability in the Horn of Africa, could be repeated elsewhere with more vigour and deeper investment. Here, the AfCFTA can act as a further enabler. 

Alamy

The revival of the Agadir Agreement in 2022 and deepening ties with Comesa countries in Eastern and Southern Africa are also driving business. 

“Inter-regional trade in North Africa remains significantly lower than in other parts of the continent, with limited cross-border financial mechanisms, but Agadir’s revival has the potential to unlock new trade opportunities, particularly in textiles, automotive manufacturing and energy,” says Zekry.

Cairo is also keen to bolster its already strong trade with the EU and the rest of the Middle East. Egypt’s exports to the EU have surged in recent years, from €6.3 billion ($6.9 billion) in 2020 to €16.3 billion ($17.8 billion) in 2022, although they dipped to €12.6 billion ($13.7 billion) in 2024, according to Eurostat. 

“The next decade presents a transformational opportunity for Egypt to redefine its trade relationships with Africa and Europe,” says Zekry.

“By leveraging trade agreements, investing in infrastructure and fostering financial inclusion, Egypt can position itself as a leading driver of Africa’s economic rise. The journey has begun and with the right policies, partnerships and financial support, the potential is limitless.” 

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