A huge underestimated investment opportunity for Egypt is Africa, a continent The Economist aptly describes as having a land mass equivalent to that of China, India, Japan, America, Mexico and Europe combined.[caption id="attachment_874" align="aligncenter" width="580"] The Economist[/caption]
Some headway has been made in this direction, with Egyptian companies looking to Africa for potential. Citadel Capital for instance said earlier this month it is considering investing in Uganda’s proposed $2.5 billion oil refinery. Uganda is east Africa’s third-largest economy.
But it’s not enough. North African neighbours such as Morocco and Algeria are tapping into the sub-saharan Africa story, leaving Egypt behind to cope with a mass of political and economic troubles.
Traditional markets, particularly in advanced economies such as Europe and the US look bleak and extremely difficult to penetrate based on competitiveness. For Egypt, the emphasis in those countries should be on building trade agreements to provide an edge and expand exports.
Instead, Egypt has a prospect to boost trade flows based on competitiveness in emerging markets, where global growth is likely to be centred in the future.
In recent years investors have been piling into Lagos and Nairobi as if they were Frankfurt and Tokyo of old. Anaemic growth in the rich world has made sub-Saharan Africa an attractive destination for money and its managers. Foreign direct investment has increased by about 50% since 2005. Once regarded as casinos, local capital markets now seem less risky.
New funds will pay for so far non-existent infrastructure on the continent.
Even the sceptics accept that the latest outlook for Africa is good. The IMF says the continent’s GDP will grow by 5% this year, down from a predicted 5.4% but still much faster than almost anywhere else. In 2013 growth may nudge up to 5.7%. Further economic problems in the rich world could hit South Africa, but countries to its north are still likely to do well.