The interest of Egyptian companies and international firms headquartered in Egypt in the African market has been growing, with many of them now wanting either to venture into the African market or to increase the volume of their operations across the continent.
Prime among them are firms working in the food industry and manifested in particular through their participation in the Africa Food Manufacturing Exhibition held this week in Cairo.
CEO of Cleopatra Group Mohamed Abul-Enein said last month that Cleopatra Developments, a brand focused on real estate, had held talks in several African countries to mull over the possibility of investing in housing and infrastructure projects.
Jumia, an online marketplace for electronics and fashion, announced it had pumped $600 million into several African markets, including Egypt, earlier this year.
Misr Capital Investments, the investment arm of Banque Misr, said in April it had launched a $380 million healthcare investment platform called Nile Misr Healthcare along with Elevate Private Equity in Egypt and a number of African countries.
Abeer Saleh, managing director of Al-Wafa Life Insurance Egypt, said investors were searching for markets that could garner profits. European markets were mature, rendering profit margins very narrow, she added.
The expected rapid growth of African markets is the reason why many international companies are targeting the continent, she said, adding that Al-Wafa, which operates in six countries, is considering venturing into five English-speaking African markets.
Many Egyptian companies have been operating in African markets for years, including Al-Sewedi, which owns seven factories in Africa for the production of cables, transformers, electrical supplies, and accessories.
It works in electrical interconnection, infrastructure, water delivery, and the electrical cable industry in a number of countries. One project is in South Sudan, where it is setting up electricity linkages able to carry up to 20 Megawatts. The project is slated to open in December, nine months later than earlier scheduled.
Al-Sewedi is also building a factory making large cables in Tanzania that is planned to open in the near term. The company targets expanding such factories in the majority of African states.
Qalaa Holdings is also operating in several African countries. CEO Ahmed Heikal said last year that the company was working with its partners to build a factory to extract and manufacture gold products in Ethiopia that is scheduled to start operations in two years.
In 2010, the company acquired shares from the main investor in the Rift Valley Railways, which has a 25-year exclusive right to manage the 2,000 km railways between Kenya and Uganda.
Ahmed Khalifa, deputy chairman and CEO of the Evergrow Group, owner of Evergrow for Specialty Fertilisers, said that Egypt’s strategic location gave its products a competitive edge due to the rising cost of transportation and delays in releasing cargos, especially with the outbreak of the Covid-19 pandemic.
The pandemic had opened doors for Egyptian companies to venture into African markets, he added.
Evergrow had been planning to make products for the European market, but after studying Africa it had changed its plans and started making products compatible with African soils, he said.
The company is setting up distribution centres across Africa and a collection centre in Kenya to serve East and Central Africa.
Khalifa said that the state’s logistical support had helped Egyptian investors look to African markets. The Gosour Company was established by the Ministry of Public Enterprises to bring together a number of transport and shipping companies and shopping centres in Central Africa, for example.
The sector grabbing the attention of many companies is food manufacturing. At the Africa Food Manufacturing Exhibition, which ended on Wednesday, 70 per cent of the 150 exhibiting companies came from Egypt, with the remaining coming from 19 European and Arab countries.
The exhibition covered the four main sectors of food manufacturing, namely ingredients, manufacturing, packaging, and logistics.
“Egyptian companies are careful to attend this event in order to get to know the needs of African markets,” said Ashraf Al-Gazairi, head of the Chamber of Food Industries, which took part.
“The African market is very promising. The coronavirus and the resulting halt in the movement of goods and raw materials from China, the primary supplier for Africa, created new opportunities for Egyptian companies,” lA-Gazairi said.
He added that African markets had realised that depending on one supplier could result in problems and that it was better to work with Egyptian companies that are closer to the African countries. There are also many trade agreements between Egypt and the African countries that facilitate the import and export of goods.
Egypt has the opportunity to export finished products to the African market, which is in desperate need of these goods, he said, adding that Egypt also has good opportunities to buy raw materials from Africa at reasonable prices.
Egypt is part of the Common Market for Eastern and Southern Africa (COMESA), and in 2019 it signed a tripartite cooperation agreement that gathers the COMESA, the South African Development Community (SADC), and the countries of the East African Community in one bloc.
In 2020, trade between Egypt and the COMESA countries came to $3 billion.
“Inexpensive goods cater for the African market, which is why Egyptian products are more suitable for African than European products,” said Alaa Al-Saqti, head of the Egyptian industrial zone in Ethiopia.
Delayed shipping from China as a result of the coronavirus gave Egyptian products easier access to African markets, he stated, stressing that they had a competitive edge because they are good quality and cheaper than European products.
The agreements Egypt has signed with the African states allow Egyptian investors to benefit from working on the continent, including by establishing small industrial complexes that benefit from cheap materials, low custom tariffs, low prices of land, and easy bank facilities.
*A version of this article appears in print in the 5 August, 2021 edition of Al-Ahram Weekly